This article is not presenting how to go through the legal process to start a business in Denmark, but rather about what opening a business as a foreigner in Denmark implies, the benefits, expenses and the tax aspects you need to consider.
| Short Facts | |
|---|---|
| Types of companies available in Denmark | – Private Llmited (ApS), |
| – Public limited (A/S), | |
| – Sole proprietorship, | |
| – Branch | |
| Best destinations to open a business | – Copenhagen, |
| – Aarhus, | |
| – Odense, | |
| – Aalborg | |
| Virtual office cost | €50–€150/month |
| Accounting services cost | €100–€400/month (depends on the company’s size) |
| Office rent (approx.) | €200–€400/m²/year in Copenhagen, for example |
| Average salary | €45,000–€55,000/year |
| Common investment fields | – tech, |
| – renewable energy, | |
| – biotech, | |
| – e-commerce, | |
| – logistics | |
| Economy in numbers | – GDP – $450B, |
| – ranking as the 7th richest economy per capita out of 145 studied, | |
| – low unemployment – 5% | |
| Tax benefits | – R&D incentives, |
| – lower corporate tax for SMEs, | |
| – deductions for green investments | |
| Bureaucracy level | Moderate |
| Salary taxes | 37– 55% (progressive) |
| Pros | Stable economy, easy registration, high transparency, skilled workforce. |
| Business bank account opening | 1–2 weeks, requires in-person verification |
| Time to start | 1–3 weeks |
| Company formation with local agents | Yes, possible with our company formation agents in Denmark. |
Table of Contents
Exploring business opportunities in Denmark
In Denmark, businesses are under the control of the Danish Business Authority (“Erhvervsstyrelsen”) which manages company registration, annual reports, company laws etc. The Danish Tax Agency (“Skattestyrelsen:) oversees taxes (including VAT and tax on excise goods), ensuring that businesses in Denmark pay the taxes that the state has determined that they should. Labour is also subject to regulation by the Danish Working Environment Authority (“Arbejdstilsynet”), which is charged with regulating labour rights, and workplace safety. Additional regulation, depending on the sector, may be carried out by specialist regulators, for example in the financial or environmental areas.
Denmark is known for a robust economy, transparent regulations and a friendly climate for entrepreneurs. Starting a company in Denmark for foreigners is sure possible and does not imply a complicated process. There are several types of companies to open in Denmark, including private limited companies (“Anpartsselskab “) and public limited companies (“Aktiesselskab”), suited for different business structures and plans. Selecting the best legal entity is an essential initial step when implementing Danish business set-up.
Benefits of setting up a business in Denmark
Registering a business in Denmark as a foreigner is a fast and easy process. Residents from other countries can apply for registration through the Danish Business Authority. After registration, the firm is given a Central Business Register (CVR) number allowing them to fulfil their tax, VAT and other legal obligations. This step is accomplished by most enterprises in just a few days, so Danish company formation is simple and straightforward.
Moreover, the tax system for opening businesses in Denmark as foreigners is transparent and investor-friendly, as most companies are taxed at 22%. Dividends from subsidiaries may be subject to certain exceptions and exempted from tax. Companies that perform research and development may also qualify for a tax deduction, providing growth and innovation.
Furthermore, foreign entrepreneurs with innovative ideas can obtain residence and work permits under the Start-up Denmark scheme. This contributes to an innovative, thrivingenvironmentto open a company in Denmark as a foreigner.
Costs of running a business in Denmark
Denmark is providing an encouraging environment for opening a Danish business as a foreigner, but it is also important to understand the financial implications for setting up a business in Denmark and the costs for running one. From startup capital and government registration charges to daily operational expenses, knowing the true costs of running a business in Denmark can enable foreign entrepreneurs to plan effectively and prevent unexpected fees:
- Office space costs vary widely, with virtual office services starting at around EUR 40–50 per month, while renting commercial premises in major cities such as Copenhagen can reach EUR 20–25 per sqm. or more, depending on location and facilities.
- Utilities expenses depend on the nature of the business, but electricity, heating, and internet typically add a significant monthly cost to operations.
- Accounting services usually start from EUR 150–200 per month, depending on company size and the level of support chosen.
- License renewal fees may apply for businesses operating in regulated industries, such as: finance, healthcare, or transportation, where special permits are required.
Operational costs for spending in matters such as: office rents, utilities and wages are considered reasonable in Denmark, compared to other Nordic countries, and can vary depending on the business structure chosen. In this way, opening a company in Denmark as a foreigner comes with an additional advantage.
Our Danish business incorporation specialists can offer additional support in the financial matters that occur when establishing a business in Denmark as a foreigner.
Tax considerations of a business in Denmark
Denmark is known for having a transparent and stable tax regime, which is common for both local and foreign owned businesses. Knowing how to handle corporate taxes, VAT, dividend regulations and incentives allows entrepreneurs to stay compliant, while still making use of the Danish tax structure to their benefit, as mentioned in official data:
- Corporate tax – the vast majority of businesses pay 22% in tax, with foreign companies in Denmark and domestic enterprises being taxed the same;
- VAT – starting a foreign business in Denmark implies a 25% value-added tax on goods and services;
- Dividend withholding – foreign holders can be subject to a 27% withholding tax on dividends.
Moreover, research and development benefits are possible for foreign businesses running in Denmark that invest in research and development, as these costs are tax deductible, making the cost of investment in innovation smaller.
For more information and professional support on what implies to open a business in Denmark as a foreigner and general Danish company formation, do not hesitate to contact our specialists.