A foundation in Denmark is a legal entity established by one or more founders with the purpose to serve public interest in areas such as: charity, science, culture, education, and similar fields. The foundation’s resources are dedicated to achieve non-profit goals. In this article, our specialists in Danish company formation have created a comprehensive overview of the types of foundations, the legal process to establish a foundation in Denmark, required documentation and how foundations are taxed under the Danish law.
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Types of Danish foundations
Understanding the types of foundations legally recognized in Denmark before proceeding to open a foundation in this country is an essential step. Under the Foundations Act in Denmark, these structures are part of two main categories:
- Commercial foundations: these are regulated under the Danish Commercial Foundations Act (lov om erhvervsdrivende fonde/erhvervsfondsloven) and must comply with the main specifications of the foundation law, while engaging in commercial activities. Moreover, a commercial foundation does not have owners or members, as the assets of this type of foundation must be kept separate from the assets of the founder. Basically, after the establishment, the commercial foundation owns itself and the founder is giving away the control over the assets. It can be managed by a board of directors (generally, a minimum of 3 directors), who have fiduciary duties in order to maintain the foundation’s purpose.
- Public-benefit and non-profit foundations: these types of Danish foundations are governed by the Danish General Foundations Act (lov om fonde og visse foreninger/fondsloven). Public-benefit foundations operate in areas of activity, such as: cultural and educational initiatives, charitable projects, humanitarian programs, environmental projects, spiritual activities and more.
If the purpose of the foundation is not considered to benefit the public, it is legally classified as commercial or private. To determine the classification, Danish authorities require the foundation’s regulations to define its mission and purpose in a clear way, before setting up the foundation in Denmark.
Legal requirements for establishing a foundation in Denmark
Opening a foundation in Denmark involves several essential legal steps that need to be considered in order to legitimately operate under the Danish authorities’ regulations, as mentioned:
- Drafting the Foundation Charter which is a document that must outline the foundation’s: purpose, structure, resources, and management model;
- Establishing the initial capital. In the case of commercial foundations, the minimum capital requirement is DKK 300,000 (approximately €40,000). The minimum amount required for non-commercial foundations can vary depending on the activities intended for the foundation in Denmark;
- Appointment of the board of directors, generally three or more members;
- Registerwith Danish Central Business Register (CVR);
- Notifying the Danish Business Authority;
- Register in the Ultimate Beneficial Owner Register (UBO).
Find additional support from our specialists in opening companies in Denmark who can offer guidance in this process.
Documents to open a foundation in Denmark
To set up a foundation in Denmark, the following documents are required to be prepared in order to register this kind of structure, imposed by the authorities in charge:
- Foundation Charter;
- founding document;
- identification of the founders (copies of passports or ID cards);
- minutes from the first board meeting;
- initial budget or financial plancovering at least two fiscal years;
- proof of registration in the CVR;
- notification to the foundation authority.
Furthermore, if the foundation in Denmark plans to engage in economic activity, VAT registration in Denmark is mandatory. Additionally, a Danish bank account must be opened to manage the foundation’s finances.
Statistics on payments by foundations in Denmark
In the recent years, established foundations in Denmark contributed to billions of DKK annually for various purposes like: culture, scientific research, social area and more. Latest data from Statistics Denmark, in 2023, presents key figures of funds granted:
- 2,896 million DKK were granted for cultural purposes;
- 9,020 million DKK were granted for health purposes;
- 3,255 million DKK were granted for educational purposes;
- 2,530 million DKK were granted for environment purposes.
For further information and support regarding setting up a foundation in Denmark and how to open a Danish company, do not hesitate to contact us.