Foreign businesses can open a representative office in Denmark as a means of establishing a presence in Copenhagen. This is simply a means of being present on the market and will not allow for engaging in any usual business activities for that company. This can be the first step for those foreign investors who wish to open a Danish company and could benefit from performing a market research or investigation before incorporating a Danish legal entity.
| Quick Facts | |
|---|---|
| Denmark representative office – definition | An office established by a company in Denmark to promote its brand or conduct research without generating revenue or profit |
|
Uses for a Denmark representative office |
Non-commercial activities (market research, advertising, promotional activities) |
|
Best suited for |
Companies that aim to establish their presence in Denmark but have no plans to conduct commercial or trade-related activities |
| Local bank required (YES/NO) | YES |
| Company secretary required (YES/NO) |
YES |
| Mandatory for opening a company in Denmark (YES/NO) |
NO |
| Regulations |
Cannot make sales directly within Denmark; |
| Differences from a branch office |
Legal status; |
| Incorporation time for company formation (includes opening a representative office in Denmark) |
1 week |
| Representative office business space | Can be rented or owned |
| Liability |
The parent company is fully responsible for the actions and liabilities of the office |
| Taxes |
Denmark representative offices are exempt from corporate taxation |
| Duration |
In Denmark, a representative office is not subject to a specific duration limit |
| Advantages |
Operates as an extension of its parent company in a foreign country; No taxes; Fast incorporation process. |
| Costs | Rent (if applied), utilities, personnel salaries and benefits |
| Differences from a subsidiary |
– a subsidiary has a separate legal entity; – a subsidiary has the flexibility to engage in a wide range of commercial activities; – a subsidiary is responsible for its own debts, liabilities, and obligations; – is required to register for corporate purposes. |
|
Minimum capital required |
None |
|
Physical representation required for incorporation (YES/NO) |
NO, our specialists in company formation can help you open a liaison office in Denmark without having to be physically present in the country. |
| Management | None |
| Access of Denmark double tax treaties (YES/NO) |
YES |
| Accounting |
None |
| Laws governing liaison offices |
There are no corporate regulations for representative offices in Denmark; The Danish Companies Act provides very limited guidance on this matter. |
| Permitted activities |
– market research; – advertising and marketing; – networking; – coordinating business activities, negotiations, and collaborations; – exploring potential business opportunities, partnerships, and collaborations, etc. |
| Interdicted activities |
– direct sales; – generating direct revenue or profits through business operations; – engaging in manufacturing, production, or assembly of goods; – engaging in trading goods and services; – signing contracts on behalf of the parent company; – managing monetary transactions, etc. |
| VAT | Representative offices are not subjected to VAT. |
| Employees |
Liaison office can hire employees, foreign or local. |
| Conversion to other entity |
You can convert your representative office to another business entity by contacting our specialists in company formation. |
| Alternatives for expanding business presence |
– subsidiaries or branch offices |
| Why open a representative office in Denmark |
– to demonstrate your commitment to the local market, – built trust and awareness in your brand, – network with local businesses, – take advantage of the relaxed regulations and inexistent taxes, – strategically make your presence in a new business market. |
| Assistance | We offer assistance if you are interested in both opening a company or liaison office in Denmark. |
Benefits of opening a representative office in Denmark
Opening a representative office in Denmark can offer several benefits for businesses looking to expand into the Danish market or establish a presence in the European Union. Our Danish company formation team will explain some of the key advantages of a liaison office in the country.
A representative office can serve as a valuable opportunity for conducting market research, understanding consumer preferences, and identifying business opportunities in Denmark. It allows you to gain insights into the local market and establish contacts with potential partners and clients.
Having a liaison office in Denmark demonstrates your commitment to the local market and can enhance your company’s credibility among Danish customers, suppliers, and partners.
You can also use a representative office as a marketing strategy for your products or services without making a full commitment. This can help you adjust your market entry before making larger investments.
The process of opening a representative office in Denmark is fast and straightforward. You also do not need to pay any taxes, except for costs associated with the office space and employee’s salaries. There is no need for annual financial statements or minimum share capital.
Overall, establishing a liaison office in Denmark is advisable if you intend to conduct market research before making substantial investments in the country.
The uses of a representative office in Denmark
The representative office in Denmark is one of the ways in which a foreign business can establish its presence on the market. Two other alternatives include opening a branch office, for the purpose of also engaging in commercial activities or incorporating a Danish corporation.
The Danish representative office is suited to those businesses that do not intend to engage in commercial or trade activities in the country and simply need to establish their presence for the purpose of promoting the business or for performing certain market research projects.
Investors who are interested in company formation in Denmark can talk to one of our agents for more information about the subsequent steps after deciding to establish their presence in Copenhagen.
How to establish a representative office in Denmark
Because it does not engage in any trade or business activities, the representative office is not required to fulfill the same incorporation procedure as in the case of a corporation or even a partnership. It does, however, need to have a bank account opened in Denmark and can rent an office space. The office will need to have a company secretary.
Company formation in Denmark is a straightforward process and investors can establish a new business in approximately one week. This is a subsequent step after opening a representative office or, for some businesses, it can be accomplished without the mandatory need to establish a representative office beforehand.
Danish representative offices taxes
In Denmark, representative offices are not obligated to register with the Danish Business Authority for corporate purposes. Additionally, a representative office is typically not subject to Danish corporate taxation or required to register for corporate tax purposes. Its role is primarily limited to non-commercial activities aimed at supporting and representing the interests of the parent company.
In addition to taxes and fees, there are various other business expenses that a representative office in Denmark may need to budget for, such as rent, utilities, salaries and benefits for employees, office supplies and equipment, and any necessary licenses or permits.
For more details about opening a representative office in Denmark and tax and registration, please get in touch with our specialists in company formation in Denmark. We also invite you to watch a video about the representative office:
Representative office vs. Branch
A representative office and a branch are two options for foreign companies seeking to establish a presence in Denmark.
One of the main differences between a branch and a representative office in Denmark is their legal status. A branch is a separate legal entity that is part of the foreign company and has its own management structure. In contrast, a representative office is not a legal entity and is considered an extension of the foreign company. As a result, a branch has greater independence and decision-making power, while a representative office is more limited in its scope of activities and functions.
Another difference between the two is their tax liability. A branch is generally subject to Danish corporate income tax on its profits and may also be subject to withholding tax on certain payments. In contrast, opening a representative office in Denmark is usually not subject to corporate income.
Ultimately, the choice between a representative office and a branch depends on the specific needs and goals of the foreign company in Denmark. You can discuss the best solution for your company with one of our Danish company formation specialists.
Differences between the subsidiary and representative office in Denmark
A foreign company that wants to establish a presence in Denmark also has the choice to open a subsidiary.
However, the main difference between a subsidiary and a representative office in Denmark lies also in their legal status and the extent of their business activities. A subsidiary is a separate legal entity that is owned and controlled by a foreign company. It can engage in commercial activities, is liable for its own debts and obligations, and must comply with registration and reporting requirements. A representative office, on the other hand, is not a legal entity and is limited to non-commercial activities such as market research and promotion. It does not have legal liability and is not required to register for corporate purposes.
Transitioning from a representative office to another legal entity
It is possible to transition from a representative office to another legal entity in Denmark if your business goals and circumstances change.
The process typically involves setting up a new legal entity and transferring the relevant assets, liabilities, and operations from the representative office to the new entity.
Before making any changes, consult with our specialists in company formation in Denmark, who are knowledgeable about business laws and regulations. They can help you understand the requirements and implications of transitioning to a different legal entity.
Decide on the type of legal entity that best suits your new business objectives. Common options include setting up a subsidiary or opening a new company such as an A/S (public limited company) and an ApS (private limited company). Each has its own legal requirements.
You must also be aware of tax implications associated with the transition.
Follow the registration process for the chosen legal entity type. This typically involves preparing the necessary documents, submitting applications to relevant authorities, and meeting compliance requirements.
We can help you with the procedures regarding transitioning from a liaison office in Denmark to another entity if you are interested.
Closing a representative office
It is possible to close a representative office in Denmark if it no longer serves your business purpose or you wish to invest further in the country. Before initiating the closure process, you must first review the legal and financial obligations associated with your representative office. These mostly include utility contracts, leases, and employee agreements.
It is also necessary to pay off any outstanding debts and financial obligations related to the representative office such as unpaid bills and employee salaries or benefits.
Also in the case of employees hired in the representative office in Denmark, provide proper notice of termination and fulfill any legal requirements. You must comply with Danish labor laws, and if you require legal assistance in this matter, our specialists in company registration in Denmark can help.
Lastly, you must inform the relevant authorities of closing the liaison office. The procedure will include providing and signing the necessary documentation.
Once all the necessary steps have been completed, you can officially close the representative office, and it will no longer be legally active.
We assist in both closing and opening a liaison office, as well in the process of opening a company in Denmark.
Here are a few intriguing facts and statistics for investors who are considering opening a company or a representative office in Denmark:
- In 2022, there were 8,059 foreign-owned enterprises in Denmark, according to Statistics Denmark;
- There were over 13,000 Danish-owned foreign affiliates in 2022;
- In 2021, Denmark had a GDP of over 398 billion dollars;
- The energy industry in Denmark is believed to generate an annual revenue of approximately 389 billion DKK;
- In terms of transport and logistics, the estimated annual revenue in Denmark in 2021 was around 182 billion DKK;
- Denmark’s agricultural industry generates approximately 162 billion DKK in export sales alone.
For complete assistance, as well as counseling prior to company incorporation, please contact our Danish company formation agents.