Company formation in Denmark is usually a procedure that is mainly differentiated by the type of company that is established. Many foreign investors come to set up a company in Denmark, but their first concern is to choose the type of business that suits his objectives and then register it with the Danish Commerce and Companies Agency.
Businessmen who want to open a company in Denmark and don’t know what type of legal entity to choose can find more details in the table below which summarizes the characteristics of the main types of business entities in the country. These can be incorporated by local and foreign investors alike.
Quick facts | |
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Main types of companies/structures | – private limited company, – public limited company, – general partnerships, – limited partnerships, – sole proprietorship, etc. |
Foreign entities in Denmark | – branches, – subsidiaries, – representative offices |
Minimum share capital | – 40,000 DKK for private limited companies, – 400,000 DKK for public limited companies |
Bank account required for share capital (YES/NO) | YES |
General steps in company formation in Denmark | – choose legal structure, – select company name, – deposit share capital, – draft documents, – register with the Danish Business Authority, – register for tax purposes with SKAT |
General required documents | – Articles of Association, – ID documents, – shareholders’ register, – declaration of company capital, – proof address, etc. |
Special licenses and permits | Industry-specific (healthcare, transportation, finance, hospitality, etc.) |
Corporate income tax rate | 22% |
Personal income tax for sole traders | Progressive rates, based on earned income |
VAT Registration | For businesses exceeding the annual threshold of DKK 50,000 in sales of goods/services. |
VAT rates | – 25% (standard), – 0% (reduced) |
Minimum shareholders required | 1 for private and public companies |
Virtual office possibility (YES/NO) | YES |
Residency requirement | There is no residency requirement to open a company in Denmark. |
Assistance | Our team can help you with company registration in Denmark and help in selecting the appropriate business type. |
As highlighted by our team of Danish company formation agents, each type of business entity has its own characteristics and advantages. One issue to consider for branch formation is that companies that are permitted to open a branch in Denmark must be foreign public or private limited companies, limited partnership companies with a similar business form based in other countries such as the United States, Switzerland or Georgia, among others. The particularities of branch formation can be discussed with our Denmark company formation specialists.
We recommend that investors take into consideration each of the issues mentioned above and seek proper counseling from our agents in case of any questions.
The type of the business entity will depend on the available capital, the plans for future business expansion and many other factors. It is also useful to know that, if the situation demands so, investors can change the business form. Investors interested in starting a business in another jurisdiction, for example in Australia, our team recommends this local company formation firm – AustraliaCompanyFormation.com.
There are three main ways in which investors may choose to open a company in Denmark and they are available for much of the types of companies, certainly for the most attractive one such as the private limited liability company (our team can provide complete details on how the process is changes slightly when discussing the registration of a branch, which will depend on the provision of documents concerning the parent company). Investors can opt for:
All new companies in Denmark must be registered with the Danish Business Authority, the tax authorities and the customs authorities for VAT purposes. The process is a simple one that starts with the drafting of the Memorandum of Association for the new legal entity. The registration with the Business Authority must take place within two weeks after the Memorandum is signed. Also, in order to register a new company, you need to open a bank account in Denmark where you will deposit the share capital of the company. Our incorporation agents can help you set up a bank account.
In terms of accounting and reporting requirements in Denmark, investors must know that the Danish Financial Statements Act applies to companies. The legal entities, such as the A/S are required to file annual financial statements that include the annual report, the profits and loss account, the cash flow statement and the balance sheet along with any explanatory notes. The branch in Denmark must submit the annual report of the foreign company with the Business Authority. One of our agents can give you additional details on these requirements.
Danish companies may decide not to have the annual report audited. For this to be possible, the legal entity is required to not exceed two of the conditions mentioned below for two consecutive years:
The exception from appointing an auditor may apply as long as the company’s Memorandum doesn’t specify otherwise or as long as it is not decided otherwise at the annual general meeting.
In terms of taxation, registered companies in Denmark are taxed according to residence, where resident companies are taxed on their worldwide income and non-resident ones only on their Danish-source income. For resident corporations, profits and losses derived from foreign permanent establishments and real estate are exempt from taxation.
Read below a short list of taxes presented by our team specializing in company formation in Denmark:
We invite you to watch a video on the main business entities in Denmark:
Our team of Danish company formation agents can provide complete details on the taxes applicable to companies, how to declare corporation tax and how to handle the reporting requirements in place. What’s more, we can also assist investors who are interested in changing an existing business form or dissolving a company.
When an investor wishes to stop the activities of a Danish company he may choose to do so through a declaration to dissolve the legal entity or by liquidation, according to the Company Act. These two processes are subject to different requirements. For example, when the chosen method is to dissolve the company, the statement asking for the commencement of this process is submitted within one month after the company is closed. The applicant also submits the company tax return for the period during the dissolution process as well as other documents, as needed. The owner who dissolves the company will need to cancel the company obligations and file the final VAT return, e-tax for business and a-tax (as well as others).
Closing down a company in Denmark is a process for which the declarations are submitted in Danish only. Foreign investors who wish to commence this process can request our services as needed. In case you need company formation services in an Asian country, we reccommend our partners from CompanyFormationTaiwan.com.
Foreign investors are allowed to have full ownership and control over any type of company in Denmark they choose to incorporate. This, combined with a number of other advantages listed below by our agents, makes the country a suitable location to base a Nordic office.
The main reasons why Denmark is attractive for company formation purposes are:
Denmark offers numerous business opportunities in many different business fields, some of them well-established, other fast-growing and promising. Some examples are listed below for those who consider opening one of the types of companies in Denmark:
These are some examples of business areas that may be of interest to foreign investors in Denmark. Opening a regional head office in Denmark presents opportunities for expanding to the Nordic countries while remaining close to other European capitals. In most of these cases, when a foreign company chooses to set up a distribution center or headquarters, the operations will be conducted through a Danish ApS company or A/S company, depending on the size of the operations. However, for in some cases, foreign companies might benefit from setting up a branch office, as described above.
According to Statistics Denmark, most companies activate in the trade and transport sector. In 2018, the data showed the following numbers:
Most companies were small or medium-sized, having below 10 employees, most of which were men. In terms of size, the following category in terms of total enterprises included companies with 10 to 49 employees (again, most of them were men). As expected, the industry in which the largest employers activated was also trade and transport, followed by other business services. At the end of November 2019, the data showed that 74,914 employees were working in the trade and transport sectors.
The Ministry of Foreign Affairs supports foreign investments through its dedicated investment agency. Denmark is not only a good location to open a business for logistics purposes or for ease of doing business (as per the World-Bank report 2012-2019) but it is also a country where foreign investors can enjoy a good work-life balance and where they will find it easy to communicate with business partners as it is estimated that 9 out of 10 people in Denmark speak English. The labor market is flexible and the pool of talented workers is significant, with options to hire both Danish employees and foreign nationals who have come to the country specifically for employment opportunities.
Company formation in Denmark is simplified for all available types of companies, however, we do still recommend that investors seek personalized assistance from one of our incorporation agents before they begin the process. Whether you are looking for pre-incorporation or post-incorporation information, our team can guide you throughout the process.
For more details on each type of company please feel free to contact our company formation specialists. Our company incorporation experts can also offer other business related services, such as trademark registration in Denmark.
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