Establishing a business in Denmark is easy and cost effective.
The most commonly used limited liability companies in Denmark are the private limited company (ApS) with a share capital DKK 50,000 (approx. USD 9,200) and the public limited company (A/S) with a share capital of DKK 500.000 (approx. USD 92.000).
From the 1st of January 2014 a “start-up” company (IVS) with a share capital of as low as DKK 1 (approx. USD 0.25) is also available. The ApS and the A/S can be registered online with the Danish Business Authority (in Danish: “Erhvervsstyrelsen”)，meaning that the incorporation period is very short. The IVS is registered after manual filing, meaning registration will usually take place within 8 weeks from filing.
The share capital is part of the operating capital and can be sent back to a home country's mother company as a loan or used as operating capital.
There are no resident requirements for management or shareholders. General meetings and executive board meetings may be held electronically without physical meetings.
Low running costs
Compared to Norway, Sweden, Germany and the UK, Denmark offers low office rentals as well as many scalable coworking locations. It also has the lowest energy tax for industrial processes within the European Union.
Furthermore, a company may opt out of having its annual report audited if 2 out of the following 3 limits are not exceeded：
Employers additionally have low cost burdens in terms of social security, labor taxes etc., including practically no payroll taxes. This makes the overall labor costs in Denmark very competitive.
Denmark is a central access point to the rest of Europe. Denmark is situated at the heart of the Baltic Sea market with more than 100 million consumers.
Denmark has an impressive road and rail network, including the bridge connecting Denmark and Sweden, and 6 international airports of which Copenhagen Airport is the Nordic hub with 22.7 million passengers and 309,000 tons of cargo per year. Additionally, Denmark has ten seaports with free port and trade zone facilities.
Furthermore, Denmark is in close proximity to leading industry clusters within Information Communication & Technology (ICT), Life Sciences, Cleantech, Maritime and Food & Agriculture.
Denmark has an extremely flexible and robust labor market. The Danish “flexicurity” model offers a high level of flexibility in hiring and firing practices.
The Danish flexicurity model combines flexibility for employers with state-ensured security for their employees. The flexicurity model creates a dynamic labor market. For example, Denmark does not have the principle of “last in - first out” as they do in Sweden and Norway.
Fast track work permits: A number of schemes have been designed in order to make it easier for highly qualified professionals from countries outside the Nordic countries or the EU/EEA to get a residence and work permit in Denmark.
The Positive List: Foreign nationals from outside the Nordic countries, EU/EEA and Switzerland who have a written employment contract within professional areas in which there is a shortage of specially qualified manpower, will have easy access to a residence and work permit.
The Pay Limit Scheme: Under the Pay Limit Scheme an applicant will be eligible for a work and residence permit if the applicant has been offered a job with an annual gross salary of not less than DKK 375,000 (approx. USD 69,000) irrespective of the field or specific nature of the job.
The Green Card Scheme: The Green Card Scheme allows specially qualified foreign citizens to obtain a residence permit and subsequently a work permit for up to three years with the purpose to look for and take on a job in Denmark. The foreigner's qualifications are individually judged in a scorecard system based on educational level and field of expertise, language skills, work experience, etc.
The Corporate Scheme: The corporate scheme makes it easier for companies with operations in Denmark to transfer employees with special abilities or qualifications from the company's foreign departments to Denmark to work on a project. Certain conditions must be met in order for the employee to get a corporate residence permit, however, a good part of these conditions concern the employer and its status.
Additionally, researchers also have particularly easy access to the Danish labor market. In order to obtain a work permit as a researcher there must be a particular reason why the research is to be performed by the said researcher. Furthermore, the researcher must have a written job contract which must correspond to Danish standards.
Special Tax Regime for Foreign Experts and Key Employees: Denmark has a special tax scheme for highly paid foreign researchers and key employees (annual salary minimum DKK 847.200 - approx. USD 155.550). Such researchers who are recruited abroad and are able to meet a number of conditions may chose to pay tax at a rate of 26 % plus labor market contribution, a total of 31.9% for a period of 5 years without deductions of any kind, instead of paying 56.6% tax under the regular income taxation scheme.
Top Talent at Competitive Rates
Denmark is one of the top 2 countries in Europe when it comes to competitive salary levels for professionals and management, and the Danish workforce is among the most productive in Europe. The excellent reputation of the Danish workforce can to a large extent be ascribed to the traditional awareness in Denmark of the importance of education. The percentage of the population that has attained at least upper secondary education is 80% - among the highest in the European Union.
Looking at skilled labor that is readily available Denmark scores 7.87 of 8, and Danish employees are ranked no. 1 in the world on worker motivation (IMD 2013).
Denmark has made tax treaties with many nations, including the US to avoid double taxation. There are no additional tax or administration costs incurred in relation to avoiding double tax.
The Danish Government has decided to lower the corporate tax digressively from 25% (2013-level) to 22% by 2016. This is a competitive tax rate compared to like countries such as Sweden； 22%, Norway； 28%, Finland； 24.5 %, Germany； 29.8% and UK; 24%.
Businesses that have research and development expenses resulting in tax losses are entitled to a cash reimbursement of 25 percent of the losses.
The current ceiling is DKK 5 million (approx. USD 918,000), which means a maximum payment of DKK 1.25 million (approx. USD 230,000) - the Danish Government is currently debating raising the ceiling to DKK 25 million (approx. 4,590,000).
The Danish Government is also considering easing taxation of intellectual property rights. Additionally, Denmark is one of the only countries that allows losses to be carried forward indefinitely.
The Danish Government wishes to send a clear signal to the business sector that the new favorable initiatives will remain in place going forward, and all other taxes and levies will remain stable to ensure confidence in the future and promote long-term investments.
The general assumption is that foreign investors prefer to establish in the largest markets and expand from there. However, this strategy does not provide the best corporate setup and tax structure, nor is it the most cost effective when it comes to trying out what works best.
Expansion through branches will as a general rule lead to double taxation of income from branches. According to the unique tax rule in Denmark, a Danish company is not subject to tax on income from foreign branches. Furthermore, as a general rule, a Danish company may receive dividends from subsidiaries without paying taxes in Denmark (with a minimum of 10% ownership), and distribute dividends without withholding taxes.
Thus, the unique tax rule sets Denmark apart from other countries and makes it a perfect solution for the establishment of a regional headquarters.
Invest in Denmark has developed its own benchmarking tool with IBM using a quality-cost matrix which allows objective comparison of Denmark with up to 35 different global locations.
All the data programmed into the tool is kept constantly up to date and fully referenced. Quality factors include general business environment, human resources, infrastructure, labor flexibility, etc. Cost factors include taxation, total employment costs, real estate, etc.
Assuming 50 employees at the regional headquarter, Copenhagen comes out as a high quality, low cost location as compared to comparable cities in Europe.
This benchmarking can be further adapted and specified depending on client objectives and needs.