The following is our guide to opening a business in Denmark, with links that are updated with the latest information. We are happy to walk you through it as well as introduce you to our Service Provider Network that can further assist you.
Choose which type of legal entity fits your goals and activities in Denmark.
There are several types of company structures in Denmark. We recommend that foreign companies use an “Anpartsselskab” (ApS – meaning a private limited liability company), which is akin to a limited liability company in the United States, as this provides you with the most protection.
Register your company.
Every company in Denmark must be registered with a CVR number (Central Company Register Number) in the Danish Business Authority’s (DBA) online registration system (webreg-portal.dk).The CVR number is always used when communicating with public authorities. It costs DKK 670.00 to register your company online.
A company should be registered officially at least eight days before starting operations. To register your company, the DBA requires you to have a “NemID”, an individual’s digital signature to access public and private services on the internet in Denmark (nemid.nu). In order to get a NemID, you must have a residence and work permit in Denmark.
Therefore, we recommend that you work with a lawyer who can do this for you. We have a vetted list of lawyers to introduce you to when you are ready. Here is an overview of all our service providers: investindk.com.
It only takes a couple of hours to register your company online; however your lawyer will need the following from you before starting:
Register with the Danish Tax Authorities.
Upon registering, the Danish Business Authority (DBA) sends the relevant information to SKAT (the Danish Customs and Tax Administration), who is responsible
for the collection of taxes and VAT. SKAT also provides advice to companies on tax, duty and VAT issues (please see link: skat.dk for more insight).
As abovementioned the company must be registered with the DBA at least eight days before starting operations. You must register the business separately for:
For more information on corporate taxation, please see link: investindk.com.
Issue Employment Contracts.
Your lawyer can also assist you in preparing employment contracts or "Secondement" addendums to the existing contracts for employees who will transfer within the company that complies with Danish legislation.
All employers must take out a mandatory industrial injury insurance. This can be done in one day and has no registration fee. This insurance should be added to the salary as the employer’s contribution, which is amongst the world’s lowest rates for employer-paid social insurances (Sweden: 31.42% of salary; Denmark: fixed at approx. DKK 10,000.00 - 12,000.00).
For a detailed description on hiring in the Danish labor market, including working conditions please see: investindk.com.
Register for any permits that you require for operating your business (where relevant).
Please see link: investindk.com/ permits for more information.
Set up corporate structure (optional).
We would recommend setting up your corporate structure so that you avoid double taxation, but rather use Denmark as a profit center for your other international branches or companies.
Denmark not only has a low corporate taxation rate, it also incurs no fees on the transfer of dividends outside of the country. Your lawyer can assist you here for a separate fee. Once you have your company set up, you can continue with the following steps simultaneously - assisted by your Danish service providers.
Process for helping you transfer your employees to Denmark.
Depending on the employee’s nationality different rules may apply:
Applications for residence and work permits (one application per person) can be filed by the employer and the employee directly or via a Danish lawyer who, for an additional fee, can assist you in filing out the application form and filing the application on behalf of the company in Denmark, potentially saving you some time. Since you are establishing a new company, it may be advisable to use a lawyer for the first couple of applications which will enforce your reputation as a legitimate business with the authorities, however this is not necessary.
There are three steps that must be completed when filing the application:
Foreign employees that have been offered a highly paid job have particularly easy access to the Danish labour market. There are no specific requirements with regards to education, profession, or the specific nature of the job.
In order to obtain residence and work permit according to the Pay Limit Scheme the client’s job must have gross annual pay of no less than DKK 375,000.00. The employee must have a written job contract or job offer which specifies salary and employment conditions. Salary and employment conditions must correspond to Danish standards.
For more information on the Pay Limit Scheme please see: investindk.com/paylimit. The application for a residence and work permit under the pay limit scheme must be completed by filling in the application form “AR1”: investindk.com.
The fee for each application under the pay limit scheme is: DKK 3,225.00 (2014-figures). The AR1 application form consists of two parts; one for the employer to be filled out and one for the employee to be filled out.
For more information on the International Citizen Service please see link: icitizen.dk. We will of course assist you in the process.
Set up payroll and bank account.
Invest in Denmark generally recommends foreign companies who establishes a company in Denmark to engage a Danish accountant or auditor since the company has to file tax returns locally, arrange bookkeeping, VAT reporting, pay rolls, etc.
If you would like to have internet banking, you will also need following information:
Once the bank has these documents and the information requested about internet banking, they can make the documents and an unauthorized translation and send
them to you.
You can fax the documents back to the bank and you can snail mail them. When the bank has these documents in signed condition, then the accounts will be activated, and they will send passwords to users in internet banking.
Find an office location.
If your employees will be situated with the initial client, in the interim most law firms offer that the lawyer’s address can be your Danish address.
If you are looking to lease a location Invest in Denmark can provide you with a list of options that help meet your criteria as well as introduce you to the necessary service providers. Denmark has many flexible office locations that can be month-tomonth leases and offer additional business-in-a-box solutions as you grow your business, such as a science park.
Ongoing business in Denmark – Taxation & filing requirements.
An accounting company can file your annual financial statement. An audit will not be required as long as the company in two successive financial years does not exceed 2 out of these 3 limits:
A financial year can in principle start on any given date, however the most practical is to follow the financial year of the parent organization – and the most common start dates are 1 January or 1 July.
Your accountant must file your VAT with the tax authorities on a monthly, quarterly or semi-annual basis depending on the company size and wishes. The Danish company is a separate legal entity, which is subject to corporate taxation in Denmark. The tax rate is 23.5% for the year 2015. As a result of the Government’s new Growth Plan the corporate tax rate is gradually being lowered to 22% by 2016.
Personal income tax is a combination of national tax, city tax and optional church tax. It is a progressive system. The lowest tax rate is approx. 36% up to marginal income tax rate of 51.5%, exclusive of church tax. Certain allowances and deductions are allowed.
Closing or scaling down the company.
Downscaling of operations is a valid excuse to let go of workers, but different rules apply to blue collar (union rules apply) and white collar (in contract) workers. Unions however, tend to be cooperative in Denmark.
Closing down a Danish company requires a liquidation process or – if there are no liabilities – through a termination statement. Both processes require help from a lawyer.
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