How to start a business in Denmark

Denmark has an entrepreneur-friendly reputation, making it one of the popular countries to start a new business. The Scandinavian country offers one of the simplest and quickest start-up processes.

The process of setting up a business in Denmark is so simple you can finish it in a day, and handle everything online. Many of the documents you’ll need to complete are available in English.

Furthermore, it’s not a requirement to have Danish residents on your management team, including the CEO position and board of directors.

So, how do you get started?

What Types Of Businesses Can You Open In Denmark?

Danish Private Limited Company (Anpartsselskab or ApS)

An ApS only requires a single shareholder, and that individual doesn’t need to be a Danish resident. However, an ApS does require a minimum share capital of 1 40,000DKK.

Shares within an ApS are transferable, but the company may impose restrictions. Shareholders are only liable up to their personal contribution.

Danish Public Limited Company (Aktieselskab or A/S)

A single shareholder can start an A/S by providing a minimum share capital of 2 400,000DKK, and you must pay at least 25% upon incorporation. Shareholders in an A/S aren’t personally liable for the company’s obligations, and shares can be publicly traded or shared with company members.

Danish General Partnership (Interessentskab or I/S)

A general partnership must have at least two founding members, all of whom are fully personally liable for company obligations. Partnerships must be registered with the Danish Business Authority.

Danish Limited Partnership (Kommanditselskab K/S)

A limited partnership also requires at least two partners, however in a K/S, one partner has unlimited liability while the other has limited liability for the company’s obligations. Like in an I/S, a K/S must be registered with the Danish Business Authority.

Danish Sole Proprietorship

You can also set up a company on your own in Denmark as a sole proprietor. Sole proprietors have unlimited liability for the company and must register with tax authorities if they have employees or are involved in certain commercial activities.

Visa requirements

There are various ways to obtain a visa in Denmark as a US citizen which would allow you to live and work in the country.

For most entrepreneurs, the best route to starting a business in the country is the Start-up Denmark visa.

Start-up Visa

The Start-up visa is available to US citizens and other foreign entrepreneurs looking to start an innovative company in the country.

This visa usually takes around a month to process, and includes a ³DKK 2,490 processing fee.

Approval for this visa requires that you satisfy the following conditions:

• Your business idea has been approved by the Danish Business Authority’s panel of experts
• You are a full or partial owner of the company
• You play an active role in the running of the business
• You can support yourself (from ⁴DKK 147.912 if you’re in the country without family to DKK 344,496 if you are in the country with your spouse and one or more children)

What’s The Process For Opening A Business In Denmark?

The process for opening a business in Denmark is renowned for its simplicity.

Here’s a step-by-step guide to navigate the process:

1. Choose your business type

While you should carry out your research to find out which business type makes the most sense for your goals, we’ll focus on the ApS, or private limited company, for the remainder of this guide.

Starting an ApS offers your business the most protection and is one of the most common business types in Denmark.

Use our Business Name Generator tool to brainstorm ideas for your company name.

2. Register for a CVR number with the DBA (Danish Business Authority)

The first step to set up an ApS, or any other business type, is to register for a CVR number, which serves as a company identification number.

You can register for a CVR number through the Virk.dk online portal. The site is in Danish, so you may want to use a browser like Google Chrome to translate the page into your native language.

To complete the process, you’ll need a NemID or MitID (Denmark’s digital signature system), which you can only secure with a residence or work permit in the country.

If you don’t have either, you can hire a lawyer who will set up the company for you, without a personal NemID. Conveniently, Denmark’s Ministry of Foreign Affairs has put together a list of trusted service providers who you can contact to take on that role.

Whether you decide to go through the process yourself or through a lawyer, here’s everything you’ll need to have ready:

• Share capital of 40,000 DKK
• Names and passport copies of all members of the executive board and Board of Directors
• Memorandum and Articles of Association
• Description of ownership structure
• Passport copies of all major shareholders (who control 25% or more)

Registering for Taxes in Denmark

Once you’re registered with the Danish Business Authority (DBA), your information will be automatically forwarded to SKAT (Danish Customs and Tax Administration) for you.

SKAT collects taxes, but also provides tax advice to companies.

You may also need to register separately for these specific types of taxes, depending on your business:

• VAT (Moms): If your business sells goods and has an annual revenue exceeding ⁵50,000 DKK, it’s mandatory to register for VAT. The VAT rate in Denmark is typically 25%.
• Payroll Tax (Lønsumsafgift): If your business is exempt from VAT, you may be required to register for payroll tax instead.
• Duties (Afgifter): If your business manufactures, imports, or deals in wholesale goods, you might have to register for excise duties.
• Import/Export: If you deal with non-EU countries, you’ll have to register for customs duties.
• A-tax: If you have employees, you’ll need to sign up for A-tax.

Employment Contracts

Employers in Denmark must provide a written employment contract if the duration of employment is more than one month, and the employee in question is set to work more than eight hours per week.

Your lawyer can help you generate employment contracts or amend them for any existing employees.

As an employer, you’re legally required to take out industrial injury insurance to cover your employees from workplace accidents and any occupational illnesses. You will pay for this insurance on your employees’ behalf, and it won’t be deducted from their salaries.

Additional Considerations for Starting a Business

Before you get started on the requisite paperwork to set up a business in Denmark, there are a few other important considerations to factor into the process.

Permits

Depending on the type of business you set up, you might need to apply for permits or licenses to operate legally. Check in with the relevant Danish authorities to make sure your business remains compliant.

Double taxation

Denmark has double taxation agreements with many countries, including the United States, which will prevent you from being taxed twice on the same income.

Consult a tax advisor to make sure you minimize tax liability and stay compliant with this treaty.

Transferring employees

If appropriate, you can transfer your employees to Denmark. This process will look slightly different for every business, but here are the basic requirements:

Non-EU Residents: Employees from outside the EU must apply for both a residence permit and a work permit before they can legally work in Denmark.

EU Nationals and citizens of Nordic countries: EU nationals do not need work permits or resident permits to legally work in Denmark.

Where to Find More Help

Investindk.comhas set up a wealth of resources to help you establish your business in Denmark. Some of their most helpful resources include:

• Step by Step Guide to Opening a Business in Denmark
• Establishing a Business in Denmark
• 7 Reasons to Invest in Denmark

Doingbusiness helpfully breaks down the business registration process and timing for you.

Workindenmark.dk has a variety of business resources regarding business structure, tax, employment, and visas.

If you’re looking for specific information about forming your business in Copenhagen, you can check out Copenhagen’s site for internationals.

For information about Denmark’s special program for start-ups, Start-up Denmark has some great resources.

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Sources used :

¹ Invest in Denmark
² Invest in Denmark (fact sheet)
³ NYI Danmark
⁴ NYI Danmark
⁵ Intra VAT

Sources last checked on 15-November- 2024.

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