Selecting Denmark as the home of your new business seems almost too good to be true. The land of ‘hygge’ offers one of the easiest and fastest start-up procedures in the world.
In fact, the process is so easy it can be done entirely online and can be completed in less than a day. According to the World Bank’s “Doing Business 2019: Training for Reform” report, Denmark is ranked 3rd in ease of doing business worldwide.
In this article, I will cover the essential first steps to build your thriving business in Denmark. The topics to be covered will include the following:
- Danish Work Permits
- Putting the Start in Startup – Danish Company Types
- Step-by-step guidance for registering a business on Virk.dk
- Registering for taxes in Denmark
So let’s dive in and get started, shall we?
Danish Work Permits
Before the registration process, you will need a work permit in order to register and run a business in Denmark.
Nordic, Swiss, and EU/EEA citizens are exempt from this rule as they can work and study in Denmark under the EU regulations on freedom of movement. However, they should obtain an EU residence document (click here to apply).
If you are a citizen from outside the Nordic countries, EU/EEA and Switzerland, you have to apply for a residence and work permit in order to be self-employed and/or operate an independent company in Denmark. However, if you already hold a residence permit (ie an accompanying family member), the residence permit includes the right to work or study during your stay in Denmark.
If you are in any doubt or are a non-EU citizen you should contact the New to Denmarkwebsite for further clarification.
Putting the Start in Startup – Danish Company Types
Once you have settled on your business idea and concept, you have to decide what type of business form you’re going to trade under in Denmark.
There are tax implications which will also determine whether you need to register for a CVR (Central Business Register) number or not. The CVR number is a business number identifying your company the same way the CPR (Central Person Register) number identifies you as a person.
Depending on the type of company you have decided to set up, you may have to pay a fee to register it. Please note that the type of company that you register is flexible and you can change it in the future.
Below are the types of companies you can open in Denmark:
Personally Owned Small Business (Personligt ejet mindre virksomhed or PMV)
This form of company is aimed at people who want a part-time or leisure business with a view to profit (eg consultant or freelancer). The company must not have employees and must not have a taxable turnover of more than 50,000 DKK annually and is free to register.
Sole Proprietorship (Enkeltmandsvirksomhed)
Sole proprietors have full liability for the company and are registered with tax authorities if they have employees or are involved in trading. It is free to register this business type.
General Partnership (Interessentskab or I/S)
A partnership must have at least two founding members, all of whom are fully liable for company obligations. The company must only be registered if the stakeholders are capital companies or if the company must be registered for tax and tax obligations.
Private Limited Company (Anpartsselskab or ApS)
An ApS only requires a single shareholder, and that person isn’t required to be a Danish citizen. However, an ApS does require a minimum share capital of 40,000 DKK. Shares within an ApS are non-transferable and non-negotiable. Owner/s are not personally liable for the company’s debts and other liabilities in addition to the values deposited in the company. You will need to pay a fee of 670 DKK to register.
Public Limited Company (Aktieselskab or A/S)
A single shareholder can start an A/S by providing a minimum share capital of 400,000 DKK. Shareholders in an A/S aren’t liable for the company’s obligations, and shares can be publicly traded or shared with company members. You will need to pay a fee of 670 DKK to register.
Entrepreneurial limited company (Iværksætterselskab or IVS)
Please note: Due to changed legislation in Denmark, from 15 April 2019, the IVS is no longer an optional company structure. Existing IVS companies must, within two years, re-register for private limited companies or be closed down.
Step-by-step guidance for registering a business on Virk.dk
1) Firstly, you go to Virk.dk and click “Start”.
2) Log in with your NemID or Digital Signature and then accept the terms &conditions.
3) Select the type of business you want to create by clicking on the “IVS, ApS, A/S, P/S and SE company” tab.
4) Complete the master data under this tab (ie the company name), place of residence and the date of establishment. It is not required that you fill in the other fields, such as website and contact information, although all items marked with a * are compulsory.
5) Enter the company’s founders details here. If there are founders or management members with a different nationality than Danish, you must upload a copy of a valid ID, such as a passport or driving license.
6) Indicate the company’s purpose, subscription rule and industry under this tab. You must also enter the company’s industry code that you find by using the search box.
7) Fill in the capital, financial year and audit information here. In addition, you must state the company’s financial year. Finally, you must choose whether you want an auditor, if you opt out of using an auditor, you must confirm that your company is not subject to an audit obligation.
8) Fill in all ownership details here.
The individual owner’s name, voting share and shareholding must be stated.
9) Upload a signed copy of your foundation document and your articles of association respectively.
10) You will get a summary of all the information you have provided about your company and it is extremely important that you ensure that all your information is correct.
Then click the “Approve” button at the bottom right of the popup box.
Images courtesy of Legal Desk
As mentioned previously, depending on which company type you have selected, you will now have to pay the fee of 670 DKK and the registration will then be submitted to the Danish Business Authority. Once submitted, you will receive a receipt for your application and your brand new CVR number (if applicable).
When you have registered your business, you can find your business registration certificate by logging on to E-tax for businesses (TastSelv Erhverv) and selecting ‘Profil’ and then ‘Registreringsbevis’ (Registration certificate).
If you require further assistance to register your business with the Danish Business Authority, you may call them on their helpline at +45 78 73 68 86 (Monday-Thursday 8.30 – 16.00 & Friday 9.00 – 15.00) or write to their Customer Centre here.
Registering for taxes in Denmark
Once you’re registered with the Danish Business Authority (DBA), they’ll send your information to SKAT (Danish Customs and Tax Administration) for you. SKAT collects taxes, but also provides tax advice to companies. I would recommend consulting a tax accountant for your unique tax requirements.
Congratulations on registering your new company and taking your first step on your entrepreneurial journey, the hard part starts now. Entrepreneurship can be a long and daunting road but the most important thing is to have passion and perseverance. This is the fuel and inexhaustible stamina that constantly drives your actions forward.
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