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Subsidiary versus Branch in Denmark

Subsidiary versus Branch in Denmark

Updated on Monday 19th June 2017

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Subsidiary versus Branch in DenmarkBusinessmen interested in investing their money abroad can find many opportunities in Denmark. The law allows foreigners to extend their businesses in Denmark by opening a branch office or a subsidiary. Danish subsidiaries are set up as limited liabilities companies and the business legislation considers them legal entities. Foreign companies can also start a branch office in Denmark and can appoint a representative to conduct the branch`s activity.

Before choosing a business form, commercial considerations should be taken into consideration. If you want to make an informed decision, our team of Danish lawyers can give you a detailed presentation of the similarities and differences between subsidiaries and branches in Denmark. The main difference between subsidiaries and branches in Denmark is their legal status and independence towards the foreign parent company. Therefore, subsidiaries in Denmark are legal entities, highly independent towards the foreign parent company, while a Danish branch does not have a legal personality and is reliant on the parent company.

The video below presents the main differences between subsidiaries and branch offices in Denmark:


 

Subsidiary in Denmark

If you want to start a subsidiary in Denmark, there are several prerequisites to be considered:

• A minimum share capital has to be deposit depending on the type of company you want to set up;
• Preparing and signing a Memorandum of association. This should contain the articles of association, the name and objective of the company, the share capital rights, the management body and an appointed date for the annual general meeting. It is highly recommended to rely on the legal services of a law firm in Denmark when you prepare this Memorandum;
• The resolution of the parent company to start a subsidiary in Denmark;
• A registered address in Denmark where the subsidiary to operate.


All this documentation must be filed with The Danish Commerce and Companies Agency in order to register the subsidiary. A subsidiary in Denmark is subject to taxation, depending on its business activity. Other financial and legal aspects are involved in starting a subsidiary in Denmark. Our attorneys in Denmark are proficient in these requirements and can provide you with complete subsidiary formation packages.

Branches in Denmark

Another option for foreign companies who want to extend their business in Denmark is setting up a branch. A foreign company can do business in Denmark only after a branch is registered with the Danish Business Authority. Parent companies which are not based in the EU, EEA countries or countries which don`t have a mutual recognition agreement with Denmark, must submit a declaration from a relevant authority in their jurisdiction recognizing the establishment of a company branch in Denmark. The Danish law applies to a branch operating in Denmark and it is subject to corporate taxation. A designated manager conducts the branch`s commercial activity and supervises the annual financial report. Several other audit requirements must be complied by the board of directors and managing director.

If you want to open a subsidiary or a branch in Denmark, feel free to contact our Danish law firm.
 

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