Denmark is one of the countries in Europe that allow for a simple company formation process, with a well-developed infrastructure and a business environment that encourages research and development and innovative business ideas.
Opening a company in Denmark is a simple process that involves a few key steps and starts with choosing the right business structure. Because the country offers an attractive business environment, many international companies have set up their local Nordic headquarters in Copenhagen or other Danish cities. Some of the key areas for investment include the technology industry, the life science sector, or the maritime sector. Of course, investors can find business opportunities in other areas for design to food production as well as the renewable energies sector.
Our Danish law firm offers complete services to local and foreign investors who are interested in opening a company in Denmark. We can help investors from the early stages of company formation and once the company is in need of solutions for dispute resolution or other types of legal services.
Types of companies
Private Limited Liability Company (ApS) Public Limited Liability Company (A/S)
DKK 40,000 for the ApS DKK 400,000 for the A/S
Minimum number of
Limited to the extent of one's contribution
Residency requirements for foreign investors
Full foreign ownership permitted (Yes/No)
Company name requirements
Unique and distinguishable from others
Cannot include certain words
Cannot be misleading
Registered office requirement
Must be based in Denmark
Main registration documents
Memorandum and Articles of Association Documents proving the identities of the shareholders and directors Proof of share capital payment
Mandatory corporate registration
With the Danish Business Authority
Licenses and permits
Applied for after corporate registration with the relevant Danish authorities
Corporate tax rate
Other taxes for companies
27% withholding tax on dividends in some cases; lower rates can apply 25% standard value added tax; a 0% rate applies for certain types of goods and services Social security contributions per year, per employee; real property tax; payroll tax; others
Patent deductions (subject to conditions) Research and development tax credits and tax allowances (up to certain amounts, subject to eligibility criteria)
Company formation steps in Denmark
Below, we present a short guide that highlights the main steps needed to open a company in Denmark. Further down in this article, we also answer some of the most important questions about the ease of doing business and hiring employees as well as the general investment environment in the country.
The major steps needed to open a company in Denmark are the following:
Choose a legal structure: this is important as the type of company can match the existing capital and the number of investors as well as be suited for small, medium or large companies. The private limited liability company or ApS is commonly used both by local and foreign investors.
Register the company: this is essential and it is performed with the Danish Business Authority; the process is a simple one and once it is complete, the company receives a central company register number used in all communications with the public authorities.
Register with the tax authorities: once the new company is registered with the business authority, it also needs to be registered with the Danish tax authorities, the Customs and Tax Administration, SKAT; those companies that need to register for VAT purposes perform a separate registration.
Obtain permits: some types of businesses may be required to obtain additional permits and licenses;
Hire employees: this is an important step that needs to be taken into consideration and the need to hire specialized or highly skilled staff will also depend on the chosen business field; Denmark also allows business owners to easily hire foreign employees or transfer the existing employees in the country in case of company relocation.
Our lawyers in Denmark can help investors with additional information about the existing types of companies as well as the requirements for each one of these. Foreign companies that enter the market have the option of opening a branch or a subsidiary and our lawyers can also advise investors regarding this particular choice. While the branch may present important advantages in terms of ease of incorporation and the general reporting requirements, the foreign company opening a branch in Denmark will be the one liable for the branch’s actions, debts and liabilities while doing business in Copenhagen or another Dutch city.
Corporate taxation and requirements in Denmark
For many investors who start a business, the local taxation rules and the regulations for reporting are important when choosing to establish their company in the said location. Denmark has a corporate income tax rate of 22% and the basis for taxation is the residence of that company (resident companies – those that have been incorporated in the country are taxed on their worldwide income while non-resident companies – those that have set up only a branch in Denmark, for example, are taxed on their Danish-source income). Investors should note that companies activating in the oil and gas sector are subject to a higher corporate income tax rate of 25%.
Entrepreneurs who open a company in Denmark need to comply with the requirements for tax filings and submission which include filing the tax return electronically within sic months of the end of the fiscal year and making the advance tax payments as needed (generally by the 20th of March and November during the tax year). Voluntary payments are accepted, and penalties apply for late filing or failure to file. In general, the tax year is the same as the calendar year, however, companies may choose another period that must not exceed 12 months.
The value-added tax in Denmark is 25%, and it is imposed on most types of goods and services. Certain categories are exempt, such as passenger transport, education, insurance and financial activities. Our lawyers can provide a complete list of the types of goods and services that are exempt. VAT returns are filed and VAT is paid on a monthly basis. Companies are expected to register for VAT purposes once the value of their taxable supplies exceeds 50,000 DKK and non-resident companies that engage in the supply of certain goods and services are subject to mandatory registration with no threshold applicable in their case.
Companies that have obtained a CVR number (the VAT or business registration number) need to have a Digital Post mailbox for letters that are received from public authorities. This is a free service and it can be set up online. Our attorneys can provide more details on the digital mailbox.
Company owners can decide to fully outsource the accounting services for their company. In fact, this can help them save costs and it will allow them to remain fully compliant with the current annual reporting practices. Our Danish accountants offer complete solutions for businesses, and you can rely on our team to handle all or part of your accounting. Contact us for details.
We can provide investors with complete details about the registration requirements for taxation purposes as well as the annual reporting and filing requirements with the SKAT. Moreover, our tax lawyers in Denmark can also offer complete details on the double tax treaties concluded between Denmark and other countries. Furthermore, we can assist foreigners who are interested in moving to Denmark with professional immigration services.
How can I have access to the Danish Company Register?
The Danish Company Register is obliged by law to permit and facilitate the access of the public to information about the companies in Denmark. The Central Business Register in Denmark deals with answering to requests about registered companies, registered owners and members, registered office or company capital. Anyone who wants to find out about these details can present and inquiry at the office of Danish Commercial and Companies Agency or via Internet.
The Trade Register in Denmark has several centers and departments that facilitate the running of the institution. Besides, a board of directors is mainly responsible for the management of the Danish Commercial and Companies Agency. A business center, a center for customer contact, the division for better business regulation, a center for coordination and marketing, an administration department are the main sectors of this organization in Denmark. Some projects of the Danish Trade Register are handled by the Project Forum, with the same finance as the Trade Register itself.
In order to open a company in Denmark, it is important to observe both the Companies Law as well as the Employment Law and other relevant laws. As far as employment is concerned, our Danish lawyers can assist investors in drawing up employment contracts as per the current legislation. We can also provide information about the insurance for employees and the taxes related to hiring staff, the social security contributions.
Below, we detail some of the issues regarding the ease of doing business and the easiness with which investors can hire personnel. Our team is ready to provide investors with answers to additional questions as well as assistance throughout the company formation process.
How easy is it to open a company in Denmark?
The waiting time between the registration and the beginning of actual commercial activities is very short in Denmark. The registration procedure of a company in Denmark takes only six working days and consists of only four steps. The entrepreneurs have also the possibility to acquire a ready-made company (shelf company) and our Danish lawyers can give you more details about this type of company.
Denmark has a very well educated population (a high part of it has a University degree and it’s fluent in foreign languages, 80% being fluent in English, 53% in German, 11% in French and 10% in Swedish.).
The laws in Denmark are especially in favor of the employer since there is high flexibility in hiring and dismissing employees. There is no obligation to hire previous employees, unlike other jurisdictions. The remuneration of the employees is made monthly or annually. The companies are advised to hire a recruitment agency which will find suitable candidates for it.
What types of permits and licenses are required for companies in Denmark?
Companies that provide services need to check if their activities are subject to licensing or additional authorization. Examples of regulated sectors include the following:
Trade and insurance,
Food and Beverages,
Law and accounting,
Fishing, agriculture, animal care,
Energy, gas, and environment
The Danish Energy Agency, the Danish Agricultural Agency or the Danish Medicines Agency are examples of two authorities that provide licensing for the said specific activities. The documents required by the authorities will depend on the chosen activity or profession and may include the documents that prove the individual’s professional qualification as well as proof of company registration in Denmark. Companies that provide temporary or occasional services in the country are required to renew their authorizations as needed.
Different requirements apply for non-EU citizens and companies. Our team of attorneys in Denmark who specialize in company formation can provide further information. It is also useful to note that some of the agencies that provide licenses may request fees, however, this does not apply in all cases. The answer is issued as soon as possible once all of the necessary documents have been submitted and an usual waiting period which investors can expect is approximately four weeks (nonetheless, this period may vary).
Businesspeople who wish to start a company in Denmark and need assistance for licensing can reach out to our lawyers. By working with our team you can rest assured that the application is submitted as requested by the agency and, in the event of a rejection, our team can help you appeal the decision.
Find out from the video below how to open a company in Denmark:
What are the main points of interest for foreign investors?
Denmark is in the top ten of the most appealing places to do business from Europe. As a matter of fact, The World Bank has ranked Denmark as the easiest place in Europe to do business. Denmark is also in the top ten of the most competitive economies in the world.
It’s very easy to open a company in Denmark, as long as the minimum requirements for minimum share capital are respected and all the necessary documents are deposited on time at the authorities. Actually, the investors are advised to open new companies instead of branches because of the shorter term of waiting for registration. Our team of lawyers in Denmark has extensive experience in company formation cases and can assist you during the entire company registration procedure.
As a member of the EU, Denmark is granting access to the European market, which consists of more than 100 million consumers. Also being a member of the EU is granting tax incentives for the foreign investors coming from one of these countries.
The infrastructure is highly developed, offering fast access to the Northern European markets.
Denmark is considered very cost efficient as there is no social contribution cost for employees even though it offers high salaries. It has a relatively low corporate tax for the region (25%).
What are the advantages of a holding company in Denmark?
Danish holding companies can benefit from the provisions of the many double tax treaties signed by Denmark all over the years. These treatiesare granting tax reliefs on profits, dividends, interest and royalties paid to nonresidents.
As a member of EU, Denmark is also applying the Parent-Subsidiary Directive, according to which there is no withholding tax on dividends paid to a company from an EU country if the parent company owns 10% of the shares for more than a 1 year. There is also no withholding tax on interests if the recipient is not an individual resident in Denmark for 5 of the preceding 10 years. The royalties are also not taxed for the use of commercial, industrial or scientific equipment or on copyrights. Another advantage of opening a holding company in Denmark is that no capital duties are requested at the formation of a subsidiary, and no stamp taxes or duties apply to the share transactions (such as the issuing, the increase of share capital or the transfer).
Opening a regional headquarters in Denmark is an easy process, with simplified procedures that can be handled, in part, by our team of Danish lawyers through a power of attorney. This is a viable option for foreign entrepreneurs who cannot be present in the country during the entire company formation procedure.
The costs of incorporating a business in Denmark
The company set up costs depend on the type of company you have decided to set up. There are two kinds of expenses you should have in mind: the registration fee and the minimum amount of capital. You don`t need to invest any money as share capital and pay no registration fee if you start an unlimited company or a sole proprietorship in Denmark (IVS). Below, we list the most important costs, according to the type of company:
1 DKK: the minimum share capital for the IVS or the entrepreneur limited company.
40,000 DKK: the minimum share capital for the ApS, also known as the private limited company.
400,000 DKK: the minimum share capital for the A/S or the public limited company.
670 DKK: the registration fee for the company, applicable in almost all cases.
Like in many other countries, the costs for starting a business in Denmark are higher as the complexity of the legal entity grows. In other words, the simplest business form, the sole trader or the one-man business, will have the lowest costs while the public limited company, which is suited to large businesses with many shareholders and employees, will demand the largest investment.
The incorporation costs will also be related to the lawyer’s fees as well as any applicable notary fees. Others may include the costs for sworn translations when these are needed (for example, in the case of branches in Denmark when the Articles of Association of the parent company may need to be translated). These are all variable fees and differ according to the internal fees practiced by the notary, the translator or other service providers.
Our attorneys in Denmark will gladly answer any further question you may have on our lawyer’s fees for company formation, drawing up the Articles of Association or drawing up a power of attorney that will allow one of our agents to handle some of the steps on behalf of the company founder.
Pre-launch business start-up costs in Denmark
When deciding to open a company, investors can expect to incur the initial pre-launch costs, the fixed business costs, and the variable business costs.
The pre-launch costs are those that include the research costs, the initial ones during the market research phase when the founders are preparing the business plan and are analyzing the market. the pre-launch costs can be included in the overall promotional or marketing costs as, in some cases, the company will wish to advertise before the launch date.
The incorporation and registration of a new firm in Denmark will involve several other costs, in addition to the share capital and the registration fee mentioned above. These can include:
Bank's fee for opening a corporate bank account in Denmark, necessary for depositing the minimum share capital when setting up your company in this country;
Register the company with the Danish Business Authority (DBA). This step can be performed on line and implies the registration of ownership and voting rights. After registration, the company becomes subject of taxation in Denmark;
Obtain a NemID signature. This is a common secure login on the internet that allows you to access online banking services for your company, to contact public authorities on behalf of your company and to sign official documents and forms. You may request up to 3 NemID signatures for your employees. A charge of DKK 80 is paid for any extra NemID signature you solicit;
Costs for registering employees with workmen`s insurance. Your employees have to be insured against occupational illness and industrial accidents.
Please note that the Danish Tax Administration, SKAT, may operate changes to its fees. If you want a complete and updated assessment of the costs involved when starting a business in Denmark, please contact our Danish law firm.
Fixed business costs for Danish companies
As part of the fixed business costs for the start-up, we can mention the following: insurance, rent or premises costs, costs for staffing and employment, equipment and supplies, technology, sales, and marketing. These are the ones that are to be paid, in most cases and depending on whether or not they are in-house or outsourced, regardless of the financial situation of the company.
For manufacturing companies, the production costs can differ according to the type of manufactured product and the fees practiced by their suppliers.
Start-ups should aim to minimize the fixed and variable costs. For most businesses, the first year is the most demanding and a good financial plan is essential for the survival of the business.
Our team of lawyers in Denmark can help new investors with more information about the different requirements according to the business field in which they wish to open the company. No two businesses are alike, this is why careful planning before the incorporation phase is required. Our team can provide complete services during the pre-incorporation and the post-incorporation phase, for any legal issues that may arise.
General companies’ statistics in Denmark
As previously mentioned, Denmark is a country that has a lot to offer to foreign investors. The data presented below by our lawyers, provided by Statistics Denmark, highlights the number of establishments in several business fields in 2018:
Trade and transport: this was the business field with the highest number of companies, 67,121;
A total of 55,923 companies were included in the other business services category;
There were 33,306 companies in the construction sector; and
29,654 companies in the real estate sector;
26,217 companies were registered in the agriculture, forestry and fishing sector.
A professional team, dedicated to their clients. They provide complete legal solutions and are attentive to the needs and the specific situations of the company that requests their services. Good overall communication.
Francesco Dagnino, Lawyer and Founding Partner of LEXIA Avvocati