Starting a business in Denmark involves careful planning and understanding of the legal and financial landscape. One of the key decisions you'll need to make is choosing the right legal structure for your company. A private limited company (ApS) is a popular choice, offering a balanced mix of protection and flexibility for business owners. At Atrum, we specialize in guiding entrepreneurs through the entire process of setting up their businesses in Denmark, from initial registration to handling tax and employee matters. With our expertise, you can confidently navigate the steps required to establish your company, ensuring a smooth and successful start.
A key advantage of an ApS is its limited liability framework, which provides substantial financial security to its owners. Under this arrangement, the personal assets of the owners are shielded, ensuring they are not personally liable for the company's debts beyond their initial contribution. This approach guarantees that the business starts with sufficient capital, laying a solid foundation for its operations right from the beginning.
Known as an "anpartsselskab" in Danish, or simply ApS, this type of limited liability company is among the most widely chosen business structures in Denmark. Its appeal lies in the requirement for an upfront financial investment, which can be made in cash or as assets, making it especially attractive to entrepreneurs.
By combining operational flexibility with robust financial safeguards, the ApS structure creates an environment where businesses can grow while minimizing personal financial exposure. This model not only empowers entrepreneurs to pursue their business goals but also plays a vital role in boosting Denmark's economy by driving innovation and supporting business expansion. Moreover, its clear legal framework and well-defined responsibilities for owners make it a reliable choice for businesses of various sizes, from startups to more established companies.
Whether used as a standalone entity or as part of a holding structure, the ApS offers a versatile and dependable solution for navigating Denmark's competitive business landscape. This combination of adaptability, protection, and simplicity ensures that it remains a cornerstone of the Danish corporate system.
Starting an ApS involves a minimum capital investment of DKK 40,000, which acts as the company’s financial foundation. On top of that, there’s a registration fee of DKK 670 for administrative costs. The process is straightforward, allowing businesses to get started quickly. An ApS (private limited company) is designed to protect shareholders financially, as their liability is limited to the amount they’ve invested. This structure keeps personal assets safe, making it an appealing option for entrepreneurs who want to expand their business while ensuring their finances are protected.
Operating as an independent legal entity, an ApS is distinct from its owners, giving it a separate legal identity. It is an ideal structure for both individual business owners and investor groups, offering flexibility and security that can adjust to shifting market demands. To maintain transparency in its operations, an ApS is required to keep accurate financial records and submit annual reports through electronic channels.
The ownership of an ApS can be held by a single person or distributed among several shareholders, which may include private individuals or other corporate entities. A detailed ownership register keeps track of the company’s shares, financial liens, and collateral, providing regulators and stakeholders with a clear overview of its financial position. Additionally, the Companies Act mandates that an ApS must have a board of directors responsible for managing its operations. The structure of the board can be tailored to meet the needs of the company, and all necessary ownership details and agreements must be carefully documented. This comprehensive record-keeping not only ensures compliance with legal standards but also enhances the company’s credibility, bolstering its reputation with creditors and ensuring long-term stability.
In Denmark, the ApS (anpartsselskab) structure presents a highly appealing mix of financial efficiency, flexibility, and protection for both entrepreneurs and investors. This legal setup brings a variety of benefits that support business growth while reducing personal risk and improving operational performance.
A primary advantage of adopting the ApS model is its tax efficiency. With corporate tax rates generally lower than those for individual income, businesses can enjoy lower costs for purchases, investments, and other activities, making the ApS a more economical choice, especially for large transactions or companies operating across multiple sectors.
In addition to tax savings, the ApS structure allows for strategic tax planning. Businesses can implement accounting techniques to cut many operational expenses and adopt tax strategies that help maximize earnings and minimize some of their liabilities. This financial flexibility gives businesses an edge in staying competitive and efficient in a fast-evolving market.
The legal protection provided by the ApS is another very significant benefit. As a distinct legal entity, an ApS is capable of owning assets, signing contracts, and conducting transactions independently of its shareholders. This legal separation ensures that the personal assets of shareholders are protected from the company’s debts, limiting their exposure to the amount they have invested, which offers considerable peace of mind.
When choosing a name for your new ApS, there are a few key things to consider. First, the name should reflect what your company does and what it stands for, so people can easily understand your business. It also needs to be unique, not too similar to other names already registered with the Central Company Registration (CVR), to avoid any potential legal issues down the road.
You’ll also need to include the company’s legal structure in the name, such as "ApS," to make it clear that the business has limited liability. This helps build trust with potential partners and stakeholders. Finally, make sure not to use names, trademarks, or intellectual property that belong to someone else.
If your business plans to operate under multiple brands, these must be registered with the CVR and incorporated into the company’s articles of association. Consistency is key, so ensure the main name is prominently displayed in all official documents, communications, and digital platforms. When creating a website, it’s important to also list the registered office address and CVR number alongside the company name for clarity. Finally, should the company’s primary activities change, updating the name may be required to reflect those adjustments.
When setting up a Danish limited liability company, choosing the appropriate industry code is essential as it defines the scope of the company's operations. The key points to consider are:
- The code for the primary activity, which generates the most revenue, should be selected carefully.
- This decision is important not only at the beginning but also as the company evolves or shifts focus.
- If a secondary activity starts generating more income, the primary industry code will need to be revised accordingly.
For companies that operate in multiple sectors:
- Up to three additional industry codes can be registered.
- While this isn't mandatory, it becomes required if the secondary activity accounts for at least 10% of the total turnover and generates a minimum of 300,000 kroner annually.
- Companies can voluntarily register extra industry codes even if the conditions for mandatory registration aren't met.
The choice of industry code influences various legal obligations, including VAT and tax duties. The industry code should be updated if the company’s focus changes over time.
When starting a business in Denmark, entrepreneurs have several options for organizational and legal structures, each with its own advantages, obligations, and challenges. Among the most common choices is the ApS (Anpartsselskab), a limited liability company. However, other options, such as the stock corporation (A/S), the simplified limited liability company (IVS), the limited liability partnership (K/S), and the single-member limited liability company (E/ApS), are also available. Understanding the differences between these structures is key to choosing the right one for your business.
Choosing the right business structure
The ideal structure depends on factors like the company’s size, capital needs, and potential for growth. Understanding the key differences between each type of structure is essential to selecting the one that aligns with your goals.
Comparing ApS with other business structures
I. Ownership requirements:
The ApS is flexible, allowing ownership by a single person, which is great for solo entrepreneurs. In contrast, an A/S requires at least three shareholders, making it more suitable for larger companies. The E/ApS, a simplified version of the ApS, is designed for single owners who prefer a less complex structure.
II. Capital requirements:
An ApS has a low minimum capital requirement of DKK 40,000, making it appealing for smaller businesses. On the other hand, an A/S demands a higher capital of DKK 400,000, which suits companies requiring substantial investment.
III. Registration process:
Setting up an E/ApS is the easiest and most cost-effective option, ideal for those who want to avoid bureaucracy. While the ApS registration process is more complex and expensive than the E/ApS, it is still simpler than the A/S, which involves more paperwork and higher costs.
IV. Share transfer and management:
Shares in an A/S are easier to transfer, which is ideal for businesses planning to attract investors or go public. ApS shares, however, have stricter transfer rules to protect existing shareholders.
V. Capital raising opportunities:
An A/S offers better opportunities for raising capital, especially through public offerings, which an ApS cannot access. In contrast, an ApS typically relies on private funding or loans, limiting its ability to raise large amounts of capital quickly.
Entrepreneurs should carefully evaluate their specific needs before choosing a business structure. This decision impacts everything from capital requirements to control levels and funding access. For small to medium-sized businesses with manageable capital needs and a focus on limiting personal liability, the ApS is often the best choice. While other structures exist, many Danish entrepreneurs favor the ApS for its manageable capital requirements, flexible ownership options, and strong liability protection. To ensure the structure fits long-term business goals, it's advisable to consult with a legal or financial advisor.
When setting up a limited liability company (ApS), personal assets are protected, even if the business suffers losses, unlike a sole proprietorship.
Key points to consider when choosing an ApS:
- Initial capital: A mandatory initial investment of DKK 40,000 is required to establish the company.
- Personal income and company losses: It is important to note that personal earnings cannot be used to offset any losses incurred by the company. Even if the company faces financial setbacks, taxes on your personal income will still need to be paid.
- Paying yourself a salary: If you decide to receive a salary, the company must issue a payslip, withhold the necessary taxes, and submit them to the tax authorities.
Opting to form an ApS can be a prudent decision if you expect the business to make a profit or break even, offering both financial security and a more formal business structure than a sole proprietorship.
A “tax-free” conversion is usually a better fit for businesses with significant value. While the term "tax-free" suggests no taxes are due, it actually means that tax payments are deferred until the shares in the newly formed ApS are sold. This option can be attractive for business owners who prefer to delay their tax liabilities. However, the process requires an auditor to evaluate the company’s value and supervise the formation of the new ApS. Auditor fees typically range from DKK 5,000 to 20,000, excluding VAT, depending on the size and complexity of the company.
A taxable conversion is often a more practical and cost-effective option, particularly when transferring a sole proprietorship to an ApS, especially if the business has little or no tangible value. This approach involves paying taxes on the transferred assets, but it usually results in minimal or no profit, keeping the tax burden low. For smaller businesses or those with limited assets, taxable conversion is more affordable compared to the complex and expensive process of a tax-free conversion. It’s typically faster and simpler, making it a preferred choice for entrepreneurs who want a smooth, cost-efficient transition without the need for extensive valuations or deferred tax liabilities.
When setting up a limited liability company (ApS) in Denmark, the eligibility criteria for founders differ based on whether the founders are individuals or legal entities. Understanding these distinctions is crucial for ensuring the correct procedure is followed. It's also important to remember that a sole proprietorship cannot establish an ApS, as Danish law does not recognize sole proprietorships as legal persons, meaning they do not have the capacity to form a company under the ApS structure.
For individuals looking to establish an ApS, the conditions are generally straightforward. They must meet the following criteria:
- Age: The individual must be at least 18 years old.
- Legal competence: The individual must not be under legal guardianship or incapacitated in any way.
- Not involved in bankruptcy or restructuring: The individual should not be engaged in any bankruptcy or restructuring processes of other companies, as this would disqualify them from forming a new company.
Legal entities wishing to establish an ApS face a more detailed set of conditions. These include:
- Legal capacity: The entity must possess full legal capacity, which means it must be in a position to enter into contracts, acquire rights, and assume obligations.
- No ongoing company formation: The entity must not be in the process of creating another company at the time of application.
- Absence of bankruptcy or liquidation procedures: The entity must not be undergoing bankruptcy, compulsory liquidation, or restructuring procedures. However, an entity that is in voluntary liquidation still retains the right to establish a new company.
- Ability to assume rights and obligations: The entity must be able to engage in legal agreements and obligations, making it capable of carrying out the responsibilities that come with establishing and managing an ApS.
By ensuring all of these requirements are met, founders-whether individuals or legal entities-can proceed with the necessary steps to establish an ApS in Denmark.
When setting up a limited liability company (ApS) in Denmark, various costs need to be considered. One of the primary expenses is the registration fee of DKK 670, which is paid to the Danish Business Authority. Additionally, a minimum share capital of DKK 40,000 is required to officially establish the company. If the capital is not contributed in cash, the fees for professional services may be higher.
A key part of the registration process involves verifying the initial capital, which often requires the expertise of a professional. It’s also a good idea to set aside a budget for any unforeseen costs that may arise during the procedure, which could necessitate specialized assistance.
The overall cost of registering an ApS will depend on the method you choose. If you decide to handle the registration independently through the online platform, you can reduce expenses. However, seeking the help of a lawyer or accountant will add extra costs, typically beginning at 1,500 kroner or more. These fees may increase if the shareholders' agreement is intricate, especially when there are multiple parties involved.
Shares in an ApS signify the ownership stake in the company and are typically issued at a nominal value of DKK 1 each. These shares can be allocated based on necessity, and shareholders have the choice to either receive dividends if the company profits or reinvest those earnings. Despite potential growth and increased profits, the share capital stays the same. For example, if the share capital is set at DKK 40,000, this amount remains fixed, even though the value of each share grows as the company expands and becomes more profitable.
Additional capital can be introduced beyond the initial DKK 40,000. One option is creating a capital premium, where the nominal share capital stays at DKK 40,000, and any extra funds are added to the company’s free reserves. Another alternative is providing the company with a personal loan, which may be exempt from tax in certain situations, though a promissory note is necessary to document the loan.
Typically, all shares in an ApS are equal in terms of rights, but the company’s articles of association may allow for the creation of different types of shares. These share classes can offer unique rights to shareholders, such as preferential dividends for specific classes. The articles must clearly define these distinctions and the corresponding rights attached to each share class.
In Denmark, limited liability companies (ApS) can structure their equity by creating different classes of shares, each offering unique rights and privileges. This flexibility allows businesses to customize the ownership structure to suit specific needs or cater to the preferences of various investors. For example, companies can establish share classes with varying levels of voting power, dividend entitlements, or influence over company decisions.
These share classes typically include:
- Class A shares: These shares provide holders with enhanced voting power, giving them a stronger influence in company decisions and meetings. This class is usually reserved for major stakeholders or founders who wish to maintain control over the direction of the company.
- Class B shares: Often issued to passive investors, Class B shares typically offer fewer rights, such as limited or no voting power. However, they may still provide financial benefits, like a share in the company’s profits.
- Class C shares: These shares typically represent a lower-value class, which may be used for investors who are primarily interested in the financial aspect of the business, rather than decision-making authority.
Offering different share classes can be a smart move for companies looking to cater to various types of shareholders. For instance, some shares might offer better dividends, while others could give holders more voting power or the option to buy additional shares down the line. This flexibility allows businesses to appeal to a wider range of investors, whether they're after more control or simply looking for solid returns.
It’s important to clearly define each share class and the rights that come with it in the company’s articles of association. If the shares haven’t been classified yet, the proposal to introduce different share classes must be brought up at a general meeting and approved by a vote. This process ensures that all shareholders understand and agree to the rights tied to their shares.
For example, if a company wants to attract passive investors who aren’t interested in being involved in decision-making, it might offer Class B shares with no voting rights. This setup allows the company’s control to stay with the active stakeholders, like the managing director or other key owners, while still offering financial returns to those investing in the business.
In Denmark, to set up an ApS, the minimum capital requirement is DKK 40,000. This can be provided in the following ways:
- Cash: Directly deposited into the company’s account.
- Non-cash contributions: Such as machinery, vehicles, or equipment, provided they have actual economic value. Note that services cannot be used to fulfill this requirement.
- If the full capital is not available in cash, equivalent assets can be used to meet the requirement.
Capital approval is necessary to confirm that the funds are deposited and available when registering the company. This approval can be obtained from:
- A bank: Banks generally charge up to DKK 4,000 plus VAT for this service, providing confirmation of funds through a signed and stamped payment receipt.
- A lawyer: A lawyer can arrange capital approval through a client account. In this scenario, the lawyer holds the funds in a separate account until the company is officially created, at which point the money is transferred. Some law firms may include this service in their company formation package, helping you avoid the bank's fee.
It’s important to evaluate the different methods for obtaining capital approval, as each option may involve different costs. Carefully consider your needs to determine the best approach for your situation.
If you're considering launching a limited liability company (ApS) in Denmark, you may want to take advantage of two programs designed to provide tax benefits that can ease the financial burden of starting your business: the Founder’s Account Program and the Entrepreneur’s Program. These programs allow you to reduce your tax liability while setting up your company, making them valuable options for securing funding.
I. Founder’s Account Program: This program is great for those with a lower tax rate, offering a tax deduction of about 27%. It helps lower your taxable income while investing in your new business, which can be especially useful for individuals looking to reduce their tax burden during the early stages of their company.
II. Entrepreneur’s Program: Ideal for individuals in higher tax brackets, this program provides a larger tax deduction, around 52%. If you’re taxed at a higher rate, this option allows you to save more on taxes, helping to ease the financial challenges of starting your business.
Both of these programs can help cover various costs involved in setting up your ApS, such as registration fees, legal expenses, and meeting capital requirements. However, there are some complexities to consider, especially around eligibility criteria, like meeting the “founder” qualifications, and understanding the specific rules related to amortization.
Given these complexities, it’s highly recommended to consult with a qualified accountant. They can walk you through the details of each program and help you figure out which one aligns best with your financial situation and business needs. Their guidance will help you make the most of the tax relief available to you.
Choosing between the Founder’s Account and the Entrepreneur’s Program should depend on your personal tax situation and your business goals. By contributing to these programs, you can reduce your tax burden while building a solid financial foundation for your company’s growth.
Starting a private limited company (ApS) in Denmark involves a few essential steps. Initially, the founders must draft the incorporation documents and the Articles of Association, which need to be signed by all parties involved. This can be done electronically, and once signed, the documents should be submitted to facilitate the payment of the required minimum share capital, set at DKK 40,000.
Once you've secured the capital, the next step is to register your company on the Danish Business Authority’s (DBA) online platform, virk.dk. As part of the registration, you'll need to upload the incorporation document, Articles of Association, and proof of the capital deposit. Be sure to complete this process within 14 days of signing the incorporation document, or the registration could be considered invalid. There’s also a registration fee of DKK 670.
Once the company is officially registered, the Danish Enterprise Authority will provide a unique identification number (CVR), which formalizes the company's establishment. At this point, the founders must open a business bank account to deposit the share capital. To open the account, the CVR number, company ledger, and identification for at least one owner will be required. Some banks might also ask for a business plan during the account setup.
Using a lawyer’s client account (klientkonto) for the share capital deposit can simplify things. This ensures the capital stays secure until the company is officially set up. Once registered, the capital can be used for business expenses such as paying salaries or distributing dividends, but it cannot be transferred to the founders’ personal accounts.
In Denmark, there are three main ways to register a company, each with different timelines and convenience. The online registration process is the fastest and most affordable, allowing the company to start operating within hours. Traditional paper registration, however, takes about two to three weeks. Another option is purchasing a pre-registered company, which has already been registered but is inactive, so it can be ready to use within a day.
For businesses involved in international trade, additional registration requirements apply. Companies that import goods from outside the EU must apply for an EORI number, which serves as a unique identifier across the EU. Businesses exporting goods to other EU countries must complete export registration, while those participating in intra-EU trade need to follow Intrastat reporting regulations to ensure compliance with EU trade standards.
Denmark is an attractive destination for international entrepreneurs who want to start a business. Foreign nationals can establish their own companies in Denmark with just a few straightforward requirements.
To register a limited liability company (ApS), applicants need to submit the following documents through the Danish online platform, Virk.dk:
- A copy of the applicant's passport to verify identity.
- Proof of residential address.
- The identification number from the applicant’s home country.
- If the business is owned by another company, a registration certificate (in Danish or English) is also required.
The type of business being set up plays a significant role in determining the eligibility for registration. Foreign nationals without a Danish personal number (CPR) may face challenges in forming companies like an ApS or an A/S. However, if the applicant has a CPR number, they can also choose to establish a sole proprietorship.
A key requirement for registering a company in Denmark is having a registered business address. This is necessary to complete the legal registration process and to operate the business, whether the entrepreneur resides in Denmark or abroad.
Before starting the company, it’s crucial to fully understand Denmark’s legal framework and regulations. Seeking guidance from experts can ensure that all requirements are met and compliance is maintained throughout the business formation process.
A vital step in the legal process of forming a private limited company (ApS) in Denmark is the drafting and signing of an incorporation document. This document serves as the official record of the company’s establishment. It may include essential clauses that are required by law, as well as optional provisions that the founders can choose to add based on their preferences and the specific needs of the business. Founders are required to prepare this document in order to launch the company.
The incorporation document must include several key elements:
- Founders: The names, addresses, and, if applicable, identification numbers of all the founders must be included. For individuals, their full legal names should be listed. In the case of legal entities, the company name, registration number, and address should be provided.
- Commencement date: This is the official date when the company begins to have legal capacity. If this date is not explicitly stated in the document, the signing date of the incorporation document will automatically be considered as the start date.
- Accounting start date: This indicates the beginning of the company’s fiscal year and marks the first point when the company’s financial records must be kept.
- Deadlines: Time limits for subscribing to shares and fulfilling payment obligations are also essential in the incorporation document, ensuring that the process runs smoothly and efficiently.
- Issue rate: The document should specify the price at which new shares will be issued, should the company decide to increase its share capital at a later stage.
Along with these required elements, the incorporation document may also include optional provisions that the founders may choose to include based on the nature of their business and specific agreements:
- In-kind contributions: If the company’s funding involves non-cash assets, such as property, machinery, or equipment, this section will outline these contributions. It is important to specify the value of these assets to ensure proper accounting and legal recognition.
- Contracts: Any contractual obligations that could result in financial commitments for the company, such as agreements between the founders, may be included. This ensures transparency and clarity regarding financial relationships from the outset.
- Audit exemption: Smaller companies may choose to opt-out of the audit requirement. This is a common choice for businesses with fewer financial complexities or smaller turnover, and it can be specified in the incorporation document.
- Special rights or benefits: Certain parties, such as the founders, may be granted specific privileges or benefits. These could include preferential shares or decision-making rights, and should be clearly stated in the document to avoid future disputes.
It is important to note that the flexibility given to founders in drafting the incorporation document allows them to tailor it according to the specific needs of the company. Founders can decide which of the optional provisions they wish to include, ensuring that the document aligns with their vision for the company and its long-term goals. The careful drafting of this document sets the stage for the company's operations and legal standing, making it a crucial step in the establishment of a private limited company in Denmark.
The Articles of Association is an essential legal document that every Danish limited liability company (ApS) must have. It establishes the guidelines for how the company will be governed and managed, and applies to all stakeholders. This document is accessible to the public, promoting transparency in the company's internal structure. Although there is a general template available, the Articles can be customized to suit the company’s particular needs, as long as the provisions remain legally compliant and relevant.
The following core details should be included in the Articles of Association:
- Company name: This includes the official name of the company, as well as any alternative or trade names it may use.
- Share capital: The Articles must specify the minimum share capital, which is at least DKK 40,000.
- Purpose: The document must state the main objectives and activities the company was set up to pursue, aligning with its business goals.
- Management structure: This section outlines how the company is managed, including the board of directors, any executive management, and their respective roles.
- Financial tear: The financial year, which dictates the period for financial statements and reporting, must also be stated.
- Shareholder meetings: Procedures for organizing and holding shareholder meetings must be clearly defined, including the decision-making process and voting methods.
- Shares and their value: The document should detail the number of shares issued or their individual value, which determines the ownership and capital structure of the company.
In addition to the required elements, it’s also a good idea to think about including other important details, like the company’s representation. This defines who has the authority to act on the company’s behalf in legal matters and business transactions, which can help prevent any confusion down the road.
Including these points in the Articles of Association sets a solid foundation for the company’s management and growth moving forward.
The register of ownership is key to keeping track of shareholding history in a company. It ensures there’s an up-to-date record of shareholders and their holdings, with any changes in ownership being quickly reflected. Every time shares are bought, sold, or transferred, this information should be recorded to show the current ownership structure. The register should clearly show how many shares each shareholder holds, how they got them, and any rights that come with those shares, like voting rights.
The company’s management usually handles the register, but in larger or more complex businesses, this responsibility can be handed off to external parties, such as accountants or legal advisors. No matter who manages it, the register needs to be accessible for inspection by public authorities when required, and shareholders should be able to review it if they ask. This can be done by keeping a physical copy or using a digital system for easier access and management.
In Denmark, companies that issue shares must report any shareholder holding 5% or more of the company's shares in the Public Owners' Register on Virk.dk. This process ensures transparency by publicly disclosing significant ownership stakes, contributing to the overall accountability and openness of the business environment.
The ownership register must contain specific details to ensure it is comprehensive and accurate. These details include the names and addresses of all shareholders, as well as the identification information of legal entities, such as the company name, CVR number, and address. The register should also document the total number of shares or mortgage rights held by each party, along with the dates when shares were acquired, sold, or pledged. Additionally, the number of shares at the time of each transaction should be noted to provide clarity on the ownership history.
Although it is not mandatory for a private limited company in Denmark, shareholders may choose to create an ownership agreement. This document helps define the rights and responsibilities of the owners, preventing potential disputes and clarifying their roles within the company. Unlike the ownership register, which is publicly available, an ownership agreement remains a private contract and is not disclosed to the public. It can involve individual owners or other legal entities, such as corporations, and provides a foundation for managing ownership-related matters and resolving conflicts when they arise.
Ensuring transparency in the ownership structure of a limited liability company (ApS) is crucial for preventing illegal activities, such as tax fraud, money laundering, and other financial crimes. A well-documented and accessible ownership record enables regulators to monitor businesses effectively and verify compliance with legal requirements, fostering a business environment based on integrity and trust.
For full transparency, both the legal and beneficial owners must be recorded with Erhvervsstyrelsen, Denmark's Business Authority. The primary categories of owners are as follows:
- Legal owners: These individuals or entities hold at least 5% of the company’s shares or voting rights. Legal owners may be private persons or companies, and they typically have the right to participate in major decisions affecting the company, such as electing the board members or approving significant corporate actions.
- Beneficial owners: These are the individuals who ultimately own at least 25% of the shares or voting rights of the company, whether directly or through an intermediary. They often hold considerable control over the company's operations, as they may have the right to appoint directors or even block certain decisions. In many situations, a person may simultaneously be both a legal and beneficial owner, particularly when one individual owns the entire company.
If a company is unable to identify any legal or beneficial owners, it must officially report this. This ensures the ownership structure is transparent and compliant with the law, helping to establish accountability.
Keeping ownership records accurate and current helps companies avoid legal issues and ensures proper oversight of their activities. Registering ownership details not only helps businesses follow regulations but also prevents unauthorized control by undisclosed individuals. Transparency is crucial for maintaining the company’s legal integrity, protecting stakeholders, and safeguarding the reputation of the wider business community.
Clear and accurate reporting of both legal and beneficial ownership benefits companies by ensuring compliance with laws, fostering trust, and deterring financial crimes. It also ensures that regulators can effectively monitor and maintain a fair business environment.
The process of selling or transferring shares in a private limited company (ApS) is generally subject to few limitations. These ownership changes are typically executed through a share transfer agreement, which outlines the key details such as the buyer and seller, the number of shares involved, and the terms of the transaction. This agreement ensures that tax regulations are adhered to.
Share transfers can be accompanied by various conditions, such as:
- Non-compete clauses: Preventing the seller from competing with the company for a certain period.
- Adjustments to the board of directors: If necessary, to align with the new ownership structure.
- Seller financing: Where the seller may provide financing to the buyer for the transaction.
- Ownership agreements: To clarify the rights and responsibilities of the shareholders involved.
These conditions are designed to protect both the company and its shareholders' interests.
In some cases, a company may decide to increase its capital to stimulate growth. This can be achieved by requesting additional investment from current shareholders or by inviting new investors. This process requires a two-thirds majority vote during a general meeting, and contributions can be made either in cash or in kind.
If the company’s Articles of Association grant a right of first refusal, co-owners are given the chance to purchase shares before they are sold to external buyers. However, this right is optional, meaning that co-owners have the freedom to waive it, allowing the seller to offer the shares to third parties. To ensure fairness in pricing, several methods can be employed, such as:
- Independent auditor’s valuation: A professional assessment to determine the value of shares.
- Third-party tenders: Offering shares to the highest bidder.
- Auction methods: Like the Mousetrap Clause, which ensures competitive bidding.
When shares are sold to third parties, the price is generally negotiable. However, when shares are transferred within a family, legal requirements often necessitate an auditor’s valuation. By adhering to these guidelines, shareholders and co-owners in a Danish Ltd company can effectively manage share transfers and capital increases while ensuring compliance with Danish law.
In Denmark, the Danish Companies Act requires that every limited liability company (ApS) establishes a board of directors. This board is crucial for guiding the company’s strategy and overseeing its long-term goals. It must consist of at least one director, though additional members can be added. The structure and responsibilities of the board are outlined in the company’s articles of association.
For larger or more complex companies, it is common to have both an executive board and a board of directors:
- Executive board: Handles the daily operations of the company, manages everyday activities, conducts mandatory audits, and ensures smooth business operations.
- Board of directors: Oversees the company’s long-term direction and sets strategic priorities.
In companies where both boards exist, the executive board reports to the board of directors to ensure that the daily management aligns with the company’s strategic objectives. In cases where only an executive board is present, it assumes full responsibility for both day-to-day operations and strategic management, acting as the highest governing body.
It is typical for individuals on the executive board to later join the board of directors, especially in the early stages of a company's development. If necessary, as the company grows, the executive board can be replaced with a supervisory board to meet the evolving governance needs of the business.
The first step in establishing a business account for an ApS in Denmark is choosing the right bank. You can opt for the same bank where you have your personal account or explore other options, as fees and services can vary between institutions.
In Denmark, every limited liability company (ApS) must have a business account, known as an Erhvervskonto. This account is essential for keeping the company’s finances separate from the personal finances of its owners. It is linked to the company’s tax identification number (CVR) and works similarly to a personal business account tied to an individual’s personal number.
To ensure proper financial management and transparency, it's important to have both a NemKonto business account and an Erhvervskonto.
When opening a business account, you'll need to provide the following documentation:
- Proof of company legitimacy: This includes documents confirming the company’s registration and legal status.
- Personal identification details: Personal ID documents for the company’s owners or directors, such as passports or CPR numbers, will also be required.
Having these documents ready in advance will make the account opening process smoother and help avoid delays.
When starting a limited liability company (ApS) in Denmark, the first key step is registering the company with the Danish Business Authority (Erhvervsstyrelsen). Upon registration, the company receives a unique eight-digit CVR number. This number is vital for the company’s legal existence and operations, ensuring its recognition in all business and administrative matters. Similar to the CPR number for individuals, the CVR number acts as an essential identifier, enabling the company to interact with both private and public entities.
The CVR number is also necessary for setting up a NemKonto, which is required to receive payments from public institutions and ensures smooth financial operations. Additionally, it plays an important role in accessing all Denmark’s digital services, such as MitID, a digital identification system for businesses, and Digital Mail, which simplifies online communication with Danish authorities and streamlines administrative tasks.
Obtaining a CVR number is typically a quick process for a Danish private limited liability company, usually taking between 1 and 4 days, depending on the company’s legal structure. However, to avoid delays or potential issues with incomplete documentation, it is highly recommended to seek the guidance of a lawyer experienced in the formation of LLCs in Denmark. This ensures that all legal documents are accurately completed, facilitating a timely and efficient issuance of the CVR number.
Having a CVR number is essential not only for legal compliance but also for ensuring that the company can conduct its day-to-day operations, interact with government agencies, and receive payments from public institutions without hindrance. Therefore, it is critical for any business operating in Denmark to obtain this number as soon as possible to ensure a smooth and lawful operation in the Danish business landscape.
Once a Danish Ltd completes its registration and receives its CVR number, it is automatically provided with an electronic mailbox known as Digital Post. This is a crucial tool for businesses in Denmark, as it serves as the primary communication channel for official messages from public authorities. The mailbox must be regularly checked to stay updated on any important notices or legal documents. While most government institutions prefer to communicate via Digital Post, there are instances where physical mail may still be used. It’s important to note that both electronic and physical mail hold equal legal status under Danish law, making it necessary for companies to monitor both forms of communication.
To access Digital Post, authorized company representatives must log in using their personal MitID, either through the Virk platform or the Digital Post app. If the MitID is not set up for business use, then access must be granted through MitID Erhverv on the Virk platform, and permissions for access are managed via the Digital Post Permissions Portal.
In addition to Digital Post, businesses in Denmark can also use private platforms such as mit.dk or e-Boks for secure communication with other companies. The free versions of these platforms allow users to receive messages but require a paid subscription for sending messages. These private platforms can be particularly useful for handling internal or non-governmental communications efficiently. Being familiar with both public and private platforms is essential for managing the company’s correspondence and ensuring smooth communication within the Danish business environment.
Starting in January 2024, all companies are required to implement digital accounting systems that align with legal standards. These systems will ensure that financial documents are stored electronically and that crucial details, such as transaction dates, amounts, descriptions of products or services, VAT information, and payment terms, are properly included. The shift to digital accounting will be phased in gradually, with the timeline depending on the company’s classification.
From July 1, 2024, businesses in categories B, C, and D must adopt electronic accounting systems. Companies in category A, with a net annual turnover exceeding DKK 300,000 for two consecutive years, will be required to transition to digital systems by 2026.
The guidelines for bookkeeping are outlined in the Accounting Act, which applies to all ApS companies that are not managed by government or local authorities. This Act requires that financial transactions be recorded promptly and backed by appropriate documentation, including special provisions for foreign currency transactions and their exchange rates. Additionally, businesses must prepare annual financial statements, with requirements varying depending on their classification.
Failure to adhere to these regulations can result in requests for further documentation from public authorities or issues noted in the company’s annual financial statements. The Act also mandates that financial records be preserved and not disposed of inappropriately.
In Denmark, many business owners opt to manage their bookkeeping independently, using popular online platforms like Billy, Dinero, Uniconta, e-conomic, or Dynaccount. Alternatively, they may rely on professional accountants or auditors to oversee routine financial tasks, such as recording revenues, expenses, assets, and liabilities.
Bookkeeping for limited liability companies (ApS) in Denmark is governed by strict regulations to ensure precise financial reporting. These rules require that all transactions be systematically and promptly recorded. Transactions must be documented immediately after they take place, maintaining their chronological sequence. This organized approach minimizes the risk of lost receipts or overlooked documents.
Every transaction must have appropriate supporting evidence, such as bills, invoices, or receipts, which can be stored in either paper or digital format. For better transaction tracking, each document should carry a distinct, sequential identifier. Additionally, it must include key information such as the invoice number, date, VAT details (if applicable), the seller’s identification, and the tax identification number (TIN). All supporting documentation must comply with applicable accounting standards.
Businesses are obligated to store bookkeeping records securely for at least five years. These records cannot be destroyed or discarded and must remain accessible for examination by public authorities if required.
To maintain accuracy and regulatory compliance, businesses are encouraged to perform afstemning (compliance checks) at regular intervals throughout the year. This proactive approach eliminates the need to review the entire year’s financial records all at once and simplifies the process of preparing the annual report, ensuring greater precision and efficiency.
Small businesses classified as type B can be exempt from audit requirements if they meet specific thresholds:
- Their total balance sheet is less than DKK 4 million,
- Net revenue does not exceed DKK 8 million, and
- They employ fewer than 12 full-time staff members.
Even though audits are not always compulsory, companies may choose to have their financial statements reviewed voluntarily by a certified public accountant. This decision must:
- Be officially made during an extraordinary shareholders' meeting, and
- Be documented in the meeting minutes, which must then be submitted to the Commercial Office.
Danish private limited companies (ApS) are obligated to prepare and submit yearly financial reports, which serve to present an accurate and fair picture of the company’s financial condition. To guarantee the reliability of these reports, most private limited companies are required to undergo an independent audit. The role of the auditor is to verify that the financial statements accurately detail:
- The company’s revenues,
- Expenses,
- Assets, and
- Liabilities.
Many Danish private limited companies opt for an audit even when it is not a legal obligation. By providing an unbiased evaluation of the company’s financial records, an independent audit helps promote trust, transparency and confidence in financial reporting.
This external verification reassures stakeholders, including investors, board members, and other interested parties, further strengthening their trust in the company’s operations.
In Denmark, the Financial Reporting Act defines the regulations for financial reporting, classifying companies according to specific criteria. Most limited liability companies (ApS) fall under Class B, which determines their reporting obligations. For Class B companies, the annual financial report must include:
- The balance sheet,
- A profit and loss statement,
- A management report (if there is more than one board member),
- A statement from the board of directors, and
- Accounting policies.
Within Class B, there are two further divisions:
- General Class B reporting, and
- Class B reporting for micro-enterprises.
Micro-enterprises have reduced reporting requirements since they are not required to provide accounting policies. To qualify as a micro-enterprise, a limited liability company must satisfy the following criteria over the two preceding financial years:
- A balance sheet total not exceeding DKK 2.7 million,
- Net revenue capped at DKK 5.4 million, and
- No more than 10 full-time employees in the latest financial year.
All Danish limited liability companies (ApS) are legally required to prepare and file an annual financial report, including the necessary supporting documents. The preparation and submission of the report are the responsibility of the company’s management, typically its board of directors.
The annual report must be submitted no later than six months after the end of the company’s financial year. For companies that follow the calendar year (January 1 to December 31), the deadline is June 30. Reports must be filed through Virk.dk in the "Regnskab-basis" section.
Danish corporate tax rate stands at 22%, which is considered relatively low compared to other countries within the EU and globally. This rate applies to a company's taxable profits, determined by subtracting allowable business expenses—such as wages, operational costs, and depreciation—from the company’s total revenue.
The tax amount a company must pay may vary, depending on the fluctuations in its taxable income. For example:
- Companies experiencing losses in one year can carry these losses forward to offset profits in future years.
- Businesses that write off assets or invest in ways that lower their taxable base may find that they owe little to no corporate tax during those years.
This variability in taxable income offers companies a significant advantage by providing flexibility in managing their tax liabilities.
Small privately owned businesses often fall under different taxation rules. These businesses typically benefit from exemptions or lower tax rates, which are designed to encourage their growth and ensure their sustainability. As a result, depending on factors such as size, structure, and financial status, many of these businesses may even qualify for complete exemption from corporate taxes.
In Denmark, businesses can select their fiscal year-end date, with December 31 being the most common choice. However, they may opt for other dates, such as June 30 or January 31, though this can complicate tax reporting. If a company has an 18-month fiscal year, it will need to make partial tax payments in both years, with the final tax year ending after 18 months.
Typically, corporate tax payments are due twice a year: on March 20 and November 20, based on projected profits. Additionally, businesses can choose to make a voluntary third payment by February 1, following the end of the fiscal year. This allows for adjustments after the company's financial statements are finalized, and by paying more during the third installment, the company can reduce interest on late payments.
In Denmark, the corporate tax is levied on a company’s taxable income, which is calculated by subtracting business expenses-such as wages, operating costs, and depreciation-from its total revenue. The preliminary "pre-tax result" appears in accounting reports, like the income statement. To calculate the final taxable income, accountants or auditors adjust for items like depreciation or non-deductible expenses. These adjustments may cause the taxable income to differ slightly from the pre-tax result. This figure must be reported annually in the company’s tax return, which is due within six months of the fiscal year-end.
When a limited liability company (LLC) is first established in Denmark, the initial correspondence from the tax authorities may indicate that the company owes DKK 0. This often happens because the tax office lacks sufficient information to calculate the tax liability.
Although Danish companies are not obligated to distribute dividends, they often do so if they have excess funds. For directors who are also shareholders, receiving dividends can offer tax advantages. The decision to distribute dividends must be made at the general assembly, where the amount must be approved. There are two types of meetings:
- Ordinary meetings: These are held annually to approve the annual report and discuss dividend distribution.
- Extraordinary meetings: These are called for urgent decisions, such as electing new board members or approving dividend payments.
Regarding dividends, they are subject to withholding tax in Denmark. For the year 2021, dividends up to DKK 56,500 are taxed at 27%, while amounts exceeding this threshold are taxed at 42%. If the dividend exceeds DKK 113,000, married individuals are subject to the higher tax rate. The company is responsible for withholding and remitting the tax to SKAT Erhverv. Non-resident shareholders are generally taxed at 15%, depending on the tax treaty between Denmark and their home country. The company typically withholds this amount before paying out dividends.
In certain circumstances, companies can carry forward losses to offset taxable income in future years. For instance, if a company reports a DKK 100,000 loss in one year and earns a DKK 100,000 profit the next, the loss can reduce the taxable income in the following year, meaning no corporate tax would be due for either year.
Finally, companies in Denmark are required to submit their annual reports to the Danish Enterprise Authority (VIRK) within five months of the fiscal year’s end. Tax returns must be filed with SKAT Erhverv within six months.
Once the turnover of an ApS reaches DKK 50,000 within a 12-month period, the company is obligated to register for VAT with the Danish tax authorities. Following registration, the business assumes responsibility for collecting VAT from its customers, remitting it to the tax office, and making periodic payments.
As required by tax regulations, an ApS is also expected to regularly issue VAT invoices. These invoices must include details such as the VAT ID, customer information (including the VAT number if applicable), the transaction description, invoice number, quantity, unit price, date, total amount, and the VAT charged.
For certain services, such as medical or educational services, businesses may be eligible for VAT exemptions. Furthermore, businesses can reduce their tax obligations by claiming VAT deductions on purchases related to taxable activities, like materials and services.
Denmark’s standard VAT rate is set at 25%. However, reduced rates apply to certain products and services. For example, food, medical services, medicines, and hotel stays are subject to a 12% rate, while books, newspapers, and tickets for cultural events benefit from a 0% tax rate. The applicable VAT rate depends on the type of activities the business is engaged in.
In Denmark, it is essential for limited liability companies (ApS) to be aware of their VAT obligations, particularly if they are involved in international trade or qualify for specific VAT exemptions or deductions. Consulting with a professional is strongly recommended to avoid potential errors.
In Denmark, hiring employees for an ApS (Anpartsselskab) requires employers to understand and meet various legal, tax, and procedural responsibilities. The following is a comprehensive overview of the key obligations involved.
It is a legal requirement for employers to maintain a safe work environment, which includes:
- Providing regular health and safety training
- Supplying the appropriate protective equipment according to the job requirements
Furthermore, danish laws mandate equality in the workplace, prohibiting any discrimination based on gender, race, religion, age, or sexual orientation. Employers must ensure all employees are treated fairly.
Trade unions have a strong presence in Denmark. Employers should be aware that unions typically negotiate on behalf of employees for matters such as wages, benefits, and working conditions. While employees are not required to join a union, a large number choose to be represented, and collective agreements are widespread.
Employers must offer fair pay that complies with any applicable minimum wage standards within the industry. The salary is subject to taxation, and employers are responsible for:
- Deducting income taxes and social security contributions from wages,
- Remitting these amounts to SKAT, the Danish tax authority.
Denmark follows a progressive tax system, with higher earnings taxed at higher rates. Additionally, employers are obligated to make deductions for pensions, healthcare, and other social benefits in line with the country’s mandatory social security regulations.
Once an employee is hired, the employer must register the individual with the Danish social security system. This ensures the employee is covered for benefits such as healthcare, pensions, and insurance for illness or workplace accidents. Employers must also report wages and ensure accurate social security contributions are made.
In Denmark, the foundation of employment begins with a written contract that complies with labor laws. The contract should clearly outline:
- Salary: Specify the amount and payment intervals (monthly, weekly, etc.)
- Job description: Detail the employee's role and responsibilities
- Working hours: State the expected working hours and overtime provisions
- Paid leave: Mention the minimum of five weeks of paid vacation entitlement
- Notice period: Include the required notice for resignation or dismissal, based on how long the employee has been employed
For temporary positions, the contract must also specify the duration and conditions for termination or extension.
Contracts can either be indefinite or fixed-term. In the case of fixed-term contracts, the employer must:
- Clearly define the contract's purpose and duration (e.g., for a temporary replacement or project-based work)
- Decide whether to extend or terminate the contract when the term expires
Given the complexity of employment regulations in Denmark, many employers seek guidance from legal and tax professionals. This helps prevent costly errors and ensures full compliance with all applicable laws.
Although offering a pension scheme is not a legal requirement for a private limited company in Denmark, many businesses choose to provide one in order to attract talented professionals and enhance employee retention. Including such a scheme in the benefits package can help companies stay competitive in the job market.
Key considerations when setting up a pension scheme include:
- Employer contributions: Employers are generally responsible for contributing to the pension fund on a regular basis, with the contribution typically ranging from 4% to 12% of the employee's salary. The exact percentage is usually stated in the employment contract or any collective agreements.
- Employee participation: Employees have the choice of whether to participate in the pension scheme. Although participation is voluntary, most employees opt in to benefit from the employer's contributions.
- Pension agreements: Pension arrangements can be made through collective agreements (overenskomst) or negotiated directly between the employer and employee. It is important for these terms to be clearly stated in the employment contract to avoid misunderstandings.
- Tax benefits: Both employers and employees gain tax advantages. Contributions made by the employer are tax-deductible, while employee savings are exempt from social security contributions, offering mutual financial benefits.
- Management of the pension fund: Employers must ensure that the pension contributions are directed to an accredited provider. Employees typically have the option to choose a plan or fund that suits their personal preferences.
While it is not mandatory, offering a pension scheme is highly recommended for ApS companies. Adopting these practices ensures compliance with regulations and fosters a positive environment for both employees and employers.
In Denmark, the termination of an employee’s contract must comply with labor laws designed to ensure fairness for both the employer and the employee. The procedure varies depending on whether the dismissal is due to misconduct or financial constraints.
Notice period requirements A written notice is required, specifying the reason for dismissal and the effective date. The length of the notice period typically ranges from one to six months, depending on how long the employee has worked with the company, providing sufficient time for the employee to find new employment.
Reasons for dismissal
- Financial difficulties: If layoffs occur due to economic issues or restructuring, employers must follow specific legal procedures.
- Misconduct: In cases of poor performance or inappropriate behavior, employers must provide clear evidence and follow established protocols.
Communication between employer and employee One of the first steps in the process is to have a conversation between the employer and employee. This meeting allows the employee to explain their point of view and address any concerns raised by the employer.
Severance and support options Employees dismissed due to economic reasons may be entitled to severance pay, which is usually determined by their length of service, as specified in their contract or collective agreements. Employers may also offer additional support, such as giving time off for job interviews or helping with writing resumes.
Protections for employees Certain employees are given special protection under the law, such as those who are pregnant, on parental leave, or ill. Firing an employee in these circumstances could lead to legal repercussions.
Post-termination obligations After the dismissal is completed, employers must fulfill several responsibilities:
- Employment certification: Provide a certificate outlining the employee's job role, duties, and the length of employment.
- Final payments: Settle all unpaid wages, unused vacation days, and severance pay.
- Reporting duties: Employers must notify the relevant authorities, such as the tax office and social security system, about the termination.
For large-scale layoffs, employers are also required to consult with trade unions and follow the relevant collective agreements.
By carefully following these steps, employers can ensure that the dismissal process is in line with Danish labor laws while treating employees with respect and fairness.
In a Danish limited liability company (ApS), the owner has the option to receive compensation either as a salary or dividends. However, it’s important to remember that the company and the owner are separate legal entities, so funds cannot be directly transferred from the company’s account to the owner’s personal account, as they must maintain distinct financial records.
If the owner opts for a salary, the following actions must be taken:
- Register the company as an employer on Virk.dk.
- Create a formal employment contract.
- Prepare and submit a monthly payroll report.
- Report the salary details to Skattestyrelsen for tax purposes.
If the owner chooses not to take a salary in a given month, a "nil declaration" must be filed with Skattestyrelsen to avoid penalties. The salary should align with typical industry standards for similar roles, or any excess could be classified by the tax authorities as dividends, which would then be taxed differently.
Alternatively, the owner may opt to receive dividends, which are paid to shareholders and investors. Proper documentation for dividend payments is crucial to ensure compliance with legal requirements.
Regardless of whether the owner chooses a salary or dividends, the company must report the payments to Skattestyrelsen via platforms like LetLøn on skat.dk and ensure that all taxes are paid.
In many cases, businesses choose to set up a holding company and an operating company structure. The holding company owns the operating company’s shares, which provides a layer of protection for its assets against creditors if the operating company goes bankrupt.
A key benefit of establishing two companies simultaneously is the option of "capital roll-over." Rather than allocating DKK 40,000 for each company individually, the same amount can be used as initial capital for both companies.
It's essential to remember that the holding company is not a separate legal entity. It is specifically formed to hold and manage shares in another business.
If a Danish limited liability company (ApS) fails to meet specific legal obligations, the owner could face personal liability for the company's debts, putting their private assets at risk. For instance, if the company’s capital falls below half, the owner must call an extraordinary shareholders' meeting within six months, during which the board must provide a financial report and suggest possible actions, such as raising new capital or considering liquidation.
Personal liability can also arise in cases of severe negligence. If the owner knowingly enters into contracts on behalf of the company, despite its inability to pay its debts, they could be held accountable. Similarly, if the owner’s actions lead to significant harm to creditors or customers, they may be held personally responsible.
In situations where the company’s share capital of DKK 40,000 is the only collateral for a loan, the lender may require a personal guarantee or ask for the owner’s private assets as additional security. Larger creditors could impose similar conditions. However, once the company’s assets are sufficient to cover its liabilities, these personal guarantees and collateral may be released.
Operating an ApS generally protects the owner’s personal assets from company debts, but this protection is not guaranteed. Therefore, the owner must be careful to follow the necessary regulations and avoid circumstances that could expose them to personal liability.
When forming your private limited company (Danish LLC), or ApS, with contributions in-kind, it’s essential to understand that you bear personal liability for the assets you provide. This means that if there are any issues or disagreements regarding the asset valuation, you may be held personally accountable.
The process of setting up an ApS with non-cash assets requires the following:
- Asset valuation report: A key requirement is to submit a valuation report, which must be included with your company registration documents. This report, typically prepared by an independent accountant, is crucial for determining the true market value of the assets being contributed.
- Role of informal assessments: While informal assessments, such as those from suppliers or manufacturers, might help with the process, they cannot replace the official valuation demanded by authorities. These initial estimates can be used by the accountant to prepare the final report, but they are not adequate on their own.
In addition to these requirements, the assets’ true market value must be reflected in the valuation to ensure full compliance with Danish legal regulations.
Establishing an ApS with non-cash contributions involves more than just accurate asset valuation. You must also consider the legal and financial responsibilities linked to the assets. To navigate this complex process effectively, it’s highly recommended to consult professionals who are skilled in asset valuation and well-versed in Danish business laws. This will help ensure your ApS is set up correctly and minimize potential risks associated with contributing non-cash assets.
The general meeting (generalforsamling) is a key event for a Danish limited liability company (ApS), as it is where the owners make significant decisions about the company's future. According to the law, it must be held at least once every year.
These meetings can be either ordinary or extraordinary. Ordinary meetings generally cover:
- Approving the financial statements.
- Discussing potential amendments to financial strategies.
- Deciding on the allocation of profits or covering losses.
- Addressing other matters outlined in the company’s Articles of Association.
Extraordinary meetings are called when urgent matters arise, such as:
- Changes to the board of directors.
- Amendments to the Articles of Association.
Owners of the company’s capital have the right to attend, either in person or by designating a representative with a power of attorney. The company’s auditor may also attend, and external advisors can participate unless the company’s Articles of Association limit such attendance.
Proper organization is crucial, and the meeting must be scheduled on time to ensure the annual report is submitted to the Danish Enterprise Authority before the deadline.
The minutes of the meeting should include:
- The company’s name, type, and CVR number.
- The meeting date.
- The chairman’s name.
- The chairman’s signature.
Additionally, the management or supervisory board should provide a report confirming whether the annual report was approved. These minutes must then be submitted to the Danish Business Authority as evidence that the annual report was approved.
The process of shutting down a Danish limited liability company (ApS) involves assessing the company's financial status and choosing the appropriate closure method based on whether it is solvent or insolvent. Several options are available, depending on the company's financial situation.
For solvent companies, the following closure methods are possible:
- Voluntary liquidation: This allows the company to liquidate its assets after paying off all debts. Shareholders must sign a declaration confirming that liabilities have been settled, which protects them from future claims. Creditors are given three months to file any outstanding claims.
- Liquidation via shareholder declaration: In this case, a declaration by shareholders triggers the liquidation process. A liquidator is appointed to oversee the closure, and once the process is completed, shareholders are protected from any future liabilities.
For companies facing financial difficulties, the following procedures are available:
- Bankruptcy: This process is necessary when the company is insolvent, and it will proceed through bankruptcy proceedings.
- Restructuring: If a company is at risk of insolvency, it may request a court to initiate a restructuring process to help restore financial stability and resume operations, with the assistance of a court-appointed administrator.
In cases where legal obligations, such as filing annual reports or appointing a managing director, are not met, the court may enforce compulsory dissolution. If the company is insolvent, bankruptcy proceedings will follow; otherwise, the company will simply be dissolved.
Once the proper closure process is chosen, the following steps must be completed:
1. Finalize the company's accounting records and submit the final VAT declaration if registered for VAT.
2. Settle any outstanding wages, file employee taxes, and deregister the company as an employer.
3. Notify the tax authorities about the intent to deregister the company for corporate income tax after its official closure.
4. Submit the final income tax return by the deadline. The tax office will typically confirm the settlement of taxes within 3-6 months.
5. Obtain official confirmation from the tax authorities that all company liabilities have been cleared.
6. Shareholders must sign a statement confirming that all debts are settled, alongside the final closure application.
Once the closure application is submitted, the company will officially be closed within two weeks.
Throughout this process, ensure that VAT and employee taxes are filed and that any unpaid amounts are settled. The company must be deregistered as both an employer and VAT payer. Additionally, the final tax return for the previous year should be submitted, and a separate tax return for the closure year must be filed with adjustments for the tax liability. After completing these tasks, request a statement from the tax authorities, submit the signed shareholder statement, and finalize the company’s closure via the VIRK system.
To establish a company in Denmark, several important steps need to be completed to ensure smooth operations:
1. Apply for a NemID
The first step is applying for a NemID, a digital identification tool essential for accessing various online services, including government portals and banking. This digital signature is crucial for confirming your identity. You can apply for a NemID through medarbejdersignatur.dk, though the website is in Danish.
2. Set up an e-box
Once you have your NemID, the next task is setting up an e-box. This is an online mailbox where you will receive official correspondence from government agencies. You can access your e-box after logging in with your NemID. Additionally, some private companies also use e-boxes for communication.
3. Assign a NemKonto to your company
Another step involves linking a NemKonto to your company. This special bank account is necessary to process payments from public authorities, such as tax refunds and subsidies. After obtaining your company’s CVR number, you must contact your bank to assign a NemKonto, which may be either a new or existing account. Without a NemKonto, tax refunds cannot be processed.
- If you don't have a Danish bank account, you can apply to use a foreign account by submitting a specific form.
- To verify if your account qualifies, visit nemkonto.dk or get in touch with your bank.
4. Deposit the required minimum capital
Lastly, you must deposit the required minimum capital of DKK 40,000 into a lawyer's client account as part of the company registration process. Once the company’s bank account is set up, instruct the lawyer to transfer the capital to the company's account. If you face challenges with opening a traditional bank account, consider alternative options like Revolut.
Completing these steps will ensure your company is properly registered within Denmark’s system, allowing for effective financial management and receipt of payments from government authorities.
Employees can use MitID Erhverv for various tasks, such as submitting tax reports, managing the company’s email, or filing maternity leave documents for colleagues. However, access to certain self-service features requires that employees first receive authorization from the company.
To grant this access, the company must initially register and create an account on the MitID-Erhverv.dk platform. This service is specifically created for businesses with employees who need to interact with public and private self-service tools related to the company’s operations in Denmark.
Generally, the authorization process takes place directly within the MitID Erhverv system, although some services-particularly those associated with the Tax Office-may necessitate additional authorization management.
Employees can also log into the company’s self-service platforms through their personal MitID. This allows them to manage both their personal and business affairs in one place, but both the employee and the company must agree on using personal MitID for work-related tasks. It's essential to remember that personal and company data will remain separate regardless of the login option chosen. Alternatively, employees have the option of creating a separate MitID account strictly for business use.
Establishing an ApS in Denmark provides numerous advantages, from legal protections to flexible operational frameworks, making it a great option for many entrepreneurs. Whether you’re a local or international business owner, understanding the requirements and procedures is crucial for success. With Atrum’s guidance and expertise, you can confidently navigate the complexities of setting up and managing your ApS, ensuring your business is positioned for long-term growth.