Everything You Need to Know About Starting a Business in Denmark
Denmark has become a highly popular destination in Scandinavia among entrepreneurs and innovators looking to start a new business. The country boasts one of the fastest and quickest procedures to set up a company.
In case you are keen on starting a business in Denmark, you will be surprised to learn that you can do the entire setup online and complete the procedures within a day. Furthermore, in Denmark, there is no hard and fast rule that the company should be managed by Danish. So, foreigners can easily start their business without any hassles or restrictions. The country accepts documentation in English, and that is why Denmark is considered one of the most business-friendly nations in the EEA for foreigners.
Types of Businesses You Can Open in Denmark
Before starting a business in Denmark, it is essential to know the different types of businesses you can start. Once you have the basic knowledge, you will be better positioned to choose the right type of business.
- Private Limited Company: Also known as ApS (Anoartsseskab), a private limited company in Denmark can be started with a single shareholder. However, there is a minimum capital requirement, which is DKr80,000. The shares in this type of business are non-negotiable and non-transferable and a shareholder is liable just for the amount they invest in the company.
- Public Limited Company: Here, the minimum capital requirement is DKr500,000 and shareholders are not responsible for company debt. The shares can be listed on the stock exchange or even distributed among the shareholders.
- General Partnership: This type of business is known as Interessentskab in Denmark. It should have a minimum of two partners, who are held responsible for the company’s debt and liabilities. The company and the partnership have to be registered at the Danish Trade Register.
- Limited Partnership: This type of company should have at least two business partners, with one partner having limited liability. The business has to be registered with the Danish Trade Register.
- Sole Proprietorship: As the name suggests, a single person can set up this business. The difference is the single owner assumes complete liability of the business. In case the company has employees or resorts to trading, it has to be registered with the Danish tax authorities.
It is prudent to remember that Denmark has a corporate tax of 22%. However, the tax can vary depending on the kind of company you start and the obligations you have.
How to Start a Business in Denmark
While starting a business in Denmark is easy and quick, there are a few steps that you need to follow to successfully launch your business in the country.
Select the Right Business Type:
You need to choose the right type of business before you can start it. Most business people and entrepreneurs opt for a private limited company as it accords them the maximum protection.
Register with the Danish Business Authority:
You can go online to the Danish Business Authority website and register so that you get a CVR number. This website is in Danish, but using an online translator will enable you to understand the registration process. The fee for registration is DKr670. In addition, you will need a NemID, which is a digital signature. You will receive it once you receive your work or residence permit.
In case you do not have a NemID, get in touch with an experienced lawyer who can help you set up your new venture without this digital signature. In case you use a lawyer, you will need to submit a host of documents, proof of share capital, names of board members and their passport copies, memorandum of association, articles of association, and ownership structure.
After registering with the Danish Business Authority, you will receive the details for the Danish Customs and Tax Administration or SKAT, which is responsible for tax collection in the country. SKAT also provides businesses with tax advice.
Depending on the type of business you intend to operate, you may have to register for one or all the following types of taxes:
- VAT: In case you sell goods and generate revenue that is more than DKr500,000
- Payroll Tax: In case your business is exempt from VAT
- Duties: If your business is into manufacturing or it handles wholesale goods
- Import and Export Taxes: If you are doing business with non-EU nations
- A-Tax: If your company has employees
Contracts for Employees
If your business hires foreigners or locals, remember they will require employment contracts. You can consult a lawyer to create employment contracts for different employees, based on their hierarchy in the organisation.
If you hire staff from EEA, they will not require work permits. However, employees from non-EEA nations will not only require work permits but also residence permits to be able to work legally in Denmark.
Other Things to Keep in Mind
It is necessary to insure your business in Denmark along with the assets and employees. Hence, consult a reputable insurance broker so that you can get a policy that is right for your business. You can also find different financing sources in the country, including venture capitalists, private investors, banks, institutional investors and public incentives.
Starting a business in Denmark is as easy as it gets. If you follow the aforementioned steps, your Danish business will be up and running within no time.
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