Many entrepreneurs and foreign investors visit Denmark for the chances of establishing a company and learning about their company formation, which consists of a procedure primarily distinguished by the forms of companies that can be created. Before building your company, it’s crucial to determine what kind of business would better suit your goals. Once you’ve decided which company is right for your business, the next step is to register it within the Danish Commerce and Companies Agency.
Company Requirements & Registration in Denmark
The process of registering under the Danish Business Authority, customs authorities (VAT), and tax authorities for a new company in Denmark is straightforward. The first step is to prepare the Memorandum of Association for the new corporation, also known as a legal entity. This process must take place in the span of two weeks following the signing of the Memorandum.
The Danish Financial Statement Act pertains to all companies, and the branch in Denmark must provide the annual report of a foreign company to the Business Authority. A/S companies and alike are required to file annual financial statements which must include the profits and losses account, annual report, and the cash flow statement with the balance sheet along with any informative notes. Companies registered in Denmark are taxed at a corporate income tax fee of 22%, with an increased rate of 25% for companies correlated to the gas and oil industries. Specified withholding taxes may be applicable if a double tax treaty exists with the withholding tax on dividends rate at 22% taxation and 15% fee if the company is receiving said dividends owns less than 10% of the company making the payment.
Forms of Legal Entities in Denmark
Every business entity shares its own requirements and advantages; that is why it is essential for investors to read each legal entity and decide which will benefit and suit their company. Take into consideration the intentions of business expansion, available capital, and every other factor going into your company. Below is a list defining each business entity and its advantages in detail.
Danish Public Limited Company
A minimum of one founder is required to establish this company on this condition that it provides a minimum share capital of 500,000 DKK. The shareholders of this company are not personally liable for the company’s commitments. Public Limited Company offers shares to its members or the public.
Danish Private Limited Company
A minimum of one shareholder is necessary to establish this company, regardless of their residency on the condition that they provide a minimum share capital of 80,000 DKK with this amount split into shares. The mentioned shares are not transferable nor negotiable. The shareholder or shareholders of this company are personally liable to the extent of their endowments.
Danish Limited Partnership
A minimum of two partners are required to establish this company; they can be legal entities or individuals. At least one of its partners must be a general one while the other is limited, with limited liability to the extent of their own endowments. Must register with the Danish Trade Register.
Danish General Partnership
A minimum of two members are necessary to establish this company; they can be legal entities or individuals while bearing full personal liability for the company’s commitments. A General Partnership in Denmark must register with the Danish Trade Register.
Danish Sole Proprietorship
This individual is set out to establish their company in Denmark on their own. This member contains full personal liability on the company’s commitments. Said member must register with the tax authorities if some of their business affairs include performing deals with trading or if they have employees.
Branch and Representative Office
The representative office which is suited for research and marketing, exempt of commercial activities and the branch office which is an extension of the parent company performing the same business activities in Denmark are the two additional options for a foreign company with the desire of entering the Danish Market.
