Here are the steps to take in setting up a company in Denmark.
Step 1: Choosing a type of legal entity
There are many company structures to choose from. You should choose one that matches your interests and goals. Foreign companies are advised to set up a private limited liability company (Anpartsselskab)
Step 2: company registration
An online registration system ((indberet.virk.dk) is used to register each company with a Central Company Register Number (CVR) in the Danish Business Authority (DBA). The CVR number is used every time in communicating with the public authorities.
Online company registration costs DKK 670.
After signing a memorandum of association, a company should register with DBA within 14 days
To register with DBA, you should have a (NemID) and a digital signature (nemid.nu). These two allow you to access online private and public services in Denmark.
You will need a lawyer to help you with doing the following:
- To transfer DKK 50,000 of share capital to your client account. This money will be held by the lawyer and is considered an operating capital
- Provide details of the executive board and /or board of directors if applicable. This is regardless of their country of residence.
- Memorandum of association and articles of the company
- The ownership structure of the company
Step 3: registration with Danish tax authorities
After registering with DBA, they sand necessary information to the Danish Customs and Tax Administration (SKAT) which collects taxes and VAT.
The company needs to be registered for the following:
- VAT – for companies selling goods and services in Denmark
- Payroll – for companies with VAT exempted services
- Duties – for manufacturers, wholesalers who are subject to duties
- Import/export – for business operating outside the EU
- A-tax – for companies with employees whose tax is deducted from income at source
Step 4: payroll and bank account set up
It is advisable that a Danish accountant or auditor be engaged to help out in filing taxes, bookkeeping, VAT, payrolls, etc.
You also have to have:
- A bank account
- Company reports which include provisions for regulating the power to bind the company who needs accounts
- Ownership structure information
- Copy of memorandum of association and articles
You can also choose to have internet banking. In this case, you will have to provide several documents with information on the number of users, their names and addresses and how they should sign in to the bank, and they will set you up.
Step 5: finding an office location
In Denmark, there are a lot of flexible locations, some of which also come with additional business-in-a-box solutions. Before you get an address, you can use that of your lawyer.
Step 6: taxation and filing requirements for ongoing business in Denmark
Your annual financial statements can be filed by an accounting company.
There are 3 limits, including:
- balance sheet amount which doesn’t exceed DKK 4M
- Net turnover which doesn’t exceed DKK 8M
- Full-time employees not exceeding 12 per financial year. The most common dates for a fiscal year start is January 1st and July 1st
As long as not more than 2 of these requirements are exceeded, an auditor is not necessary.
The following are noteworthy concerning taxes:
- Depending on the company size and wishes, VAT can be filed monthly, quarterly or semi-annually
- Corporate tax is as low as 22%
- The rate of personal income tax is 36% for a marginal income tax rate of up to 52%. This is exclusive of church tax and labor market contributions.
- For foreign researchers, employees paid a minimum annual salary of DKK 764,000 and a flat tax rate of 31% for 5 years or more, there is a possibility of benefiting from a lower tax rate.
- The tax authorities issue an annual summary of taxes paid for all employees based in Denmark for the year.
A company closure or close-down
Different rules apply to downscaling. It is an excellent option to let go of workers.
Closing down, however, requires a liquidation process or termination statement, both of which need a lawyer.