If you plan to start a business in Europe, Denmark is an excellent choice for registering your company. 

The Manimama team has conducted in-depth research, analyzed the main subtleties of incorporating in Denmark, and is ready to share its results and help you choose the right jurisdiction. 

What are the main advantages of incorporating a company (business) in Denmark?

1. Promising location

Denmark is located at the crossroads of major trade routes between Northern and Western Europe. With its proximity to markets such as Germany, Sweden, and Norway, and access to the Baltic Sea, Denmark provides easy access to Northern European countries and the European Union. These factors make Denmark an ideal location for companies seeking swift and efficient entry into European and global markets.

2. Stable economy and transparent legal system

The country is known for its stable economy, which provides a favorable environment for doing business. Additionally, the transparent and predictable legal system guarantees reliable protection of entrepreneurs’ rights and minimizes risks related to legal matters.

3. Favorable tax system

Denmark offers entrepreneurs competitive tax rates, making it attractive to investors worldwide. Moreover, the country has signed numerous double taxation treaties, which minimize tax obligations for international companies. This allows for effective financial planning and increased profits, which is a crucial factor for the long-term development of a business.

4. Ease of company registration process

Denmark consistently holds high positions in rankings for ease of doing business due to efficient bureaucracy and minimal administrative barriers. The process of registering a company in Denmark can be completed online through the Central Business Register (CVR) and the documentation required is minimal. Foreign entrepreneurs are welcome and there is no requirement to have local directors or shareholders, making it easy for international businesses to set up companies.

5. Highly skilled workers

Denmark ranks among the countries with the highest standard of living in the world, which helps attract highly skilled professionals. The high level of education and professional training for workers ensures companies access to competent and motivated employees. This increases productivity and the quality of services or products, which is a crucial factor for the successful development of a business.

6. Supportive business environment

The country actively supports innovative projects and tech startups, creating a favorable environment for entrepreneurs looking to develop new ideas. There are numerous funding and innovation support programs in Denmark, enabling companies to quickly implement cutting-edge technologies and expand their capabilities. This also contributes to the growth of the IT sector and attracts investment in high-tech industries.

How to register a company in Denmark and what are the main requirements for such registration?

Step 1. Initial setup

• Initiating a preliminary project assessment, assessing risks, choosing the type of company, preparing the necessary documents and obtaining the necessary permits, determining the time frame, budget, and resources required to complete the process
• Preparation and filing of the package of documents

Step 2. Company registration

• Verification and reservation of the company name at the Danish Enterprise Authority
• Facilitating the notarial process for the company’s official registration
• Opening a bank account and depositing a minimum of DKK 40,000 (approx. €3,630) of the share capital
• Incorporating the company’s data into the Danish Enterprise Authority
• Obtaining the Certificate of incorporation, Memorandum and Articles of Association
• Registering for tax purposes with the Danish Customs and Tax Administration (SKAT); companies that need to register for VAT perform a separate registration
• Obtain a business license or permits (if applicable)

Requirements for registering a company in Denmark on the example of a Private Limited Liability Company / Anpartsselskab (ApS):

• Shareholders: the company must have minimum 1 shareholder.
• Director: the company is required to have at least 1 director and member of the board. Directors can be of any nationality and reside anywhere in the world.
• Company secretary: no requirement.
• Minimum share capital: the required share capital is DKK 40,000 (approx. €3,630).
• Legal address: the company should have its office address in Denmark.
• Liability: it is limited to the extent of one’s contribution.
• Accounting: the company must keep accounts and submit its annual report digitally every year. Annual reports must be submitted to the Danish Business Authority on VIRK no later than six months after the end of the fiscal year. In addition, the company must be audited, if any 2 of the following 3 criteria are met:
  • the company’s balance reaches DKK 4 million
  • annual turnover exceeds DKK 8 million
  • has more than 12 full-time employees

What do you have to know about taxes when registering a company in Denmark?

Corporate income tax (CIT):

• The standard rate is 22%.
• Corporate income tax is payable on March 20 and November 20 of each year.
• The CIT return is filed digitally via the Danish Tax Authorities’ digital tax platform.
• Resident companies must file an annual corporate income tax return, the deadline for which is six months after the end of the financial year.

Personal income tax (PIT):

• Taxation structure in Denmark for individuals employs a progressive income tax rate and is composed of different types of taxable income.
• State income tax – 12.06% is imposed on the total taxable income exceeding DKK 49,700 (approx. €4,511). Personal income that exceeds DKK 588,900 (approx. €53,451) plus positive net capital income in excess of DKK 50,500 (approx. €4,583) is taxed at a rate of 15%.
• Local income tax – the average municipal tax rate is 25.067%. The average church tax is 0.648%.
• Share income tax – net share income up to DKK 61,000 (approx. €5,536) is taxed at a rate of 27% and any exceeding net share income is taxed at 42%.
• Tax residents in Denmark and non-residents must file an annual Danish tax return. The return deadline is either May 1st or July 1st in the year following the relevant fiscal year, depending on the individual’s specific circumstances.

Value-added tax (VAT):

• The standard rate is 25%.
• If ApS turnover is expected to exceed DKK 50,000 (approx. €4,538) in a 12-month period, the company must register for VAT with the Danish Tax Agency.
• Some business activities are exempted from VAT: hospital, medical and dental care, insurance, banking, and certain financial activities.
• The deadline for filing and payment of VAT is 60 days after the VAT period. Monthly VAT declarations must be filed and paid no later than the 25th in the month after the VAT period.

For readers 

Manimama provides services to help you choose the right jurisdiction for your company’s incorporation, as well as to register your business in Denmark and create a strategic framework for its successful operation and development in the long term. We have a good understanding of the tax and legal peculiarities of specific jurisdictions, which helps our clients make an informed choice based on their unique needs and development strategies. In our work, we take into account factors affecting the business environment, such as the level of competition, access to financial and human resources, as well as opportunities for further growth and development in different jurisdictions. 

By choosing our company formation service in Denmark, you are working with a law firm that values integrity, competence, and client satisfaction. Let us help you set up a company in Denmark and pave the way for your business success!

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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.