Setting up a business in Denmark
20 October 2009by Ina Dimireva -- last modified 02 June 2012
The formation of companies in Denmark is governed by a number of laws, including the Companies Act, the Private Companies Act, the Act on Certain Commercial Undertakings, the Act on Commercial Foundations and the Act on Commercial Foundations. This is an overview of the process of starting a new business in Denmark.
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Legal requirements
The following laws apply to setting up a company in Denmark:
Act on Certain Commercial Undertakings
Most legislation is governed by EU directives. Regulations on establishing economic interest groups, European limited liability co-operatives and European companies are covered by the following laws:
Act on the European Cooperative Society
If you move to Denmark, you have the right to make use of the services provided by the Danish health care system. This includes free medical assistance.
Danish health insurance for foreigners
Legal forms of business organisation
A wide variety of businesses can be set up in Denmark. The first thing to do is decide which legal form to adopt:
Personally owned one-person operation (sole trader)
Partnership with personal liability of partners
Companies with limited liability:
Private company (Anpartsselskab)
Cooperative society (Andelsselskab)
Company with limited liability (SMBA)
Limited partnership (Kommanditselskab)
Business activities and related rules
There are special rules and training or registration requirements that apply to certain business activities. They apply to:
Shops, hotels, restaurants and catering
Business plans and evaluation
A business plan can be a useful tool when setting up a business. It is a systematic review of the business idea, and contains a description of the basic business idea, financing and market. A business plan is required if you want to apply for financial support from banks, etc.
To succeed, a new business needs a sound commercial strategy and secure financing.
Some standard requirements to be completed when setting up a business are the same as when opening a branch.
Administrative procedures
One-stop shops
The Services Directive is a European law that aims to make life easier for businesses that wish to provide services in the European Union – in their home country or abroad. The Directive defines the rules that apply to entrepreneurs wishing to establish a business or perform temporary services in the EU/EEA area (the 27 EU member states, plus Iceland, Liechtenstein and Norway). It obliges member states to eliminate unnecessary bureaucracy, simplify formalities for businesses and make public administrations more efficient.
For the implementation of the Directive, each member state had to set up ‘Points of Single Contact (PSC)’ , e-government portals which help businesses complete their administrative procedures on-line. The PSCs provide comprehensive information on all administrative matters related to setting up or expanding a services business in a given country. This includes for example:
- Which licences, notifications or permits do I need to obtain to start a business (at home or abroad)?
- What do I need to do when I want to offer my services abroad on a temporary basis?
- What do I need to do to apply for a licence? Which authority is responsible?
- Are the licences subject to a fee? What kinds of deadlines apply?
- Which acts and decrees apply in my sector?
- What do I need to do to establish, for instance, a restaurant or a shop? Or to work as a tour operator in another country without actually setting up a company?
- Where can I turn for personalised advice and further information?
With the PSCs, you no longer need to approach various authorities one by one!! The PSC allows you to find all relevant information and to send in your online applications to the responsible authority through one single contact point, the PSC. You can complete your administrative formalities electronically through the PSC. Just contact the PSC of the country that you want to do business in.
All PSCs are part of the European EUGO network; through a central website you can easily access all PSCs in Europe. Of course, the services of the PSCs are optional. You may always address yourself directly to the relevant authorities, too.
Points of single contact in Denmark
At Virk.dk you can set up a business and find all the forms you will need to make the necessary declarations on behalf of the company. For example, you can submit VAT and other tax declarations here, as well as changing your company information.
Registering a company
Business registration
To start a business, you need to register directly via the Internet portal WebReg.dk, or contact the Danish Commerce and Companies Agency, which will send you a registration form.
Danish Commerce and Companies Agency
All commercial funds must be registered with the Danish Commerce and Companies Agency. The initial capital must be at least DKK 300 000.
Danish Commerce and Companies Agency
Companies must be registered with the Danish Commerce and Companies Agency in Danish. If the company is registered in another language, you must attach an authorised translation. Exceptions may be allowed in special cases for the registration of subsidiaries of foreign companies. A full list of the registration requirements can be found in the Executive Order on Notification, Registration, Fees and Publication, etc. at the Danish Commerce and Companies Agency.
Social security registration
If you want to live and run a business in Denmark, you must have a personal identification number (CPR number). You can apply for this number from the local council where you have your place of residence. The local council will then report the information to the Central Civil Registration System.
Central Civil Registration System
Tax registration
Your business will basically have to pay 25 percent of its revenue as VAT. When you start your business, it will be registered for VAT. VAT can be calculated once a month, every quarter or every six months, depending on the type of business. You will receive a written reminder when it is time to pay VAT. VAT declarations are made to the Danish Tax and Customs Administration (SKAT) or on Virk.dk.
Danish Tax and Customs Administration (SKAT)
How much tax you have to pay depends on both your own personal tax status and the type of business. See Tax for Businesses:
Special procedures
Some business activities require special permits. Some types of business require authorisation, others require a licence and others require special approval. This may be either to regulate the number of players in the sector or to ensure that the work is carried out according to good professional practice.
You must therefore investigate whether the business sector in which you are setting up a business requires special authorisation.
You can usually obtain more information about the authorisations required for your business from your trade association.
You must have a licence to sell alcohol, drive a taxi, run a pharmacy or be a medical practitioner. Licences are usually issued by the local authorities.
Resources
The Virk.dk portal is the business community's digital access point to the public sector. It provides access to 1 300 reports and searches on business-related information from public bodies.
Startvækst (Start-Up Growth) is a portal for entrepreneurs and companies. It contains comprehensive information about starting up, operation and growth.
On borger.dk you can find a lot of the information and forms you will need as a citizen in Denmark.
Source: Your Europe
