Establishing a Danish ApS company

If you’re thinking about starting a business in Denmark, it’s important to understand how Danish limited liability companies, or Anpartsselskab (ApS), work. This type of business entity is quite popular among both local and international investors looking to start small to medium-sized enterprises. One big reason for its appeal is the limited liability protection it provides, which means that owners aren’t personally responsible for the company’s debts. Plus, the registration process with the Danish Commerce and Companies Agency is pretty straightforward, making it easier for entrepreneurs to get started.

If you need help with registering your ApS in Denmark, our team is here to assist you every step of the way. We provide thorough guidance to ensure that all legal requirements are met smoothly and efficiently.

Key information about ApS companies in Denmark

The most prevalent type of business entity in Denmark is the limited liability company (ApS - Anpartsselskab). Registering the business with the Danish Commerce and Companies Agency is a compulsory step. This structure is favored by both local and foreign investors looking to create small or medium-sized enterprises.

The legal personality of an ApS company is established under the Danish Private Limited Liability Company Act. Owners enjoy protection from personal liability regarding the company's obligations, as the company's capital is kept separate from their personal assets. This structure encourages entrepreneurship by allowing individuals to invest in businesses without risking their personal wealth.

Establishing an ApS in Denmark requires a minimum of one founder, who must possess full legal capacity and cannot be under guardianship if they are an individual. Furthermore, founders should not be currently involved in bankruptcy proceedings or have any applications for suspension of payments against them. Although multiple shareholders are allowed, with the option for both individuals and legal entities, at least one founder must reside in Denmark or another European nation. The Ministry of Business and Industry may provide exceptions to this requirement.

An Anpartsselskab (ApS) can be managed by one or more directors, with owners having the opportunity to also serve as directors. There is no requirement for either directors or owners to be tax residents of Denmark, providing greater flexibility in ownership arrangements. Moreover, the company can be formed with a single owner or multiple owners, depending on the specific goals of the business.

To establish a Ltd in Denmark, the required minimum share capital is DKK 20,000. Acceptable deposits can be made in both cash and non-cash forms, with cash being the most straightforward and expedient option. Non-cash contributions can include assets such as vehicles, inventory, or goods; however, these require appropriate documentation to verify their value, which may increase costs and prolong the company formation process. The owners, also referred to as shareholders, can utilize this capital for various expenses, including salaries and dividends, although dividends may only be distributed following the end of the first fiscal year.

A designated management team is required for the company, and it may also establish a supervisory board consisting of three members. This structure helps ensure proper governance and oversight of the company's activities. Additionally, having a supervisory board can provide valuable guidance and support for strategic decision-making. Furthermore, the presence of both management and a supervisory board enhances accountability within the organization.

In accordance with the EU's anti-money laundering (AML) regulations, it is essential to identify shareholders who possess or control 25% or more of the company, as well as the management team. A Danish limited liability company typically involves four categories of participants:

• Residents of Denmark: For these shareholders, the required information encompasses their name, passport details, address and the Danish yellow health insurance card.
• Domestic companies: Essential documentation includes a company extract from The Danish Business Authority (Registreringsbevis), articles of association (Vedtægter), articles of incorporation (Stiftelsesdokument), an ownership log (Ejerbog), and identification for both shareholders and management personnel.
• Non-resident individuals: Required information for these shareholders includes their name, address, tax identification number (TIN), national ID number, a copy of their passport, a driver’s license or another official photo ID, and a bank statement that shows their name and private address.
• Foreign Companies: For these entities, necessary details involve a company extract from the local business authority, articles of association, articles of incorporation, an ownership log, and identification for shareholders and management.

The standard corporate income tax rate for a private limited liability company (ApS) is set at 22%. In contrast, businesses involved in specific industries, including the gas and oil sector, face a marginally elevated tax rate of 25%.

While it is not mandatory for EU companies to obtain fiscal VAT representation in Denmark, it may be advantageous to do so. Engaging such services can greatly ease the management of VAT-related formalities. Additionally, private limited liability companies offering education, insurance, financial services, and passenger transport are exempt from this tax.

Perks of running a company in Denmark

The process of establishing a company in Denmark is recognized as one of the least cumbersome globally. Quick company registration comes with minimal administrative expenses. Among the primary benefits of an ApS company in Denmark are:

• Innovative business environment: Denmark encourages innovation and entrepreneurship through various grants and support programs available for startups and established companies alike.
• Streamlined processes: The registration of a company is efficient, requiring little administrative effort.
• Competitive corporate tax rate: At 28%, the corporate income tax is relatively low compared to other countries in Europe.
• Strong legal framework: The Danish legal system is stable and transparent, offering robust protection for businesses and investors.
• Minimal social security costs: The employer's contribution to social and health insurance is just 1% of the wage fund, ranking among the lowest in OECD nations.
• Access to a skilled workforce: Denmark boasts a highly educated and skilled labor pool, making it easier for companies to find qualified employees.
• Equal treatment for foreign firms: Foreign companies enjoy the same rights and responsibilities as their Danish counterparts.
• Well-developed infrastructure: The country has an efficient transportation network and modern digital infrastructure, facilitating smooth business operations.
• Unrestricted market and competition: Businesses face no limitations on their operations.
• Sustainable business practices: Many Danish companies prioritize sustainability, aligning with global trends and consumer preferences for eco-friendly practices.

How to establish an ApS company in Denmark?

Establishing this type of company involves a more straightforward registration process than other legal structures, with a minimum required share capital set at DKK 20,000. Registration must be completed with the Danish Enterprise Authority, known as Erhvervsstyrelsen. This simplicity encourages many entrepreneurs to start their businesses in Denmark. Additionally, the process can often be completed online, making it even more accessible for potential business owners.

Establishing LLC in Denmark requires several essential documents and actions. Among these are the articles of incorporation and the incorporation agreement. It is also necessary to register the company with the Agency for Enterprise and Trade within two months after signing the incorporation agreement. Additionally, an initial capital of at least DKK 20,000 must be provided.

Incorporating an ApS necessitates having a business address located in Denmark. The address provided should be where your business activities will take place. While some clients may choose to use their personal residence as the company address, this option is only available to Danish residents. Although the Danish Business Authority generally allows this practice, it lacks official endorsement. For those unable to establish a permanent office, utilizing a virtual office service to secure a Danish address has become a popular choice, especially among foreign entrepreneurs launching ventures in Denmark.

Selecting a company name is a prerequisite before incorporating the ApS. While there are no strict regulations governing the name, it is essential to confirm that it is not already being utilized by another entity. To check the availability of your desired name, you can refer to the Danish Business Registry, which conveniently offers an English version of its website. Additionally, the name must conclude with “ApS,” signifying “limited liability company” in Danish.

For a company to import goods into Denmark from outside the European Union, it must first be registered for import activities. Once registered, the business will obtain an EORI number, which serves as its identification as an importer within the EU. Furthermore, entrepreneurs need to choose a payment method for import duties, with the majority opting for the credit program provided by SKAT. If a company plans to export goods from Denmark to other EU member states, it must also register for export. It's important to note that if the company is already registered as an importer in Denmark, it must register as an exporter as well, since returning goods is classified as an export.

When conducting trade within the EU, companies are required to adhere to Intrastat reporting obligations. This involves providing detailed declarations regarding the goods that are imported or exported between member states. Such a system is essential for maintaining accurate trade statistics and ensuring compliance with EU regulations. Proper Intrastat reporting not only facilitates transparency in trade but also helps in monitoring economic activities across the EU.

Establishing a company in Denmark involves several steps, including:

1. To begin the process of setting up a company in Denmark, securing a MitID signature is essential. This digital signature can be easily obtained online at www.nemid.nu. Launched in July 2010, the MitID system offers improved functionality compared to its predecessor, ensuring a more secure method for authenticating your identity.

2. To establish a private limited company (ApS), a minimum startup capital of DKK 20,000 is required. It is necessary to fully pay in at least 25% of the total share capital, ensuring that this amount meets or exceeds the DKK 20,000 threshold. This initial capital can be utilized later for various company expenses, salaries, and dividend distributions. However, it's important to remember that this capital must be deposited into a company bank account and cannot be withdrawn for personal use by the owner or owners.

3. To initiate the company registration process, you will need to utilize the Webreg System provided by the Danish Business Authority (DBA). This platform serves as a centralized, one-stop solution for handling business and tax registrations specifically designed for limited liability companies. By using this system, you can streamline your registration process and ensure compliance with Danish regulations. Additionally, the DBA offers guidance and resources to help you navigate the requirements efficiently.

   The second option is traditional paper registration, which typically takes around two to three weeks to complete. Finally, there are "off the shelf" companies, which are pre-registered businesses with no prior activities. These companies can be acquired and become operational within a single day. In Denmark, the preferred method for registering a company is online due to its affordability and quick processing time.

4. Once the company has been registered with the Business Authority, it can proceed to register for VAT and tax purposes with the Danish Tax Authority. This registration is crucial for businesses whose annual turnover exceeds the specified threshold, as it enables them to comply with VAT regulations. Furthermore, maintaining accurate records of transactions will facilitate the filing of tax returns and ensure compliance with local tax laws.

Registration with the Trade and Enterprise Agency must occur within eight weeks following the establishment of the ApS company. The fee for this registration is DKK 670, whereas utilizing a law firm for the registration process is expected to cost between DKK 3,000 and DKK 5,000. Upon completion, the ApS will be assigned a unique company registration number, known as a CVR number.