The process of closing a business is a crucial step that necessitates thorough planning and careful execution. No matter the motivation behind the decision to shut down operations, it involves several legal steps and formalities that must be adhered to in order to comply with Danish regulations. Ensuring that these requirements are met is essential for a smooth and lawful closure.
The process of closing a company involves multiple steps and can be quite complex. It is essential to follow the procedure in the correct sequence to maintain access to online systems and prevent any future liabilities related to taxes, duties, or fees. Our team is here to guide you through each stage, ensuring that all formalities are completed in compliance with Danish regulations.
What are the steps to close a company in Denmark?
To initiate the closure of your business, you will need to utilize the Virk.dk platform, where a specific form must be completed. It’s crucial to adhere to particular obligations mandated by the authorities during this process. Ensuring that all requirements are met will facilitate a smoother closing procedure. Moreover, obtaining guidance throughout the process can help prevent potential pitfalls and ensure compliance with regulations.
Closing your business in Denmark requires navigating a series of legal and administrative procedures. Below is an overview of how the process unfolds. It is essential to ensure that all steps are followed meticulously to comply with local regulations.
- Verify liabilities
Ensure that the business has settled all obligations to customers, suppliers, employees, and authorities, such as tax obligations. It is crucial to conduct a thorough review of all contracts and agreements to identify any pending liabilities. Additionally, addressing any outstanding debts will help facilitate a smoother closure process.
- Approval to cease operations
Formal approval for the closure of the business must be obtained from the partners if it is a company, or from the sole proprietor if it is an individual business. It is advisable to document this decision properly to avoid any future disputes or misunderstandings.
- Notify the authorities
The next step involves informing SKAT, the Danish tax authority, regarding the business closure. This notification is restricted to the period between November and September, which is when modifications to your preliminary income assessment can be made. After notifying SKAT about the closure, you can start preparing your tax records, VAT accounts, and documentation regarding capital gains and losses. Additionally, it is essential to report the decision to close the company to relevant authorities, including registration with the Central Commercial Register (CVR).
- Reporting to Erhvervsstyrelsen
It is necessary for companies to notify the Danish Enterprise Authority (Erhvervsstyrelsen) about the liquidation process. This notification can be submitted conveniently online through the Erhvervsstyrelsen website. After submitting the report, the authority will review the information provided and update the official records accordingly.
- Process of liquidation
The liquidation process for businesses involves several key steps. Initially, it requires the preparation of a balance sheet reflecting the company’s assets and liabilities during the liquidation. If necessary, a liquidation audit should also be conducted. Finally, any remaining assets will be distributed after all outstanding obligations have been settled.
- Reporting the cessation of operations
Once the liquidation process is finalized, it is essential to notify Erhvervsstyrelsen about the cessation of the company’s activities. This step ensures that all official records reflect the company’s current status. Additionally, keeping a copy of the notification for your records is advisable for future reference.
- Document retention
In accordance with Danish regulations, it is important to keep all business-related documents for a specified duration, typically five years. This practice ensures that you have access to necessary records for any future inquiries or audits.
Additional steps include ensuring that all taxes have been calculated and settled. It’s also essential to notify suppliers, customers, and business partners regarding the company’s closure. Lastly, don’t forget to report the closure of the company’s bank accounts to the relevant financial institutions.
When closing your business, it is crucial to take the following steps: First, settle your tax accounts and finalize your tax return. Next, review your business tax account to ensure all information is accurate. You should also update your preliminary income assessment as necessary. Filing A-tax and settling final obligations, such as VAT, excise duties, and payroll tax, is essential. Additionally, confirm that you can access your business’s digital mailbox. Finally, make sure to officially close your business on virk.dk.
It’s important to note that if the entrepreneur later decides to reopen the business, they will be assigned the same CVR number they previously had. This ensures continuity and simplifies the process of resuming operations.
How to terminate a limited liability company in Denmark?
A company may be closed for various reasons. In some cases, the owner actively decides to shut down the business, while in other instances, the decision may occur without their involvement. Generally, these reasons can be categorized into distinct groups.
The closure of a business can be categorized into several types, including:
- Forced liquidation resulting from a court order.
- Bankruptcy, which involves proceedings initiated either by the company or its creditors.
- Voluntary closure, determined by the decisions made by shareholders.
- Liquidation based on a statement from the shareholders.
- Restructuring of the business.
When a decision to close a business occurs without the owner’s involvement, it is typically the result of court orders. Several factors can lead to this situation, including:
- The resignation of the Managing Director.
- Failure to submit the annual report within the designated timeframe.
- The absence of a required audit due to the resignation of the auditor, coupled with the inability to appoint a new one.
In cases where a company is dissolved by a court judgment, a liquidator is appointed to evaluate the financial condition of the business. Should the assessment reveal insolvency, bankruptcy proceedings will commence. Conversely, if the company maintains liquidity, it will proceed with a straightforward closure.
Prior to declaring bankruptcy, it is essential for a company to commence legal proceedings. A bankruptcy petition may be submitted by either the company or a creditor. The primary cause for filing for bankruptcy is the company’s inability to meet its financial obligations due to a lack of liquidity. In cases of insolvency, bankruptcy is the inevitable outcome. To prevent any potential liability for directors or restrictions on their activities, it is vital to ensure that all accounting is accurately finalized before the bankruptcy declaration.
One option to prevent bankruptcy proceedings is to decide on restructuring. In this scenario, the court designates an individual to oversee the restructuring process. When a company demonstrates the ability to reorganize its operations and finances effectively to avert bankruptcy, it can seek the court’s approval for restructuring. In these situations, a restructurer will be appointed by the court to manage the entire process.
When a company is solvent, voluntary liquidation becomes an option. This means that the assets of the company exceed its liabilities. A public announcement regarding the liquidation decision must be made, allowing creditors at least three months to submit their claims. Once the liquidation is completed, shareholders are safeguarded from any future claims against the company. The liquidation process is managed by a liquidator, who is often a lawyer. The fees for a lawyer serving as the liquidator generally fall between 10,000 DKK and 20,000 DKK, plus VAT.
Typically, dissolving a limited liability company is a lengthy process, much like voluntary liquidation. However, when a company is closed based on a shareholders’ statement, there is no requirement for a three-month waiting period for creditors to file their claims. It is crucial to keep in mind that if any obligations remain unmet, the shareholders will be responsible for the resulting debt. Therefore, it is essential to ensure that all formalities are completed and that all taxes and obligations of the company are settled appropriately.
To successfully close an ApS company through a shareholder statement, follow these steps:
- Gather financial documents: Ensure you have all relevant invoices and bank statements up to the closure date.
- Complete accounting: Finalize the accounting records up to the closure date to ensure accuracy.
- Submit VAT declarations: File VAT declarations for any outstanding periods through SKAT Erhverv.
- Check employee taxes: Confirm that all employee taxes have been declared on SKAT Erhverv. If there are any estimated amounts on the „Skattekonto,” address these issues promptly and make sure all amounts are paid.
- Deregister the company: Complete the deregistration of the company for VAT and as an employer on VIRK, ensuring all duties and obligations are covered.
- File tax declarations: Submit the tax declaration for the previous tax year via SKAT Erhverv. For the current year, which is the closing year, create a manual tax declaration in PDF format known as „ophørende selvangivelse.” Ensure that any estimated future company income tax payable is set to zero, as estimated income tax installments are made on March 20 and November 20 each year and can be adjusted in SKAT Erhverv. Adjust the tax payment for the current year to reflect the actual company income tax for the closing year, and settle any remaining tax amounts.
- Request a payment statement: Obtain a statement from the tax office, known as „betalingserklæring.”
- Prepare the shareholder statement: Draft the shareholder statement, also referred to as „betalingserklæring.”
- Close the ApS: Finally, proceed to close the ApS on VIRK once you have received both the tax office statement and the shareholder statement.
By following these steps diligently, you can ensure a smooth and compliant closure of your ApS company.
To dissolve or close an ApS, the first step is to determine the appropriate strategy, which will primarily depend on the company’s financial status. In some cases, however, the court may initiate the process, removing the decision from the owner’s control entirely.
When a business is shared among multiple owners, such as in an IVS, ApS, or A/S, the easiest way to close it down could be through a dissolution declaration. This document requires all owners to confirm that any debts have been fully paid and express their decision to shut down the company. Although this is the simplest approach to ending a business, it has the downside that all practical aspects of the process must be handled by the owners themselves, and they remain liable for any creditors that may arise after the closure.
Our role in helping you close your company in Denmark
Whether it’s a company or a sole proprietorship, we will handle all the key actions for you, including:
1. Ensuring continued access to the company’s Digital Post after closure.
Once a company is closed, its NemID becomes deactivated, which ends access to Digital Post. However, the company may still receive messages in Digital Post even after the closure. Therefore, it’s essential to configure access properly before shutting down, so you can maintain the ability to manage the company’s digital mail post-closure.
2. Verifying the company’s tax account.
Prior to closure, it’s important to review the Skattekonto to ensure all payments and reports are up to date. This step allows you to confirm that everything has been properly reported and to prevent overpayment on obligations like VAT or A-tax upon the company’s closure.
3. Completing the closure form.
The next step involves officially closing the business by submitting the necessary forms. Once this is done, you will receive a closing certificate, which could be required in the future for institutions such as banks or unemployment insurance funds. It is important to keep this document safe, as it may be needed in various situations even after the company has been closed.
4. Submit tax reports.
Make sure to file all necessary reports promptly for every period leading up to the closure. Any delay could result in a fine of up to DKK 800. Even if your final report shows 0 DKK for the period, it must still be submitted. Additionally, you need to settle any outstanding VAT, payroll taxes, excise duties, or other obligations to the Danish state before officially closing the business. Failure to do so may result in further liabilities or penalties.
5. Adjustment of advance tax returns.
When shutting down your business, it’s important to adjust the expected profit on your tax return to ensure that you are paying the correct amount of tax. This ongoing adjustment helps avoid overpaying for underpaying taxes, ensuring that your final tax obligations are settled accurately when the business is closed.
6. Prepare the tax statement and submit the oplysningskema.
To finalize the company’s accounts, calculate the profit and loss, and create a tax return for the period starting January 1 until the company’s closure. All items transferred out of the company or sold to others, such as computers, inventory, furniture, vehicles, or machinery, must be included in the profit or loss calculation. It’s important to note that the results on the oplysningskema can only be reported in the year following the business’s closure, with a submission deadline of July 1. Missing this deadline incurs a daily penalty of 200 DKK, capped at 5,000 DKK.
By entrusting us with the closure process, you can focus on your future endeavors without the stress of managing complex formalities. Our team is dedicated to ensuring that all necessary steps are completed accurately and efficiently, protecting you from potential liabilities. Rest assured, we will guide you every step of the way, making the transition as smooth as possible.