ApS company registration in Denmark
A limited liability company (ApS – Anpartsselskab) is the most common form of business in Denmark. The registration process for such a company is simpler compared to other legal forms, and the minimum share capital required for its establishment is DKK 40,000. Denmark’s strategic location between Western and Northern Europe, along with its extensive coastline, provides compelling reasons to invest in the country. If you need support in registering an ApS company in Denmark, we are here to help you.
What is worth knowing about an ApS company in Denmark?
An ApS company has legal personality and is regulated by the Danish Private Limited Liability Company Act. The owners are not liable for the company’s obligations with their personal assets, and the company’s capital is separate from that of the owners. The company must have a designated management and may have a supervisory board of three members. This type of structure is popular among investors who establish small or medium-sized businesses, as well as among foreign investors in Denmark. A mandatory requirement is to register the business with the Danish Commerce and Companies Agency.
To establish a limited liability company, the following are necessary:
- incorporation agreement,
- Articles of Incorporation,
- initial capital of at least DKK 40,000
- registration with the Agency for Enterprise and Trade within two months of signing the incorporation agreement.
Before incorporating the ApS, you must choose a company name. The name should end with „ApS,” which stands for „limited liability company” in Danish. There are no specific rules for the name itself, but you must ensure it is not already in use. You can verify the availability of your chosen name in the Danish Business Registry, which also has an English version of the website for convenience.
To incorporate an ApS, you will need a company address in Denmark. Some clients use their private address in Denmark as the company address, but this is only applicable to Danish residents. While the Danish Business Authority typically accepts this practice, it is not officially permitted.
Securing a Danish business address is a requirement for establishing an ApS company. You must provide the address where your business will be conducted in Denmark. If a permanent office isn’t an option, you can obtain a Danish address using a virtual office service. This alternative is increasingly favored by foreign entrepreneurs starting businesses in Denmark.
We must identify shareholders who own or control 25% or more of the company, as well as the company’s management, in compliance with the EU’s anti-money laundering (AML) legislation. Generally, there are four types of participants in a Danish limited liability company:
- Non-resident individuals: Needed information about that shareholder include name, address and TIN (tax identification number), national ID number, copy of passport, copy of driver’s license or other ID photo, bank statement with name and private address on it.
- Resident individuals: Needed information about that shareholder include name, address, passport and Danish yellow health insurance card.
- Non-resident companies: Needed information about that shareholder include a company extract from the local business authority, articles of association, articles of incorporation, ownership log, identification for shareholders and management.
- Resident companies: Needed information about that shareholder include a company extract from The Danish Business Authority (Registreringsbevis), articles of association (Vedtægter), articles of incorporation (Stiftelsesdokument), ownership log (Ejerbog), identification for shareholders and management.
The minimum share capital in a Danish limited liability company must be at least DKK 40,000. Deposits can be made both in cash and non-cash by depositing assets with the company. The easiest and quickest form of deposit is cash. In the case of a non-cash deposit, you can deposit a car, goods or inventory, for example. This requires the provision of appropriate documents proving the value of the deposited items, which entails higher costs and prolongs the process of forming a company. The cost of the auditor’s services ranges from DKK 5 to 15 thousand + VAT.
Who can manage an ApS company?
The governing body of an Anpartsselskab (ApS) can include one or more directors. Owners can also serve as directors of the company. Directors and owners are not required to be tax residents of Denmark, and the company can have either a single owner or multiple owners. The owners (also referred to as shareholders) can use the share capital to cover company expenses, salaries, and dividends (although dividends can only be distributed after the conclusion of the first fiscal year).
How many shareholders are required for a Danish ApS?
To establish an ApS in Denmark, at least one founder is required. While there can be multiple shareholders, who may be either individuals or legal entities, at least one founder must be a resident of Denmark or another European country. Exceptions to this rule may be granted by the Ministry of Business and Industry. The founders must have full legal capacity and cannot be under guardianship (if they are natural persons). Additionally, they must not be involved in any ongoing or pending bankruptcy proceedings, nor have an application for suspension of payments filed against them.
How is an ApS taxed?
A private limited liability company (ApS) is subject to the standard corporate income tax rate of 22%. However, companies operating in certain sectors, such as the gas and oil industry, are subject to a slightly higher tax rate of 25%.
In Denmark, the standard VAT rate is 25%. Private limited liability companies providing education, insurance, financial services, and passenger transport services are exempt from this tax. A VAT registration threshold of 50,000 DKK is applicable. The VAT return and payment are due monthly for companies with an annual turnover exceeding 50 million DKK. For those with a turnover between 5 and 50 million DKK, the VAT return and payment are due quarterly. If the turnover is below 5 million DKK, the payment and return are required twice a year. It is not mandatory for EU companies to have a fiscal VAT representation in Denmark but it is worth considering. Taking advantage of such a service can greatly streamline the management of any VAT formalities.
How to register an ApS company in Denmark?
Anpartsselskab must be registered with the Danish Enterprise Authority – Erhvervsstyrelsen. The registration process for this company is simple and less costly compared to other legal forms. During registration, incorporation documents (stiftelsesdokument), Articles of Incorporation (vedtægter) and share capital are required. The cost of registration is DKK 670, while the estimated cost of registration by a law firm is DKK 3,000-5,000. The ApS will receive a unique company registration number, or CVR.
To set up a company in Denmark, you need to follow these steps:
Obtain a MitID signature: The MitID can be obtained online at www.nemid.nu. Launched in July 2010, the new MitID is an improvement on the previous Digital Signature.
Deposit startup capital at a bank: A private limited company (ApS) must have a startup capital of at least DKK 40,000. An amount equal to 25% of the share capital, but not less than DKK 40,000, must be paid up in full.
Register the Company with the Danish Business Authority (DBA) Webreg System:
The DBA offers a centralized, one-stop service for business and tax registrations specifically for limited liability companies.
After registering with the Business Authority, the company can also register for VAT and tax purposes with the Danish Tax Authority. Details regarding taxation can be found later in this article.
Three Methods to Register a Company in Denmark
- Online Registration: Using the Danish Business Authority’s online electronic registration system, a new company can be incorporated and ready for business within a few hours. There are no requirements for local shareholders or local resident management.
- Traditional Paper Registration: This method typically takes two to three weeks to complete.
- „Off the Shelf” Companies: These are pre-established and registered companies with no prior activities or operations. They can be acquired and operational within a day.
Due to its speed and cost-efficiency, online company registration is the most commonly used method in Denmark.
A share capital of DKK 40,000 is required to fulfill the formalities. This budget can later be used to cover company expenses, salaries and dividends. Note, however, that this capital cannot be transferred to the private account of the owner or owners, but must be placed in a company bank account.
Within 8 weeks of the establishment of the ApS company, it must also be registered with the Trade and Enterprise Agency.
Export and Import Registration Requirements in Denmark
A company must be registered for export if it intends to export goods from Denmark to EU member states. If the company is registered as an importer in Denmark, it must also register as an exporter, as any return of goods is considered an export. To import goods from outside the European Union into Denmark, a company must be registered for import. Upon registration, the company will receive an EORI number, which identifies it as an importer within the EU. Additionally, the entrepreneur must decide on a method for paying import duties, with most companies opting for the credit program offered by SKAT. For trade within the EU, companies must also comply with Intrastat reporting requirements, which involve submitting detailed declarations of the goods imported or exported between member states. This system helps ensure accurate trade statistics and compliance with EU regulations.
Advantages of running a company in Denmark
In Denmark, the formalities for establishing a company are among the least burdensome in the world. Company registration is quick and does not involve high administrative costs. The biggest advantages of an ApS company in Denmark are:
- Free market and free competition: No restrictions on doing business.
- Equal rights for foreign companies: Foreign companies have the same rights and obligations as Danish companies.
- Low income tax: Corporate income tax is 28%, a low rate compared to other European countries.
- Low social security burden: Employers’ burden on social and health insurance is only 1% of the wage fund, one of the lowest rates in OECD countries.
- Simple formalities: Registering a company is quick and involves minimal administrative costs.
The flexibility and ease of incorporation make this legal business structure one of the most commonly used forms. It can accommodate almost any type of activity and can also function as a holding company or a special purpose vehicle. However, an example of an activity in which an ApS cannot be used is the banking industry.
