ApS Denmark

When starting a business in Denmark, choosing the right legal structure is a crucial decision, and one of the most popular options is establishing a private limited company (ApS). This form combines stability with flexibility, offering numerous benefits for both domestic and international entrepreneurs. In this article, we will cover the essentials of setting up and managing a Private Limited Liability Company in Denmark, including capital requirements, responsibilities of owners and board members, as well as tax and employee-related matters. If you’re planning to start a business in Denmark, take advantage of Radner’s expertise to guide you through every step of setting up and running your ApS.

ApS in Denmark: Combining stability with flexibility

An "anpartsselskab," commonly abbreviated as ApS, is one of the most popular types of limited liability companies in Denmark. This legal structure is particularly appealing to entrepreneurs, as it requires an initial financial contribution in the form of cash or assets. This ensures that the company begins with adequate capital, providing a stable foundation for its operations from the outset.

One of the standout features of an ApS is its limited liability structure, which offers significant financial protection to its owners. In this setup, the personal assets of the owners are safeguarded, meaning they are not held responsible for the company's debts beyond their initial investment. This level of security plays a key role in making the ApS model a preferred choice among business owners in Denmark.

By balancing financial protection with operational flexibility, the ApS model fosters an environment where businesses can thrive with reduced personal financial risk. This structure not only supports entrepreneurs in pursuing their ventures but also contributes to the overall growth of the Danish economy by encouraging innovation and business development.

Advantages of Danish Private Limited Liability Company

A private limited company (ApS) is one of the most favored business structures in Denmark, known for its adaptability and the financial security it provides through limited liability. Functioning as a separate legal entity, an ApS has its own legal identity distinct from its owners. One of the primary benefits is that shareholders' liability is confined to the capital they contribute, offering strong protection for personal assets. This feature is particularly attractive to entrepreneurs aiming to grow their businesses without risking their personal finances.

This flexible model suits both individual entrepreneurs and investor groups, striking an effective balance between financial security and the adaptability required to navigate evolving market conditions. Establishing an ApS begins with an initial capital contribution of at least DKK 20,000, forming the financial backbone of the company. An additional registration fee of DKK 670 covers administrative formalities. Designed for efficiency, the registration process allows businesses to get up and running quickly. To ensure operational transparency, an ApS must maintain detailed financial records and submit annual reports electronically.

Ownership in an ApS can be held by a single person or shared among multiple parties, which may include private individuals and corporate entities. A comprehensive ownership register documents the distribution of shares, financial liens, and collateral linked to company assets. This detailed register promotes transparency, offering regulators and stakeholders a clear view of the company’s financial health. Furthermore, the Companies Act requires an ApS to have a board of directors overseeing its daily operations. The board’s structure can be tailored to fit the company's needs, and ownership details, agreements, and liabilities must be meticulously recorded to ensure compliance with legal requirements. This thorough documentation enhances financial credibility and reinforces the company's stability in the eyes of creditors and regulators.

The legal independence of an ApS

The ApS (anpartsselskab) structure in Denmark offers several key advantages for entrepreneurs and investors. From legal protection to tax efficiency, this model provides both flexibility and security, making it an attractive option for business operations.

1. Legal entity status:
One of the significant advantages of an ApS is its recognition as a separate legal entity. This means that the company can:

• Own assets independently,
• Enter into many contracts and obligations,
• Engage in transactions,
• Exercise legal rights without affecting its shareholders personally.
• This legal distinction allows for greater operational flexibility, enabling the company to function more effectively and autonomously.

2. Protection of shareholders:
Another important aspect of the ApS structure is the protection it provides to its shareholders. The legal separation ensures that:

• Shareholders' personal assets are shielded from the company’s financial liabilities,
• Their liability is limited to the capital they’ve invested in the company.
• This protection helps mitigate personal financial risk, making the ApS a secure option for entrepreneurs and investors alike.

3. Tax efficiency:
An ApS also offers significant tax advantages. The corporate tax rate is generally lower than the individual income tax rate, which means:

• Companies can reduce their expenses related to purchases, investments, and other business activities,
• Operating through an ApS often proves to be more cost-effective than doing so as an individual.
• This tax benefit can be particularly useful when managing larger-scale transactions or operating in multiple areas of business

4. Optimized tax planning:
The ApS structure facilitates efficient tax planning and offers opportunities to minimize overall tax liabilities. Companies can for example:

• Implement accounting strategies designed to reduce operational costs,
• Leverage tax strategies that maximize profits and minimize tax burdens.
• This flexibility in tax planning helps many businesses remain financially efficient and competitive in a dynamic market.

Requirements for establishing an ApS

Establishing a limited liability company (ApS) in Denmark involves different criteria for founders depending on whether they are individuals or legal entities. It’s essential to note that sole proprietorships cannot form an ApS, as they are not recognized as legal persons under Danish law.

For individual founders, the requirements are straightforward: they must be at least 18 years old, not under legal guardianship, and not incapacitated. Additionally, they must not be involved in the bankruptcy or restructuring of another company.

Legal entities, however, face more detailed conditions. To qualify, the entity must have legal capacity, meaning it cannot be in the process of incorporating another company. It must also be free from any ongoing restructuring, bankruptcy, or compulsory liquidation, and must be capable of acquiring rights, entering legal agreements, and assuming obligations. However, a legal entity undergoing voluntary liquidation can still establish a new company.

How to set up LLC in Denmark

In Denmark, there are three primary methods for registering a company, each offering different levels of speed and convenience:

• Online registration: The most efficient and cost-effective approach, enabling the company to be set up and operational the fastest, within a few hours.
• Paper registration: A more traditional option, typically taking longer - two to three weeks to complete.
• Purchasing a pre-registered company: These ready-made entities are already registered but have not conducted any activities. They can be activated within one day.

The company formation process can also be simplified by using a lawyer's client account (klientkonto) for the share capital deposit. This step ensures that the payment is handled smoothly. Once the company is formed, the share capital can be used for operating expenses, such as salaries and dividends, but cannot be transferred to the personal accounts of the founders.

Starting a private limited company (ApS) in Denmark involves several key stages. The first step is to draft the incorporation document and Articles of Association, which must be signed by the founders. This process can be done electronically, and once signed, the relevant documents must be submitted to facilitate the payment of the minimum required share capital of DKK 20,000.

Once the share capital is secured, the next step is to register the company on the Danish Business Authority's (DBA) digital platform, virk.dk. During registration, the incorporation document, Articles of Association, and proof of the capital deposit must be submitted. It's crucial to complete this step within 14 days of signing the incorporation document to avoid invalid registration. A fee of DKK 670 is also required for registration.

After the company is registered, the Danish Enterprise Authority issues a unique identification number (CVR), which officially establishes the company. At this stage, the founders need to open a business bank account where the share capital will be deposited. The CVR number, company ledger, and identification for at least one owner will be required to open the account. Banks may also request a business plan during the account setup process.

For businesses engaging in international trade, additional registration steps apply. Companies importing goods from outside the EU must register for an EORI number, which acts as a unique EU-wide identifier for importers. Additionally, businesses exporting goods to EU countries need to complete export registration, and those involved in intra-EU trade must comply with Intrastat reporting requirements to ensure conformity with EU trade regulations.

Opening a Limited Liability Company in Denmark for international entrepreneurs

Starting a limited liability company (ApS) in Denmark is possible for non-citizens, as long as certain conditions are met. Foreign nationals can easily run their own businesses in Denmark, facing few obstacles along the way.

To register an ApS, applicants must submit the required documents through Virk.dk, Denmark's online platform for business registration. This includes a passport copy for identity verification, along with proof of the applicant's residential address and identification number from their home country. If the business is owned by another company, a registration certificate in either Danish or English is also necessary.

The type of business activity plays a crucial role in determining eligibility. Individuals without a Danish personal number (CPR) may face restrictions when forming limited liability companies like an ApS or an A/S. On the other hand, those who possess a CPR number may also choose to operate as sole proprietors.

Additionally, having a registered business address in Denmark is a key requirement. This is necessary for legal company registration and to conduct operations, regardless of whether the entrepreneur resides in Denmark or abroad.

Denmark is known for being business-friendly, offering great opportunities for international entrepreneurs. It's important to understand Danish laws and regulations thoroughly, and consult experts when needed to ensure compliance before launching the business.

Selecting the right name for your ApS

Choosing the right name for your new ApS company requires considering several key factors:

• It should clearly reflect the company's purpose and activities to avoid confusion for customers and business partners.
• To prevent any conflicts, the name must be unique and not too similar to any other registered businesses in the Central Company Registration (CVR). Ensure that it is neither identical nor too close to another company's name.
• It’s also crucial to include the company’s legal structure in the name, making it clear that it is a limited liability entity. This helps establish its legal status for potential partners.
• Be careful not to use names, trademarks, or intellectual property owned by others.

If your company intends to operate multiple brands, these names should be registered with the CVR and included in the articles of association. For consistency, the main name should appear in all official communications, business documents, and online platforms. When creating a website, ensure the registered office and CVR number are included alongside the main company name for easy identification. Lastly, if the company’s core activity changes significantly, updating the name may be necessary.

Determining the industry for your ApS

Selecting the right industry code is a crucial step when registering a Danish limited liability company, as it defines the business activities. The industry code for the primary activity, which brings in the highest revenue, must be chosen with care.

This decision not only impacts the business at its inception but also plays a role as the company grows or shifts focus. If a secondary activity starts generating more income, the primary industry code must be revised accordingly.

For companies operating in several sectors, it is possible to register up to three additional industry codes. While it’s not mandatory to register them, it becomes required if the secondary activity accounts for at least 10% of the total turnover and generates a minimum of 300,000 kroner annually. Even without meeting these conditions, companies can still voluntarily register extra industry codes.

It’s important to remember that this choice influences various legal obligations, including VAT and tax duties, so the industry code should be updated if the company’s main focus changes over time.

ApS formation costs

Registering an ApS in Denmark involves varying costs depending on your chosen approach. Opting for online registration can help minimize expenses if you handle the process independently. However, seeking professional assistance from a lawyer or accountant adds extra costs, generally starting at 1,500 kroner or more. The fees can increase if the shareholders' agreement is complex, particularly when multiple stakeholders are involved. Additionally, if the initial capital isn't contributed in cash, professional service fees may be higher.

Several key expenses come with establishing a limited liability company (ApS) in Denmark. You'll need to pay a registration fee of DKK 670 to the Danish Business Authority, along with a mandatory minimum capital investment of DKK 20,000 to officially register the company.

Verifying the initial capital is an essential part of the registration process, often requiring professional assistance. It’s also wise to budget for any unexpected needs during the process, which may involve seeking specialist support.

Capital contribution requirements

In an ApS, shares represent ownership in the company and can be distributed as needed, typically with a nominal value of DKK 1 per share. Shareholders are entitled to receive dividends if the company generates profits, although they also have the option to reinvest those profits. However, despite the company's growth and higher profits, the share capital remains fixed. For example, if the initial share capital is DKK 20,000, this amount will stay the same, while the value of each individual share increases as the company’s assets and profits grow.

Beyond the minimum required contribution of DKK 20,000, additional capital can be injected into the company. One option is to establish a capital premium, where the nominal share capital remains DKK 20,000, and any extra investment is placed into the company’s free reserves. Alternatively, funding may come from a personal loan to the company, which is tax-exempt in certain situations. However, a promissory note should be drawn up to document the loan.

Typically, all shares in an ApS carry equal rights, but the articles of association may allow for the creation of different share classes. These share classes can assign distinct rights to shareholders, such as prioritizing dividend payments for a particular class. The articles must clearly outline these differences and the associated rights.

Different capital classes in an ApS

In Denmark, limited liability companies can categorize equity shares into different classes to adjust the rights attached to them. These classes can include:

• Class A: Provides more voting power.
• Class B: Offers fewer rights.
• Class C: Typically represents shares with the lowest value.

The creation of these classes allows companies to assign varying rights, such as:

• Different voting powers at general meetings.
• Priority for share purchases.
• Profit distribution preferences.

This structure enables companies to tailor shareholder rights to meet the preferences of their investors and owners.

Each class and its associated rights must be clearly defined in the company's articles of association. If shares haven’t been divided previously, the proposal to create different classes must be presented at a general meeting and approved through a vote.

For example, a company wishing to attract passive investors may offer shares from a lower class, like Class B, which carry no voting rights. This ensures that decision-making power stays with active owners, such as the managing director.

Confirming capital for your ApS

To verify that the required capital has been properly deposited and is available at the time of company registration, approval of the capital is required. This can be obtained through a bank or a lawyer. Typically, banks charge a fee of up to DKK 4,000 plus VAT for this service, with the bank confirming the availability of funds by stamping and signing the payment.

Alternatively, capital approval can be arranged through a lawyer’s client account. In this case, the funds are held in a separate account until the company is formed, at which point the lawyer will transfer them to the newly established business. Some law firms may include capital approval as part of their company formation package, potentially saving you the bank fee.

The minimum capital requirement for establishing an ApS in Denmark is DKK 20,000. This amount can be provided either in cash or as non-cash assets, such as vehicles, industrial equipment, or tools. However, non-cash contributions must hold actual economic value, while services are not acceptable. If you don't have the full amount in cash, you can still meet the capital requirement by contributing assets of equal value.

Capital approval is essential because it confirms that the required funds are available. The method of obtaining approval can vary, and each option may come with different costs. It’s crucial to assess all available options and choose the one that works best for your circumstances.

Financial programs for aspiring ApS founders

Thinking about starting your own limited liability company (ApS) in Denmark? Two options that could significantly benefit your savings are the Founder’s Account Program and the Entrepreneur’s Program. These special accounts offer tax advantages, making them great choices for future business funding.

Here’s a breakdown of both options:

• Founder’s account program: Ideal for individuals with a lower tax rate, offering a tax deduction of approximately 27%.
• Entrepreneur’s program: A better fit for those taxed at the highest rate, providing a larger tax break of around 52%.

Both programs can be used to cover the costs of establishing your limited liability company. However, the eligibility for these programs, such as being considered a “founder,” and the detailed rules regarding amortization can be complex. It's recommended to consult an experienced accountant to help you navigate these regulations and determine the best option for your needs.

Ultimately, your choice between these two programs will depend on your personal tax situation. By contributing to these accounts, you can save for your business’s setup while benefiting from significant tax relief.

ApS formation document

To set up a Danish private limited company (ApS), the founders need to sign an incorporation document, which is essential for the company’s registration. This document can include both mandatory and optional clauses, based on the choices of the founders.

The following elements are required in the incorporation document:

• Commencement date: This is the date the company gains legal capacity. If not specified, it is assumed to be the date the founders sign the document.
• Founders: The document should list the names, addresses, and, when relevant, identification numbers of the founders. For individuals, full names are required, while for legal entities, the company name, identification number, and address must be provided.
• Accounting start date: This is the date when the company’s financial year begins and when its accounts are first recorded.
• Issue rate: The price at which new shares will be issued if the company decides to increase its share capital.
• Deadlines: The time limits for subscribing to shares and fulfilling payment obligations.

In addition to the mandatory items, the incorporation document may also include some optional provisions:

• Contracts: Any agreements that could result in any financial obligations for the company, such as those involving the founders.
• In-kind contributions: If the company is not solely funded by cash, this section will outline any non-cash contributions, like movable or immovable property.
• Special rights or benefits: Any specific rights or privileges granted to certain parties, such as the founders.
• Audit exemption: Companies under a certain size may opt to waive the audit requirement.

It is important to note that the founders have the flexibility to decide which optional provisions to include in the incorporation document.

Articles of Association

A limited liability company (ApS) must have an Articles of Association, which is a legal document outlining how the company will operate and is applicable to all its owners. This document is also available to the public. It defines the rules and structure for running and managing the business. While there is a standard format, it can be adapted to meet the specific needs of the company, as long as the provisions are remaining relevant and meaningful.

Key information that must be included in the Articles of Association is:

• the company name, including any alternative names,
• the purpose of the company’s activities,
• the amount of share capital (at least DKK 20,000),
• the number of shares or their unit value,
• the governance structure of the company, including details about the board of directors or management,
• the procedures for convening a shareholders' meeting,
• the company’s financial year.

Determining whether other key issues, like the company’s representation, should be included in the articles is also essential.

Register of ownership

A register of ownership is a vital document that tracks the history of shareholding within a company. It must be regularly updated whenever there are changes in the ownership structure to ensure its accuracy. The register should include key information, such as the number of shares held by each shareholder, how they obtained them, and any associated rights, such as voting privileges.

While it is typically the responsibility of the company’s management to maintain this register, the task can also be entrusted to third parties like an accountant or lawyer. The register must remain accessible for inspection by public authorities when needed, and shareholders should have access to it when necessary. It can be stored in either physical or digital forms, including formats like a Word document or an online file.

For capital companies, it is required to register shareholders owning 5% or more of the company's shares in the Public Owners' Register on Virk.dk. This ensures transparency regarding the company’s ownership.

The register of ownership must contain:

• the name and address of each shareholder or mortgagee, including the company name, CVR number, and address for legal entities,
• the total number of shares or mortgage rights held,
• the dates when shares were acquired, pledged, or sold,
• the number of shares at the time of their acquisition, pledge, or sale.

Though not obligatory for a Danish ApS, an ownership agreement is a private contract between owners that specifies their rights and responsibilities. This agreement helps avoid disputes among the owners and remains confidential, not made available to the public. Owners can be either individuals or distinct legal entities, such as corporations.

Ownership structure in a limited liability company (ApS)

Transparency in the ownership structure of a limited liability company (ApS) is essential for preventing financial crimes, including for example tax evasion. To achieve this, both legal and beneficial owners must be registered with Erhvervsstyrelsen, enabling regulators to oversee compliance with regulations regarding ownership and business operations.

Legal owners are those who hold a minimum of 5% of the company's shares or voting rights, and they can be individuals or companies. On the other hand, beneficial owners are individuals who own at least 25% of the shares or voting rights and may also have extra rights, such as the power to appoint board members or veto certain decisions. In some cases, a person can be both a legal and beneficial owner, which is very common in situations where one individual fully owns the company.

If a company has no legal or de facto owners, it must officially report this. This helps ensure that the ownership structure is transparent and clearly documented, reinforcing accountability.

Registering ownership information helps companies avoid legal issues while also facilitating proper oversight of their activities and governance.

Handling share transfers in an ApS

In Denmark, transferring or selling shares in a private limited company (ApS) is usually subject to minimal restrictions. Ownership changes between individuals or entities are typically carried out through a share transfer agreement. This agreement specifies the buyer, seller, the number of shares involved, and the terms of the exchange, while ensuring compliance with tax regulations.

Certain conditions may accompany share transfers, such as non-compete clauses, adjustments to the board of directors, seller financing arrangements, or the creation of an ownership agreement. These provisions help protect both the company’s and shareholders’ interests.

To support growth, companies can choose to increase their capital. This can be done by requesting additional funds from existing shareholders or by welcoming new investors. Such actions require a two-thirds majority vote during a general meeting, and the contributions can be made in either cash or non-cash assets.

If the Articles of Association grant a right of first refusal, co-owners are given the chance to purchase shares before they are offered to external buyers. However, this right is optional, meaning co-owners can decide not to exercise it, allowing the seller to sell shares to third parties. To ensure fairness, valuation methods such as independent auditor assessments, third-party tenders, or auction-based methods (like the Mousetrap Clause) are often employed.

For shares sold to third parties, the price is typically negotiable. However, when shares are transferred within a family, legal requirements often necessitate an auditor’s valuation. By following these guidelines, shareholders and co-owners in Danish ApS companies can manage share transfers and capital increases effectively, ensuring compliance with local laws.

Responsibilities of board members in an ApS

According to the Danish Companies Act, every ApS (limited liability company) must have a board of directors. This board, which is typically led by the company owner, must include at least one person, though additional directors can also be appointed. The company’s articles of association specify the structure and main responsibilities of the board.

For larger companies, it is recommended to have both an executive board and a board of directors. The executive board manages mainly daily operations and performs mandatory audits, while the board of directors is tasked with overseeing the company’s long-term strategy and overall direction. Both boards work together to ensure the company’s strategic goals are achieved.

If both boards are in place, the executive board reports to the board of directors. In cases where only an executive board is established, it becomes the highest governing body, responsible for both day-to-day operations and also strategic management.

When the executive board is formed first, the members who serve on it are often the same individuals who later join the board of directors. If necessary, the executive board can be replaced by a supervisory board at a later stage.

Planning a general meeting for a Danish ApS

For a Danish limited liability company (ApS), the generalforsamling, or general meeting, is a crucial event where important decisions regarding the company’s future are made by its owners. These meetings are required by law to be held at least once a year.

Owners of the company’s capital have the right to attend, either in person or by appointing a representative with a power of attorney. The company’s auditor may also participate, and external advisors can attend unless restricted by the company’s Articles of Association.

There are two types of general meetings: ordinary and extraordinary.

• Ordinary meetings typically focus on:
  • Approving financial statements.
  • Deciding on the allocation of profits or covering losses.
  • Discussing potential amendments to financial plans.
  • Addressing other matters outlined in the company’s Articles of Association.
• Extraordinary meetings are called when urgent decisions need to be made, such as:
  • Changes to the board of directors.
  • Revisions to the company’s Articles of Association.

Proper organization is essential when preparing for a general meeting. Meetings must be scheduled in a timely manner to ensure the approved annual report is submitted to the Danish Enterprise Authority on time.

The minutes must be recorded, including:

• The company’s name, type, and CVR number.
• The chairman’s name.

A report from the management or supervisory board should confirm whether the annual report has been approved. The minutes should document all decisions made, including:

• The meeting date.
• The chairman’s signature.

These minutes are then submitted to the Danish Business Authority as proof that the annual report was approved.

Setting up a bank account for Danish Limited Company (ApS)

Every limited liability company (ApS) in Denmark is required to have a business account, known as an Erhvervskonto. This account is essential for maintaining a clear separation between the company’s finances and the personal finances of its owners. Tied to the company via its tax identification number (CVR), the Erhvervskonto operates similarly to a private business account, which is linked to an individual’s personal number. Additionally, a NemKonto business account is necessary to ensure transparency and effective financial management.

The first step in setting up an account for an ApS is selecting the right bank. You can either choose the bank where you have a personal account or explore other options, as fees and services vary across institutions.

Opening a company account requires specific documentation, including proof of the company’s legitimacy and personal identification details. Having these documents ready in advance can help prevent any issues during the account creation process.

The impact of the Danish Accounting Act on ApS companies

In Denmark, all ApS companies are required to follow the guidelines set forth in the Accounting Act, which governs bookkeeping practices, including the recording of financial documents and the storage of records. These regulations apply to companies not managed by government or local authorities. Failure to meet these obligations may result in requests for further documentation from public authorities or remarks in the company's annual financial reports.

The Accounting Act outlines specific standards for bookkeeping, ensuring that financial records are preserved and not improperly discarded. Transactions must be recorded promptly, with supporting documentation for each entry. When transactions are in foreign currency, the exchange rate used must be either the average rate or the rate applicable on the transaction date. The Act also requires the preparation of annual financial statements, which vary depending on the company's classification.

As of January 2024, a new law mandates that all companies adopt digital accounting systems that meet legal standards. Financial documents must include essential information such as dates, amounts, descriptions of products or services, identification numbers for both the sender and recipient, VAT details, and payment terms. These documents must be stored digitally.

The shift to digital accounting will occur gradually, depending on company classification. From January 1, 2024, the Danish Business Authority will provide a list of available accounting systems. Starting July 1, 2024, companies in classifications B, C, and D will be required to implement electronic accounting. By 2026, companies in classification A with an annual net turnover exceeding DKK 300,000 for two consecutive years will also need to adopt digital accounting systems.

Accounting for an ApS

Specific rules regulate the bookkeeping procedures for a limited liability company (ApS) in Denmark to ensure accurate financial reporting. These guidelines mandate that every transaction be recorded systematically and in a timely manner. To facilitate proper financial management, it is essential that transactions are documented as soon as they occur, in a way that preserves their chronological order. This practice helps prevent missing or forgotten documents and misplaced receipts.

Each transaction must be backed by relevant documentation, such as receipts, invoices, or bills. Both paper and digital versions of these documents are acceptable. All records related to bookkeeping must be stored securely and cannot be discarded or destroyed. These records must be kept for a minimum of five years and be available for inspection by public authorities if requested.

For tracking transactions, each supporting document must be assigned a unique, sequential number. The attachment should contain crucial details like the invoice number, date, VAT number and rate (if applicable), the seller’s identification information, and the tax identification number (TIN). These supporting documents should also meet the necessary accounting regulations.

Business owners in Denmark often choose to manage their own bookkeeping using online tools like Billy, Dinero, Uniconta, e-conomic, or Dynaccount. Alternatively, they may hire professional accountants or auditors to handle regular accounting duties, including the documentation of income, expenses, assets, and liabilities.

To ensure compliance and accuracy, conducting afstemning (compliance verification) periodically throughout the year is highly recommended. Rather than waiting until the year’s end, this approach helps speed up the preparation of the annual report and ensures greater accuracy, avoiding the need to review the entire year’s financial records at once.

Reporting and auditing in financial management

Danish limited liability companies (ApS) are obligated to submit annual financial reports, which are intended to provide a true and fair view of the company’s financial standing. To guarantee the accuracy of these reports, most private limited companies must undergo an independent audit. The auditor’s task is to verify that the financial statements accurately reflect the company’s income, expenses, liabilities, and assets.

Small businesses categorized as type B may be exempt from the audit requirement if they meet specific conditions: the company’s balance sheet total is below DKK 4 million, its net turnover is under DKK 8 million, and it employs fewer than 12 full-time workers.

While an audit may not be mandatory, companies can still opt to have their financial statements examined by a certified public accountant voluntarily. If the company’s owners decide to take this step, they must do so during an extraordinary shareholders' meeting. The minutes of the meeting, which must document this decision, should then be submitted to the Commercial Office.

To maintain transparency and trustworthiness, many private limited companies in Denmark choose to have an audit. This process ensures an accurate representation of the company’s financial health and reassures investors, board members, and other interested parties. The auditor offers an independent review, providing an external perspective on the company’s financial situation.

ApS company annual financial report

Every limited liability company (ApS) in Denmark is obligated to submit an annual financial report, along with the necessary supporting documents. The board of directors, also known as the company’s management, is responsible for preparing and submitting the report.

The deadline for submitting the annual report, which includes the financial statements, is set for six months after the end of the company's financial year. For businesses following the calendar year (January 1 to December 31), the report must be filed by June 30. Submissions are made through Virk.dk under the "Regnskab-basis" section.

The Financial Reporting Act in Denmark outlines the regulations for financial reporting, categorizing companies based on specific criteria. This classification determines the reporting requirements for the annual report. Typically, ApS companies fall under Class B, which mandates the inclusion of the following documents in the report:

• a management report (if there is more than one board member),
• a balance sheet,
• a profit and loss statement,
• the board of directors' opinion,
• accounting policies.

Class B reporting is further divided into two subcategories:

• reporting Class B,
• reporting Class B for micro-enterprises.

Although both categories follow similar reporting standards, micro-enterprises are not required to include accounting policies, unlike other Class B companies.

To be classified as a micro-enterprise, an ApS must meet the following criteria for the past two financial years:

• a balance sheet total not exceeding DKK 2.7 million,
• a net turnover of no more than DKK 5.4 million,
• a maximum of 10 full-time employees in the most recent financial year.

E-services for limited liability companies (ApS)

Several essential steps must be followed to set up a company in Denmark and ensure efficient operations.

Applying for a NemID is the first task. This digital signature is necessary for accessing government websites, online banking, and various other digital services. It plays a crucial role in verifying your identity. You can request a NemID through medarbejdersignatur.dk, though the site is in Danish.

Next, after receiving your NemID, you need to set up an e-box, a digital mailbox used to receive official communication from government authorities. This serves as an online inbox, where messages can be accessed after logging in with your NemID. Additionally, some private companies use e-boxes for their correspondence.

The following step involves assigning a NemKonto to your company. This special bank account is needed to receive payments from public authorities, such as tax refunds and subsidies. Once your company has a CVR number, you must reach out to your bank to assign a NemKonto, which can be an existing or new account. Tax refunds cannot be processed without a NemKonto. To check if your account qualifies, visit nemkonto.dk or contact your bank. If you don't have a Danish bank account, you can apply to use a foreign account by submitting a special form.

Finally, the required minimum capital of DKK 20,000 must be deposited into a lawyer's client account during the registration process. Once your company’s bank account is established, you can instruct the lawyer to transfer the capital to the company’s account. If you face challenges opening a traditional bank account, alternatives such as Revolut can be considered.

Completing these steps will ensure your company is fully registered in Denmark’s system, facilitating effective financial management and receipt of government payments.

Overview of taxation for Danish private limited companies (ApS)

In Denmark, the corporate tax rate for businesses there is set at 22%, which is considered relatively low compared to other countries from the EU and all around the world, and can be highly attractive for companies looking to minimize their tax burden. This rate is applied to a company’s taxable profits, which are determined by subtracting deductible business expenses-such as operating costs, employee salaries, and depreciation-from the company’s total income.

However, the amount a company is required to pay may vary in years when its taxable income fluctuates. For example, companies that experience losses in one year may carry those losses forward to offset future taxable profits. Similarly, businesses that write off assets or make investments that reduce their taxable base might find that they owe little to no corporate tax for that year. These fluctuations in taxable income can offer companies a degree of flexibility in managing their tax obligations, which is a huge advantage.

In contrast, small privately owned businesses are often subject to different tax rules. These businesses usually benefit from exemptions or reduced tax rates, which are designed to support the growth and sustainability of smaller enterprises. As a result, many of these businesses may be completely exempt from corporate tax, depending on their size, structure, and financial situation.

Corporate income tax and dividend taxation

1. Corporate tax obligations for LLCs in Denmark limited liability companies (Ltd) in Denmark are subject to a corporate income tax rate of 22% for 2021. The tax is applied to a company's taxable income, which is calculated by subtracting expenses from revenue. This "pre-tax result" is shown in accounting reports, such as the income statement in e-conomic or other software programs. To determine the actual taxable income, accountants or auditors make necessary adjustments for items like depreciation or non-deductible expenses. These adjustments may cause the taxable income to differ slightly from the pre-tax result, and the final figure must be reported annually in the company’s tax return, which should be filed within six months after the end of the fiscal year.
2. Corporate income tax payments
   • Corporate income tax payments in Denmark are made twice a year: March 20 and November 20, based on estimated profits. These are considered "ordinary corporate income tax payments."
   • An optional third payment, the "voluntary payment of company income tax," can be made on February 1, after the fiscal year ends. This payment allows companies to adjust their tax obligations after the completion of the financial statements for the previous year. Paying more taxes in the third installment can help reduce interest on late payments.
3. Initial tax correspondence when an LLC is established in Denmark, the first letter from the tax office regarding corporate income tax may indicate that the company owes DKK 0. This is typically because the tax office does not yet have enough information to accurately calculate the owed amount.
4. Dividends and their distribution
   • Danish companies are not required to pay dividends, even if they are profitable. However, dividends are usually distributed when the company has surplus funds. For individuals who are both owners and directors, receiving dividends can provide tax advantages. The decision to distribute dividends is made at the general assembly, where the amount must be approved.
   • There are two types of meetings:
     • Ordinary meetings: Held annually to approve the annual report and decide on dividend distribution.
     • Extraordinary meetings: Convened when urgent decisions are necessary, such as appointing a new board member or auditor, or approving dividend payments.
5. Dividend taxation
   • In Denmark, tax on dividends is withheld when paid to individual shareholders. For 2021, dividends up to DKK 56,500 are taxed at 27%, with any amount exceeding that taxed at 42%. Married individuals are subject to the higher tax rate if their dividend exceeds DKK 113,000. The company is responsible for withholding the tax on dividends and sending it to the Danish tax authority, SKAT Erhverv.
   • Non-resident shareholders are generally taxed at a rate of 15%, depending on the double taxation agreement between Denmark and their home country. In most cases, the company will withhold this 15% tax before paying out dividends.
6. Tax loss carryforward in certain cases, a company can carry forward tax losses to offset future taxable income. For example, if a company experiences a DKK 100,000 loss in 2020 and a DKK 100,000 profit in 2021, the loss from 2020 can be applied to reduce taxable income in 2021, resulting in no corporate income tax being owed for either year.
7. Deadlines for filing reports and tax returns
   • Companies in Denmark must submit their annual reports to the Danish Enterprise Authority (VIRK) within five months of the fiscal year’s end. Additionally, tax returns must be filed with SKAT Erhverv within six months.
   • Corporate tax payments are due on March 20 and November 20 each year. Companies may also make an optional voluntary payment on February 1 of the following year to reconcile any discrepancies.
8. Fiscal year options companies in Denmark can choose their fiscal year-end date. While December 31 is the most common, businesses may opt for alternative dates such as June 30 or January 31. These options may complicate tax reporting. In cases where a company has an 18-month fiscal year, partial tax payments are made in both the first and second years, with the tax year ending after 18 months.

Navigating VAT responsibilities for an ApS in Denmark

In Denmark, limited liability companies (ApS) must be aware of their VAT responsibilities to avoid errors. This is especially crucial for businesses that engage in international trade or are eligible for specific VAT exemptions or deductions, as seeking professional guidance is recommended.

Once an ApS's turnover reaches DKK 50,000 within a 12-month period, it is required to register for VAT. The company must submit the relevant documentation to the tax authorities to confirm its business details. Following registration, the business becomes responsible for collecting VAT from their customers, remitting it to the tax office, and making regular payments.

VAT exemptions may apply to businesses that offer medical or educational services. Moreover, businesses can claim VAT deductions on purchases related to taxable activities, such as materials and services, helping reduce the overall tax liability.

In accordance with tax regulations, an ApS is required to issue VAT invoices on a regular basis. These invoices should include the VAT ID, customer details (including the VAT number when relevant), transaction description, along with the date, invoice number, quantity, unit price, total amount, and the VAT charged.

The standard VAT rate in Denmark is 25%. However, reduced rates are available for certain products and services. For instance, food, medical services, medicines, and hotel stays are taxed at 12%, while books, newspapers, and tickets for cultural events are subject to a 0% tax rate. The applicable rate depends on the company's specific activities.

Valuation of assets for an ApS

When setting up your private limited company (Danish LLC), or ApS, with an in-kind contribution, one of the key requirements is providing an asset valuation report. This report, which is generally prepared by an independent accountant, serves to determine the exact value of the assets being contributed to the company. It’s crucial to understand that informal assessments from suppliers, manufacturers, or car dealers, whilecan be potentially helpful, cannot substitute for the official valuation required by the authorities. These preliminary estimates may assist the accountant in preparing the final valuation report, but they are not sufficient on their own.

This asset valuation document must be included in the incorporation papers when registering the company. The valuation should reflect the true market value of the assets being contributed, ensuring transparency and compliance with Danish legal requirements. Additionally, if non-monetary contributions (in-kind) are used to form your ApS, you personally assume responsibility for the contributed assets. This means that, in the event of any disputes over the value of the assets or if issues arise with them later on, you may be held personally liable.

Establishing an ApS with in-kind contributions can be a complex process, involving not just the proper valuation of assets but also an understanding of the legal and financial responsibilities involved. Therefore, it’s essential to work with professionals who have expertise in asset valuation and are familiar with Danish business laws. By doing so, you can ensure the proper formation of your ApS and avoid potential liabilities related to the contribution of non-cash assets.

Owner compensation in an ApS

The owner of a Danish limited liability company (ApS) has two options for compensation: a salary or dividends. It’s important to note, however, that funds cannot be directly transferred from the company’s account to the owner's personal account. This is because the company and its owner must maintain separate financial records due to their distinct legal statuses.

To receive a salary, the owner must follow these steps:

• Register the company as an employer on Virk.dk.
• Create an employment contract.
• Prepare a monthly payroll report.
• Submit the salary details to Skattestyrelsen for proper taxation.

The salary must align with what is reasonable for similar roles, or the excess could be reclassified by the tax authorities as a dividend, which would be taxed accordingly. If the owner chooses not to take a salary in a given month, they are required to submit a "nil declaration" to Skattestyrelsen to avoid penalties.

Alternatively, the owner can choose to receive dividends, which are paid out to shareholders and investors. Ensuring proper documentation for dividends is essential.

Regardless of the option chosen, whether a salary or dividends, the company must:

• Report the payments to Skattestyrelsen via platforms like LetLøn on skat.dk.
• Ensure taxes are paid.

Danish Ltd pension scheme rules for employees

Offering a pension scheme in a Danish Ltd (Private Limited Company) is not obligatory, but it is widely practiced to enhance employee retention and attract skilled professionals. Many businesses choose to include such pension schemes in their benefits packages to remain competitive in the job market.

Here are the key elements to understand when implementing a pension scheme:

• Participation by employees: Employees have the freedom to decide whether they want to participate in the pension scheme. Although joining is optional, most employees opt in to take advantage of employer contributions.
• Contributions from employers: Employers are generally required to contribute regularly to the pension fund, with contributions typically falling between 4% and 12% of the employee's salary. The exact percentage is outlined in either the employment contract or relevant collective agreements.
• Types of agreements: Pension schemes can be arranged through collective agreements (overenskomst) or negotiated individually between the employer and employee. Clearly defining these terms in the employment contract helps prevent any misunderstandings.
• Management of pension funds: It is the employer’s duty to ensure that contributions are handled by an approved pension provider. Employees are often given the option to select a plan or fund that best suits their individual needs.
• Tax-related advantages: Both the employer and employee benefit from tax incentives. Employer contributions qualify as tax-deductible, while employee savings are exempt from social security contributions, providing mutual financial advantages.

Although pension schemes are not a legal requirement, they are strongly recommended for ApS companies. Following these practices ensures compliance with regulations and helps create a supportive environment for both employers and employees.

Employing staff in a Danish Private Limited Company

Employing staff in a Ltd in Denmark (Anpartsselskab) requires compliance with various legal, tax, and procedural obligations. Below is a comprehensive guide to help employers navigate this process effectively.

Employment contract requirements

The foundation of hiring in Denmark is a written employment contract, which must adhere to Danish labor laws. Key details to include are:

• Compensation: Clearly specify the salary and payment schedule, such as monthly or weekly intervals.
• Role and duties: Define the employee's responsibilities and job title.
• Working hours: Outline the expected working hours per week and any overtime provisions.
• Paid leave: Employees are entitled to a minimum of five weeks of paid vacation annually, and the policy should be outlined in the contract.
• Termination notice: Detail the notice period for resignations or dismissals, which depends on the employee’s tenure.

For temporary contracts, employers must additionally state the duration of employment and any conditions for renewal or termination.

Salary and tax obligations

Employers must offer fair pay, meeting any applicable minimum wage requirements within the industry. Gross earnings are subject to taxation, and it is the employer's duty to:

• Withhold income taxes and social contributions from employee wages.
• Submit these withholdings to the Danish tax authority, SKAT.

Danish taxation follows a progressive model, meaning higher earnings are taxed at higher rates. Employers must also deduct contributions for pensions, healthcare, and other social benefits, ensuring compliance with the country’s mandatory social security system.

Registration and reporting

After hiring an employee, the company must register them with Denmark's social security system. This ensures coverage for benefits like healthcare, pensions, and insurance against illnesses or workplace accidents. Employers are also obligated to report wages and ensure accurate social security contributions.

Workplace safety and equal opportunity

Maintaining a safe work environment is a legal requirement. Employers must:

• Conduct regular health and safety training.
• Provide necessary protective equipment tailored to the job’s demands.

Additionally, Danish laws emphasize equality and prohibit discrimination. Employers are responsible for ensuring fair treatment, regardless of gender, race, religion, age, or sexual orientation.

Union relations and collective agreements

Trade unions play an influential role in Denmark. Employers should be prepared for unions to negotiate terms such as wages, benefits, and working conditions on behalf of employees. While union membership is not mandatory, a significant number of workers are represented, and collective bargaining agreements are common.

Types of employment contracts

Employment contracts can either be indefinite or fixed-term. For fixed-term contracts, it is necessary to:

• Clearly define the contract’s timeframe and purpose, such as temporary replacement or project-based work.
• Decide whether to extend or terminate the contract once it ends.

Professional guidance

Given the complexity of Danish hiring regulations, many employers opt to consult with legal and tax professionals. Expert assistance helps prevent costly errors and ensures full compliance with all requirements.

By following these guidelines, ApS companies in Denmark can manage the hiring process smoothly while adhering to all relevant regulations.

Legal aspects of employee dismissal in a Danish LLC

Terminating an employee’s contract in a Danish company requires adherence to specific labor laws aimed at fairness for both parties. The approach depends on the reason for dismissal, whether it stems from misconduct or economic challenges.

Key steps in the dismissal process

1. Employer-employee dialogue
   • A critical first step involves the employer discussing the situation with the employee. This meeting allows the employee to share their perspective and respond to any concerns raised by the employer.
2. Grounds for termination
   • Misconduct: When termination is due to inadequate performance or inappropriate behavior, employers must present clear evidence and follow the required procedures.
   • Economic challenges: For layoffs prompted by financial difficulties or restructuring, strict legal standards must also be followed.
3. Notice requirements
   • Written notice is mandatory, specifying both the reason for termination and the effective date.
   • The notice period, which typically spans one to six months based on the employee's tenure, ensures sufficient time for the individual to secure alternative employment while respecting contract terms.
4. Severance and support measures
   • Employees let go for economic reasons may be entitled to severance pay, often determined by their length of service and stated in contracts or collective agreements.
   • Employers may provide additional help, such as allowing time off for interviews or offering CV assistance.
5. Employee protections
   • Special protections exist for employees in specific situations, such as pregnancy, parental leave, or illness. Dismissing someone under these circumstances can lead to legal consequences.
   • In cases of large-scale layoffs, employers must involve trade unions, consulting them and adhering to applicable collective agreements.

Responsibilities after termination

Employers must fulfill certain obligations after the dismissal process is finalized:

• Employment documentation: Issue a certificate summarizing the employee’s role, responsibilities, and duration of employment.
• Final payments: Settle all outstanding payments, including wages, unused vacation days, and any severance owed.
• Reporting obligations: Inform the relevant authorities, such as the tax office or social security system, about the termination.

By carefully following these steps, employers can ensure that the dismissal process aligns with Danish labor laws while treating employees with fairness and respect.

Situations where limited liability does not protect ApS owners

Operating a Danish limited liability company (ApS) typically offers the benefit of protecting the owner’s personal assets from the company’s debts. However, this protection is not guaranteed in all situations, and there are certain circumstances where the owner may still face personal liability.

For example, if the company’s share capital of DKK 20,000 is the only collateral for a loan, the lender may request a personal guarantee or require the owner’s private assets as additional security. Larger creditors might impose similar conditions. Once the company’s assets are sufficient to cover its liabilities, personal guarantees and collateral could potentially be released.

In cases of severe negligence, such as when an owner knowingly signs contracts on behalf of the company despite its inability to repay due to financial difficulties, personal liability may be triggered. If the owner’s actions cause significant harm to creditors or customers, they could be held personally responsible.

There are also specific legal obligations for Private Limited Liability Companies in Denmark. If the company’s capital drops below half, the owner is required to call an extraordinary shareholders’ meeting within six months. The board must then provide a financial report and suggest potential actions, which may include considering liquidation or raising new capital.

Failure to meet these legal requirements could expose the owner to personal liability for the company’s debts, endangering their private assets. Therefore, it is crucial for the owner to carefully follow these regulations to avoid such risks.

Comparing ApS with other types of business entities

When starting a business in Denmark, entrepreneurs are presented with a variety of legal and organizational structures to choose from, each with its own set of requirements, advantages, and drawbacks. Among the most commonly selected options is the ApS (Anpartsselskab), a limited liability company. However, other business structures are also available, including the stock corporation (A/S), the limited liability company (IVS), the limited liability partnership (K/S), and the single-member limited liability company (E/ApS). Understanding the key differences between these business structures is crucial for entrepreneurs to determine which is best suited to their goals.

Key differences between an ApS and other business structures

1. Minimum capital requirement
   One of the most noticeable differences between an ApS and other company types is the required minimum share capital. For an ApS, the minimum capital is DKK 20,000. This relatively low capital requirement makes it an attractive option for entrepreneurs starting small to medium-sized businesses. On the other hand, an A/S, which is typically used for larger companies, demands a much higher capital investment of DKK 400,000. This capital must be in place before the company can be registered, making the A/S a more suitable option for businesses with significant funding and growth potential.
2. Ownership structure
   Another key distinction lies in the number of owners required. An ApS can be owned by just one individual, which makes it a flexible option for solo entrepreneurs. In contrast, an A/S requires a minimum of three shareholders, reflecting its status as a larger corporate entity. Additionally, the E/ApS, which is a variation of the ApS, is specifically designed for sole proprietors who want to set up a limited liability company with a simpler structure.
3. Cost and complexity of registration
   The process of registering a business in Denmark also varies significantly between the different company types. Establishing an E/ApS is the simplest and least expensive option, making it an appealing choice for individual entrepreneurs who want to set up a company with minimal bureaucracy. The registration process for an ApS is more complex and costly than for an E/ApS but is still relatively straightforward compared to that of an A/S, which can involve more extensive paperwork, higher fees, and stricter regulations.
4. Management and transfer of shares
   Another important consideration is the ease with which shares can be transferred. Shares in an A/S are generally easier to transfer, which can be advantageous for businesses looking to bring in new investors or undergo changes in ownership. In contrast, transferring shares in an ApS can be more complicated, with stricter rules in place to protect existing shareholders from unwanted transfers. This makes an A/S a more suitable option for businesses seeking significant external investment or those with plans for eventual public listing.
5. Raising capital
   The ability to raise capital is another major difference between the two types of companies. An A/S has more opportunities to raise capital, particularly through the stock market, which is not available to an ApS. For an A/S, shares can be sold to the public, allowing the company to access larger amounts of funding. In contrast, an ApS relies more on private investments or loans to raise capital, making it less suitable for businesses with aspirations for rapid expansion or significant capital raising.

Choosing the right business structure is a critical decision for any entrepreneur. Factors such as the size of the business, the amount of capital required, and future growth plans all play a role in determining which company type is the most appropriate. For small to medium-sized businesses that want to limit their owners’ personal liability without the high capital requirements of an A/S, an ApS is often the preferred choice.

However, it is important for entrepreneurs to carefully consider their specific needs before making a decision. The structure of the business can affect everything from the amount of capital required to the level of management control and even the ease of raising funds in the future. Therefore, consulting with a lawyer, accountant, or other business advisor is highly recommended to ensure that the chosen business form aligns with the entrepreneur's goals.

Despite the availability of various business structures, the ApS remains a favored choice among Danish entrepreneurs. Its relatively low capital requirements, flexibility in ownership, and limited liability protection make it an ideal option for those looking to establish a solid business foundation. Additionally, with a simpler registration process compared to an A/S, the ApS allows entrepreneurs to focus on growing their business without being burdened by excessive administrative tasks. However, as with any business decision, it's important for entrepreneurs to assess their unique needs and circumstances before making a final choice.

ApS compared to sole proprietorship

Choosing to establish a limited liability company (ApS) can be a wise move if you foresee making a profit or breaking even. Unlike a sole proprietorship, an ApS ensures the protection of your personal assets, safeguarding them even in the event of company losses. However, to set up an ApS, you must invest an initial capital of DKK 20,000. It’s also crucial to remember that personal income cannot be used to cover any losses of the company. If you decide to pay yourself a salary, the company will need to issue a payslip, withhold the appropriate taxes, and submit them to the authorities. Therefore, even if the company operates at a loss, you will still be liable for taxes on your personal income.

Converting a sole proprietorship into an ApS

When transferring a sole proprietorship to an ApS, taxable conversion is the most efficient if the business has little or no value. This option results in minimal to no profit, ensuring taxes remain low. It’s a more affordable choice for smaller businesses compared to a tax-free conversion.

Alternatively, “tax-free” conversion is suitable for businesses with significant value. Though the term "tax-free" suggests no immediate taxes, it actually allows you to defer tax payments until you sell shares in the newly created ApS. To proceed, an auditor must evaluate the company’s value and supervise the ApS registration. The auditor’s fee generally ranges from DKK 5,000 to 20,000, excluding VAT.

The process of shutting down a Private Limited Company in Denmark

When closing a Danish limited liability company (ApS), the owner must first assess the company's financial situation and decide on the most suitable course of action. The process of closure depends on whether the company is solvent or insolvent, and several options are available:

1. Bankruptcy - If the company is financially insolvent, the closure will proceed through bankruptcy proceedings.
2. Restructuring - If the company is on the brink of bankruptcy, it may request a court to initiate a restructuring process. This aims to recover finances and restore operations, with a court-appointed administrator overseeing the process.
3. Voluntary liquidation - Solvent companies can opt for voluntary liquidation. Before proceeding, all outstanding debts must be paid off, and shareholders need to sign a declaration confirming that the debts will be settled. Once completed, shareholders are protected from future claims. A public announcement must be made, and creditors are given a three-month window to file claims.
4. Liquidation via shareholder declaration - For solvent companies, another route is voluntary liquidation through a shareholder declaration. A liquidator is appointed to oversee the closure, and shareholders are safeguarded from future liabilities once the process is finalized.
5. Compulsory dissolution - In certain cases, such as failure to submit annual reports, resignation of the managing director, or lack of an appointed auditor, the court may dissolve the company. If insolvency is present, bankruptcy proceedings will follow, but if the company is solvent, it will simply be dissolved.

Once the appropriate closure procedure is determined, the following steps should be completed:

• Ensure that all accounting tasks are finalized before the company shuts down. If registered for VAT, the final VAT declaration must be submitted.
• Any outstanding employee wages must be paid, employee taxes filed, and the company deregistered as an employer.
• Inform the tax authorities of the intent to deregister for corporate income tax, which typically happens after the company's formal closure.
• Submit the final income tax return by the required deadline. The tax office will then provide a statement confirming that all VAT and other taxes have been settled, usually within 3-6 months.
• Obtain official confirmation from the tax authorities that all liabilities have been cleared.
• Prepare a statement signed by the shareholders, confirming that all company debts are settled, along with the final closure application.
• After submission of the closure application, the company will officially be closed within two weeks.

Throughout the process, ensure that VAT and employee taxes are filed for the remaining periods, and any unpaid amounts are settled. The company must also be deregistered as both an employer and VAT payer. A final tax return for the previous fiscal year should be submitted, and a separate manual tax return must be filed for the year of closure, with adjustments reflecting the actual tax liability for that year. Once these tasks are completed, request a statement from the tax authority (betalings-erklæring) and submit the final statement signed by the shareholders. The company can then be closed via the VIRK system.

Using an ApS as a holding company

One advantage of creating two companies at the same time is the possibility of "capital roll-over." Instead of paying DKK 20,000 for each company separately, you can use the same DKK 20,000 as initial capital for both.

A holding company and an operating company structure is often used in this situation. The holding company owns the shares of the operating company, which helps protect its assets from creditors if the operating company faces bankruptcy.

It's important to note that the holding company isn't an independent legal entity. It is created specifically to hold and manage shares in another company.

The importance of the CVR number for an ApS

Upon registering a limited liability company (ApS) in Denmark, the company will be assigned a unique eight-digit CVR number. This number serves a similar purpose to the CPR number for individuals and is essential for the company's functioning. It allows the company to be recognized in business and administrative processes and is required to set up a NemKonto for receiving payments from public institutions.

The CVR number is also necessary for utilizing MitID, the digital identification system for businesses, as well as for accessing Digital Mail, which simplifies online communication and administrative tasks. Having a CVR number ensures compliance with Danish legal requirements and enables the company to operate lawfully.

The time required to obtain a CVR number generally depends on the company's legal structure. For a Danish ApS, the process typically takes between 1 and 4 days, provided the registration is completed properly. To avoid any delays or the need for resubmission, it is recommended to consult with a lawyer experienced in setting up LLCs in Denmark. This will ensure that all legal documents are accurately completed, allowing for a smooth and quick issuance of the CVR number.

Using Digital Post in an ApS

Upon receiving a CVR number, a Danish ApS company is granted an electronic mailbox known as Digital Post. This mailbox is used by public authorities to send official communications to the company, making it crucial to check it regularly for updates. Although most public institutions prefer to use Digital Post, some may still opt to send physical mail. Under Danish law, both electronic and traditional mail hold equal legal status.

Authorized company representatives can access the Digital Post mailbox by logging in with their personal MitID via the Virk platform or the Digital Post app. If personal MitID is not authorized for business use, access must be granted through MitID Erhverv on Virk, with permissions managed via the Digital Post Permissions Portal.

Additionally, businesses in Denmark can use private platforms like mit.dk or e-Boks to exchange messages with other companies. The free versions of these platforms are limited to receiving messages, while a subscription to the paid version is required to send messages.

Employee access to MitID Erhverv

To begin using MitID Erhverv, a company needs to first register and create an account on the MitID-Erhverv.dk platform. This service is designed specifically for businesses with employees who require access to various public and private self-service tools for the company's operations in Denmark.

Employees can utilize MitID Erhverv to perform a variety of tasks, such as managing the company’s email, submitting tax returns, or filing maternity leave reports for colleagues. However, employees must be granted the necessary authorization by the company before they can access certain self-service functions. Authorization is generally handled directly within the MitID Erhverv system, although some services, particularly those linked to the Tax Office, may require separate authorization management.

Additionally, employees can log into the company’s self-service platforms using their personal MitID, allowing them to handle both personal and business matters from a single account. For this to work, the company and the employee must agree to the terms for using personal MitID for professional tasks. It is crucial to understand that personal and company information will remain separate, no matter which login method is used. Alternatively, employees have the option of creating a distinct MitID solely for work-related purposes.

To conclude, setting up a Ltd in Denmark offers a range of benefits, from legal protection to flexible operational structures, making it an ideal choice for many entrepreneurs. Whether you’re a local business owner or an international entrepreneur, understanding the process and requirements is essential for success. With Radner’s expertise and guidance, you can navigate the complexities of establishing and managing your ApS with confidence, ensuring your business is set up for long-term growth and success.