Change of company form from sole proprietorship to ApS

In Denmark, many entrepreneurs initially choose to operate their company as a sole proprietorship. However, as the company grows and business needs change, business owners often consider converting their sole proprietorship into a limited liability company (ApS). This comes with a number of benefits, including increased credibility, protection of personal assets, and easier acquisition of financing.

Converting a sole proprietorship into an ApS (Anpartsselskab - limited liability company) is a process that requires certain conditions. To establish such a company, the minimum share capital is DKK 20,000. Conversion is possible only in the case of a newly established ApS company or a company that has not operated before. The value of the tax share must not be negative, unless the company benefited from the corporate tax system in the year prior to the conversion.

An auditor's opinion on the value of the sole proprietorship should be obtained before the conversion. Consulting with advisors and obtaining the consent of possible collaborators and contractors is also recommended. There is a tax-free conversion of a sole proprietorship into an ApS in accordance with the Law on Conversion of Companies, which involves tax succession.

In order to meet the requirements of the law, payment for the acquisition must be made in the form of shares in the new company. All of the company's business must be transferred to the new entity, and the conversion must take place within the first six months of the fiscal year.

One method of converting a company is to transfer a sole proprietorship to ApS, where the entrepreneur becomes a 100% shareholder in the new company. Assessing the value of the acquisition and disposal and applying the principle of balance to avoid taxation during the conversion is necessary. The tax consequences of such a conversion can bring significant economic benefits to the owner of a sole proprietorship.

Converting a sole proprietorship into an ApS in Denmark is a process that requires careful analysis and the completion of certain formalities. Despite this, the benefits of operating as a limited liability company can outweigh the potential difficulties, bringing greater stability and business development opportunities to the entrepreneur. It is worth consulting with legal experts and tax advisors to ensure that the process of changing the form of business is carried out in accordance with applicable regulations and best business practices.