Closing a company in Denmark
Closing a company is a complicated process with many steps. We will help you through the process so that you complete all the formalities in accordance with Danish regulations. It is important to perform the procedure in order. This will preserve access to online systems and avoid any later burden of taxes, duties or fees.
Note that if at some point the entrepreneur decides that they want to reopen the business – they will receive the same CVR number as before. Shutting down your business isn’t as simple as just clicking a button. You must meet specific obligations set by the authorities. The actual process involves closing your business through Virk.dk, where you will need to complete a form.
While shutting down your business you should:
- Ensure you have access to your business’s digital mailbox
- Review your business tax account
- Officially close your business on virk.dk
- File A-tax and the final obligations such as VAT, excise duties, and payroll tax
- Update your preliminary income assessment
- Settle your tax accounts and complete your tax return
How to close a company in Denmark?
Closing a business is an important step that requires careful planning and execution. Regardless of the reason for the decision to close a business, the process involves a number of formalities and legal steps that must be followed to ensure that everything is done in accordance with Danish law. To close your business in Denmark, you must go through several administrative and legal steps. Here’s how the procedure works:
1. Check liabilities
Make sure the company has no outstanding obligations to customers, suppliers, employees and authorities (e.g. tax).
2. Decision to close
The decision to close the company should be formally approved by the partners (in the case of a company) or the owner (in the case of a sole proprietorship).
3. Inform the authorities
Next, you need to inform SKAT (the Danish tax authorities) about the closure of your business. This notification can only be made between November and September, as these are the months when you can modify your preliminary income assessment. Once you have notified SKAT of your business closure, you can begin preparing your tax accounts, VAT accounts, and a statement of capital gains and losses. Report the decision to close the company to the relevant authorities, such as:
- Tax Office (SKAT)
- Registration with the Central Commercial Register (CVR)
4. Notification to Erhvervsstyrelsen
Companies must report the liquidation to the Danish Enterprise Authority (Erhvervsstyrelsen). This can be done online using the Erhvervsstyrelsen website.
5. Liquidation procedure
For companies, the liquidation process includes:
- Preparation of a liquidation balance sheet
- Conducting a liquidation audit (if required)
- Distribution of assets remaining after payment of liabilities
6. Notification of termination of operations
Upon completion of the liquidation process, report the termination of operations to Erhvervsstyrelsen.
7. Archiving of documents
Retain all documents related to the business for a certain period of time (usually 5 years) in accordance with Danish regulations.
Additional steps:
- Report the closure of the company’s bank accounts.
- Inform suppliers, customers and business partners about the closure of the company.
- Make sure all taxes are accounted for and paid.
How to close a limited liability company in Denmark?
If you co-own your business with others, such as in an IVS, ApS, or A/S, the simplest method to close down your business might be by preparing a declaration of dissolution. In this declaration, all owners confirm that all debts have been settled and express their intention to close the business. While this is the most straightforward way to shut down a business, it has the drawback that you must handle all practical aspects yourself, and you, as the owner, are liable to any creditors who may come forward after the closure.
To close or dissolve an ApS, you first need to determine a strategy, which will largely depend on the company’s financial condition. Additionally, there may be instances where the court initiates the closure, in which case the decision is no longer in your hands.
There are many reasons why a company can be closed down. However, they can generally be divided into different categories. Sometimes the decision to close the business is made by the owner himself, and other times it is made without his participation.
Voluntary liquidation of the company is possible provided that the company is solvent. This indicates that the company’s assets surpass its liabilities. The company should publicly announce its decision to liquidate, giving creditors a minimum of 3 months to file claims Once the company is liquidated, shareholders are protected from future claims. A liquidator, often a lawyer, oversees the liquidation process. The cost for a lawyer acting as the liquidator typically ranges from 10,000 DKK to 20,000 DKK plus VAT.
The situation in which the decision to close a business is made without the participation of the owner is usually due to court orders. The reasons for this may be:
- failure to submit the annual report on time,
- resignation of the Managing Director,
- the absence of a mandatory audit due to the resignation of the auditor and the failure to appoint a new auditor.
If the company is to be dissolved by court judgment, the court appoints a liquidator whose task is to assess the company’s financial situation. If the company is found to be insolvent, bankruptcy proceedings will be initiated. If liquidity is preserved, the company will simply be closed down.
The decision to restructure is one way to avoid bankruptcy proceedings. The court then appoints a person responsible for overseeing the process. If a company can reorganize its activities and finances to avoid bankruptcy, it can request court approval for restructuring. In such cases, the court will appoint a restructurer to oversee the process.
Before declaring bankruptcy, a company must initiate legal proceedings. A bankruptcy petition can be filed either by the company itself or by a creditor. The main reason for declaring bankruptcy is the company’s lack of liquidity. When a company is insolvent, it will always be closed through bankruptcy. It is crucial to ensure that the accounting is properly completed before the bankruptcy to avoid director liability or quarantine.
In general, the process of dissolving a limited liability company is time-consuming, as is voluntary liquidation. On the other hand, in the case of closure of the company on the basis of a statement of shareholders, a 3-month waiting period for creditors to come forward is not required. However, it is important to remember that failure to fulfill any obligations will result in a debt that shareholders will have to pay. That is why it is so important to complete all formalities and settle all taxes and obligations of the company.
How to close an ApS company using a shareholder statement?
- Ensure you have all invoices and bank statements up to the closure date.
- Complete the accounting up to the closure date.
- Submit VAT declarations for all outstanding periods on SKAT Erhverv.
- Verify that employee taxes are declared on SKAT Erhverv. If you see any estimated amounts on the “Skattekonto,” resolve these issues, and ensure all amounts are paid on the “Skattekonto.”
- Deregister the company for VAT and as an employer on VIRK, covering all duties and obligations.
- File the tax declaration for the previous tax year on SKAT Erhverv. For the current year (the closing year), create a special manual tax declaration in PDF format, known as „ophørende selvangivelse”. Ensure any estimated future company income tax payable is set to zero (estimated income tax installments are made on 20.3 and 20.11 each year and can be adjusted on SKAT Erhverv). Also, adjust the tax payment for the current year to match the actual company income tax for the closing year, and ensure the remaining tax is paid.
- Request the statement from the tax office („betalingserklæring”).
- Prepare the shareholder statement (“betalingserklæring”).
- Close the ApS on VIRK once you have both the tax office statement and the shareholder statement.
How do we help with the closing of a company in Denmark?
In the case of both a company and a sole proprietorship, we will take care of all the most important steps, more specifically:
1. Maintain access to the company’s Digital Post after the company closes.
When a company closes, its NemID is deactivated, and with it access to Digital Post. However, messages can still be sent to the company’s Digital Post even after the company is closed. Before it closes, therefore, you should configure access accordingly so that you can continue to be able to use the company’s digital mail even after the company closes.
2. Check the company’s tax account.
Before you close the company, you need to go to Skattekonto to verify the status of reports and payments. This is where you can check that everything is as it should be. Among other things, you can check that you’ve reported everything you need to, so you can avoid paying too much in taxes, such as VAT or A-skat when you close the company.
3. Filling out the closing form.
Next, formally close the business and obtain a closing certificate, which may be needed in the future for a bank or unemployment insurance fund, for example.
4. Pay taxes.
Be sure to file reports on time for all periods up to the date of closing. A delay could cost you as much as DKK 800. You must file the final report, even if it is 0 DKK for the period. You need to settle VAT, payroll, taxes, payroll, excise taxes or potentially other tributes and benefits to the Danish state before closing the company.
5. Advance tax return adjustment.
When you close your business, you should adjust the profit in your tax return to pay the correct tax on an ongoing basis.
6. Submit oplysningskema and prepare skatteregnskab.
Calculate the company’s profit and loss, and prepare a tax return for the period from January 1 to the day the company closes. Items that are moved out of the company or sold to others should be included in the profit or loss. This can include computers, inventory, furniture, cars or machinery. Note that the result on oplysningskema can only be declared in the year following the closing of the business. The deadline is July 1. There is a penalty of 200 kr. for each day of delay (up to a maximum of 5,000 kr.) for missing the deadline.
