22% on profits made
2. What is the personal tax rate in Denmark?
Tax rates are progressive and calculated depending on a number of variables. The two main income taxes in Denmark are:
– Basic tax is charged on the sum of personal income and capital income. The rate is 12.10% (2022).
– Additional tax is calculated on the same variables and is 15% on the portion of the tax base exceeding DKK 552,500 (2022).
In addition to the above, there are also:
– local (municipal) income tax, which is calculated on taxable income at a rate that depends on the municipality. The national average is 24.982% (2022).
– the labor market tax is 8% of personal income.
– tax on profits from the sale of shares. Up to SEK 57,200 (2022) (SEK 114,400 for a married couple) is taxed at a rate of 27%. Income from shares in excess of this amount is taxed at 42%.
– church tax is imposed at a flat rate depending on the municipality. The national average for church taxpayers is about 0.70% (2022).
It is worth remembering that tax rates are adjusted every year, but the total tax rate cannot exceed 52.07% (2022).
3. How long does it take to establish a company in Denmark?
The time it takes to set up a company in Denmark depends on your choice of business form and whether you have a CPR and NemID or MitID. If so, then a sole proprietorship can be set up in 1-3 days (sometimes it takes up to 2 weeks if the form is checked manually by an official, rather than being accepted in an automated manner). The time to set up a company in Denmark is 1-4 weeks.
4. Does every company in Denmark have to use an accounting program?
5. Can a sole proprietorship in Denmark hire employees?
6. What is NemID and MitID?
It is an electronic way to log in to banks, state institutions in Denmark, national e-mail, etc. NemID and MitID is the equivalent of the Polish ePUAP system, although it has a slightly broader application in Denmark.
7. How much does a bank account for a company in Denmark cost?
The cost of setting up a bank account is usually DKK 2-4 thousand, and the cost of maintaining a bank account for a company or business in Denmark is min DKK 250/month.
8. Who can establish a sole proprietorship in Denmark?
Anyone with a Danish CPR number can set up a sole proprietorship in Denmark.
9. Who can establish a company in Denmark?
A joint stock company (A/S) and a limited liability company (ApS) can be established by any individual or legal entity regardless of the fact that they have a Danish personal number.
10. Does an ApS company in Denmark need to have an accountant?
Every entity in Denmark is required to maintain accounting in an electronic program, available either onsite or online. Some choose to do the bookkeeping themselves, while others outsource it to third-party partners such as Radner.
11. How does liability in a sole proprietorship in Denmark differ from that in an ApS or A/S company?
Companies are always liable up to the limit of the contributed share capital. The liabilities of the business, on the other hand, are directly linked to the assets of the owner of a sole proprietorship.
12. Is it mandatory to have an auditor in Denmark?
There is no requirement for the documents of a sole proprietorship in Denmark to be audited by an auditor. However, it is a legal requirement to keep accounts in accordance with accounting regulations.
The obligation to be audited arises only after specific turnover thresholds are exceeded and the balance sheet total criteria are met. As a rule, larger companies that employ a lot of people and have been on the market for a long time have such an obligation.
13. What are the advantages and disadvantages of a sole proprietorship in Denmark?
Advantages: no registration fees with the government, no obligation to file financial statements, no obligation to contribute initial capital, quick opening and closing.
Disadvantages: you are personally liable for the company’s obligations, there cannot be more than one owner.
14. What are the advantages and disadvantages of owning a company in Denmark?
Advantages of an ApS company: limited liability (up to the amount of the initial capital), possibility to have partners and a more complex ownership structure, independent legal personality, flexibility in structure, widely recognized form of business in Denmark, easier to raise capital (in banks and other credit institutions).
Disadvantages of an ApS company: higher opening costs, need to deposit share capital (min. DKK 40,000), longer and more complex process of closing the entity, need to file financial statements, higher accounting costs.
15. Does every company in Denmark have to pay VAT?
No, there are exceptions to this, different industries have different obligations in this regard. It is also possible not to be a VAT payer up to a turnover of DKK 50,000 in 12 calendar months.
16. What is a deductible business expense in Denmark?
All expenses that must be incurred to generate revenue are considered eligible expenses. Expenses deductible for tax purposes must be documented. For example, you can deduct the costs of furniture, accountants, lawyers, premises, electricity, heating, telephone, internet and insurance.
17. What are the requirements for a company name in Denmark?
The company name must be clearly distinguishable from the names of other companies. It must not use the name (or similar) of another person, the name of a company, the name of a fund or enterprise, a distinctive real estate name, a trademark, a trade name or similar. If the business of the company changes, the name must be changed. For this purpose, a sole proprietorship may not have in its name an abbreviation from limited liability company (A/S), limited liability company (ApS). (ApS) or a limited partnership (IVS).
18. Do I need a business account if I run a sole proprietorship in Denmark?
Having a separate bank account for a sole proprietorship is not regulated by law, but it is a good idea to make sure that you keep your personal and business finances separate, which can make VAT reporting easier. It is sometimes the case that a bank, as a private institution, can close a private account if a customer uses it for business purposes, because it does not comply with their customer service policy.
19. How to close a sole proprietorship in Denmark?
In short, this is done by filling out the appropriate form on the authority’s website. However, you need to take care of a number of practical aspects. For example, check when and how to send contracts, assignments and commitments for termination. You also need to make sure that you have access to the company’s digital mailbox after the fact. Finally, you still need to report and pay the SKAT by the closing date.
20. Does a Danish ApS company need to have a board of directors?
No, there is only a requirement to have at least one director in the company.
21. Can an ApS company registered in Denmark have an address abroad?
No, to be a Danish limited liability company (ApS, anpartsselskab), your company must have a Danish address. However, you as the owner can live abroad and run the company from there.
22. Can I use my Danish ApS company for several purposes?
Yes, if this is stated in the Articles of Incorporation. The purpose of the company and the industry code should be specified in it.
23. Does ApS have to have an auditor (reviewer)?
No, as a rule it does not have to.
Most companies meet the requirements to opt out of an audit by a certified public accountant (auditor), so you can do the annual accounting yourself, or your accountant can do it for you. Smaller companies can opt out of an audit if they have not exceeded two of the following three figures as of the balance sheet date for two consecutive fiscal years:
– Balance sheet total of up to DKK 4 million,
– Net turnover of up to DKK 8 million,
– Average number of full-time employees not exceeding 12 during the fiscal year
24. What is the difference between an auditor (revisor) and an accountant?
An auditor (in Danish – revisor) is a person who analyzes and examines financial statements. An accountant, on the other hand, is a person who keeps your company’s accounts up to date, enters costs into records, calculates VAT, etc.