Is it worth to invoice consulting services in Denmark through LTD (ApS)?

In Denmark, entrepreneurs quite often choose to register LTD (ApS) because this legal form of business is advantageous to them in many ways. One of the reasons for such a choice may be convenient taxation (22% corporate income tax is more favorable than personal tax, especially with high earnings), and another is limited liability. However, it is not always worthwhile to invoice consulting services through LTD, because in Denmark, the mere issuance of an invoice through an LTD company for consulting services does not necessarily mean that the company has earned income, it is only its income, which is taxable if the entrepreneur is not considered an employee of its client. If the entrepreneur receives a payment from the LTD, or if his LTD company invoices him for consulting services, or if the client pays consulting services to the LTD, the entrepreneur may be taxed double or triple.

It is worth asking yourself who is the beneficiary - the LTD or the entrepreneur. In the case where the work performed by the entrepreneur has the characteristics of ordinary employment, it is the entrepreneur himself, not the LTD, who gets paid - and according to the law, this happens if:
1. The entrepreneur has only one client or one main client.
2. The term of the contract between the entrepreneur and the client is not specified.
3. The client supervises the work performed by the entrepreneur and gives instructions, as in the case of employment.
4. The entrepreneur is entitled to, among other things, employment insurance or vacation to leave.
5. The client sets the entrepreneur's working hours.
6. The contract between the client and the entrepreneur includes a notice period.
7. The entrepreneur gets paid (monthly, weekly or hourly).
8. All costs associated with the work are on the client's side.

If the entrepreneur is deemed a beneficiary, LTD will have to reduce its income by the invoiced amount, after which it will be taxed on the entire amount received from the customer. The LTD can also deduct the entire remuneration that the entrepreneur has already received as an expense. An entrepreneur who is a director or shareholder of the company could have already received some or all of the salary in LTD, in which case he would have already paid personal income tax on the sum, and thus the tax would be paid twice in such a case, despite the preparation of an adjustment for LTD. Then the VAT on the LTD would be added to the entrepreneur's personal income and taxed again (in which case the tax would be paid a third time, increasing the total tax even to more than a hundred percent, without the possibility of making an adjustment).

If an entrepreneur is unsure whether he can be considered an employee, he should not invoice through LTD. On the other hand, if an entrepreneur decides to invoice through his sole proprietorship, even though he is considered an employee according to the law, he will still pay higher taxes, but not as much as in the case of LTD.