The owner of a Danish limited liability company (ApS) who wishes to be remunerated has two options – either pay themselves a salary or receive dividends. However, one cannot simply transfer money from the company’s account to one’s private account as remuneration. It is necessary to keep the finances of the company and the private finances of the owners fully separate. This is because a private individual and an ApS company are two different legal entities – unlike a sole proprietorship.
In the eyes of the law, everyone in a limited company is an employee – including the owners. This means that they have to go through the following process if they want to pay themselves a salary from their own company:
1. Registering the company as an employer on Virk.dk.
2. Drawing up an employment/director contract for themselves.
3. Preparing a monthly payroll statement for themselves.
4. Reporting the salary to Skattestyrelsen in order to be taxed correctly.
The question often arises as to whether there is a limitation on the payment of remuneration in a limited company. The answer is not clear. The owner of the company cannot pay themselves more remuneration than what would be payable to another person for equivalent work. If the remuneration is significantly higher, there is a risk that the tax authorities will consider the additional amount as a dividend, which will have to be subject to dividend tax.
If the company owner does not wish to pay themselves a salary in a given month, they have the option to do so. It is sufficient to notify Skattestyrelsen that a so-called nil declaration is being made. If the company owner forgets to inform Skattestyrelsen of this, there is a penalty of 800 kroner.
As mentioned above, the owner of a company has the option to pay dividends from the limited liability company to their own account as an alternative to remuneration. A dividend is money that the company pays out to shareholders and other investors. It is important to remember to record dividends correctly. Whether the business owner pays themselves a salary or receives a dividend, tax must be paid. It is the company’s responsibility to report and account to Skattestyrelsen. For this purpose, LetLøn on skat.dk can be used. There, notification can be made through the calculation programme and the payroll system.
