REGISTRATION OF A SOLE PROPRIETORSHIP IN DENMARK
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• Advice from our specialists.
• We are with you from the beginning to the end of the company registration process.
A sole proprietorship is a form of business in which the owner has personal and unlimited liability for the company’s obligations. This means that the owner is personally responsible for the company’s liabilities, both business and tax. In the event of problems with the solvency of the company, the owner is responsible with their personal assets for the company’s liabilities, including the house, car, among others.
Start your sole proprietorship with us, it will be assured to avoid legal problems with your start-up.
You will receive:
Requirements for a sole proprietorship:
• Number of owners: only one owner.
• Liability: personal and unlimited.
• Capital: There is no initial capital requirement.
• Accounting: there is no requirement to publish accounting data.
• Management: no management or board of directors required.
Private companies must pay tax on their profits, that is, tax on the amount that remains after expenses are deducted from income. A sole proprietorship is taxed in the same way as the salary of a regular employee.
Therefore, you must inform the Danish tax authority of your expected profit or loss by filling out a statement of expected income (forskudsopgørelse) in advance – just as ordinary employees do every year.
It is important to update the expected income data so that the advance income tax payments made each month are as close as possible to the amount of the final calculated annual income tax. The idea is to avoid an unexpectedly large tax liability at the end of the year.
Roughly speaking, it depends on whether you anticipate a turnover of more than DKK 50,000 per year.
– In PMV, you cannot have more than DKK 50,000 in revenue per year, and you cannot register your business for VAT or hire employees.
– Once you find that you exceed this amount of revenue, you will have to change your form of business to EVS by reporting it to the authority.
– You can exceed DKK 50,000 in revenue in EVS, and only after you exceed this amount you must register the company for VAT (you can earlier if you find it beneficial to your business).
These are the main differences that should determine your decision when choosing the right form of business for you.
| Information about PMV | Information about EVS |
| One owner | One owner |
| You can’t hire employees | You can hire employees |
| Income up to DKK 50,000 per year | No restriction on income |
| Personal and unlimited liability of the owner for the obligations of the company | Personal and unlimited liability of the owner for the obligations of the company |
| Does not pay VAT and other fees | Once revenue exceeds DKK 50,000, the company must be registered for VAT |
| You cannot export/import goods/services from outside the EU | You can export/import goods/services from outside the EU |
| There is no obligation to send an annual report to the Danish Business Authority | There is no obligation to send an annual report to the Danish Business Authority |
| Accounting of income and outgoings and tax settlements is required | Accounting of income and outgoings and tax settlements is required |
| Registration must be renewed after three years | Registration does not need to be renewed |
| Danish CPR number required for business registration | Danish CPR number required for business registration |
| No initial capital required | No initial capital required |
| One person can have one PMV | One person can have one EVS |
There is a big difference between setting up a sole proprietorship (PMV, EVS) and a limited liability company (ApS).
As a result, there is much more financial security for the owner in ApS than in EVS. The advantage of EVS instead of ApS is that it is easier to manage the company yourself.
The requirement for start-up capital is what often discourages entrepreneurs from starting this type of business.
Can I run my own business while on welfare?
If you receive cash benefits from the municipality, you cannot start your own business. This also applies to unemployed people receiving unemployment benefits. This is because the unemployment fund and the municipality require you to be ready to work while receiving benefits.
As a self-employed person, do I need insurance?
As a self-employed person, you are not covered by private insurance. Therefore, it would be a good idea to check if there is an insurance policy or two that you need to take out to insure yourself or your possessions, such as your computer or phone. In addition, you should check to see if there are any statutory insurances you need to take out. It depends on what your business does.
What is deductible?
There are various deductions for sole proprietorships that the owner can take advantage of. These are business expenses incurred that allow the business to operate. Such expenditures must be documented. For example, you can get a deduction for the purchase of office furniture, expenses for accountants and lawyers, premises, electricity and heating, as well as telephone, internet and insurance expenses.
What are the requirements for a company name?
The name of a sole proprietorship must be clearly different from other company names. The family name, company name, foundation name, distinctive real estate name, trademark, enterprise characteristics, etc. must also not be used. If the company’s operating activities change, a name change is required. In addition, EVS must not include the designation of a joint stock company (A/S) or a limited liability company (ApS).
Do I need a business account for a sole proprietorship?
There is no requirement for a sole proprietorship to have a business account.
However, it is a good idea to have a separate bank account for the company to separate personal and business finances, which can make it easier to settle VAT. Besides, banks and the Tax Administration recommend having a business account because of the fight against „money laundering” and the increased transparency of transfers between the business and the private part of the business owner.
How to close a sole proprietorship?
A sole proprietorship is closed on the Danish Business Agency/Ehrvervsstyrelsen website. However, there are a number of practical aspects that need to be addressed. Among other things, you need to check when and how you can terminate contracts, orders with contractors, settle obligations, etc. In addition, you need to make sure that you still have access to the company’s digital mailbox, as it is mandatory through TastSelvErhverv to report and pay taxes up to and including the date of closure (if the company is registered for VAT, payroll, excise, etc.).
All we need is your health insurance card and Danish ID, i.e. a copy of your passport or driver’s license.