Tax obligations for newly established companies in Denmark

If you own a company in Denmark or a foreign company doing business in Denmark, you will have to pay corporate tax of 22% on your net income. from the previous fiscal year. You can deduct any business expenses incurred in obtaining, securing and maintaining taxable income. However, if you are starting a new business or establishing a company in Denmark, there are some additional tax obligations you should be aware of.

To start a business in Denmark, you must first register with the Danish Business Authority (DBA). Upon successful registration, your business will automatically be registered with the Danish tax authority for corporate tax at a rate of 22%. However, you are responsible for self-registration for VAT, the rate of which is 25%.

If you're exempt from VAT, you should register for payroll tax. If you have employees, you need to register as an employer within 8 days and pay taxes and labour market contributions. You may also need to register as an importer/exporter in some cases.

Keeping track of accounting and bookkeeping regulations in Denmark is crucial. You're required to maintain all bookkeeping documents for at least 5 years. You're also responsible for registering for VAT, and any changes to your business must be reported through indberet.virk.dk.

Finally, as a registered company in Denmark, you will need to have a NemKonto (Easy-Account). This is a normal bank account that you assign to receive payments from the public sector, such as tax or VAT refunds.

When do I need to register for VAT in Denmark?

If you sell goods and services in Denmark, you generally need to register for Value Added Tax (VAT) within 8 days. VAT is a tax of 25% that must be added to the price of the goods and services you sell, unless you are exempt.

You need to register for VAT if your sales of goods and services exceed DKK 50,000. If your annual sales are less than DKK 50,000, you can choose to register for VAT, but it is not required.

Once you have registered for VAT, you must charge, declare, and pay VAT from the date of registration. Depending on the size of your company's turnover, you will need to pay VAT either monthly, quarterly, or every six months.

After registering for VAT, you must keep VAT accounts and can deduct VAT on most goods and services purchased for your business that were purchased for resale or used in your business operations. You can register your business for VAT at indberet.virk.dk (in Danish).

Tax obligations of employers in Denmark

If you register your business as an employer, you need to do it eight days before your business launch. If you start hiring employees after your business launch, you have eight days after paying your employees' salaries to register as an employer. You can register as an employer on www.virk.dk.

As an employer, you have to provide specific information about your employees' salaries every month and pay certain withholding taxes (A-tax) and labor market contributions to the Danish Tax Authorities (Skat) through E-income in E-tax for businesses (TastSelv/Erhverv).

To calculate your employees' salaries, you will need to order a tax card by entering their civil registration number (CPR). Your payslip should include your business's name, address, and business registration number (CVR), along with your employees' names, addresses, CPR, salary period, income year, and number of salary hours.

Every month, you need to enter information about A-income, salary hours, A-tax, labor market contribution (AM-bidrag), ATP, etc. into the E-income and Letløn systems. Additionally, you should keep your accounting records on paper or electronically for at least 5 years.

Registering and managing taxes as a self-employed individual in Denmark

If you are self-employed and starting a business in Denmark, you must register as an employer eight days before you begin operating. As a sole proprietor, you are responsible for paying taxes and labor market contributions (AM-bidrag).

To do this, you need to change your preliminary income assessment (forskudsopgørelse) and report your taxable income, which is called B-income. You must pay B-tax, which is tax deducted from income not taxed at the source. You will pay tax on your business's profit by entering the expected amount of income (business profit) on your preliminary income assessment in E-tax for individuals (TastSelv Borger).

Keeping records and filing taxes

In Denmark, it is important to keep track of all your business receipts and maintain balanced cash accounts of your business income and expenses. By law, you must keep these records for five years after the end of the income year.

You can access your tax return and service letter in E-tax for individuals (TastSelv Borger), and if you are registered for VAT or payroll tax, you must file your tax return via E-tax. To complete and file your tax return by July 1st, you need to prepare your accounts. This applies to all businesses regardless of size.

If your business revenue exceeds DKK 300,000, you need to report accounting information to SKAT. However, if your business revenue is less than DKK 300,000, it is enough to complete and file your extended tax return. You only need to send your tax accounts to SKAT if your revenue exceeds MDKK 25.

It is important to remember that tax laws can be complex and constantly changing. This article provides only a simple overview and cannot be relied upon as legal advice.