Denmark Entity Set Up

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Denmark Subsidiary Entity Set-Up

Global expansion into Denmark generally means that you need to set up an in-country entity. However, by partnering with us you create the possibility to bypass this process and utilize our expertise. By using our PEO-service we take care of the complicated paperwork.

Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of just frustrating and time-consuming. Therefore, we have been supporting companies in over 100 countries with their expansion plans.

In this guide, we will share which documents you need to establish an entity in Denmark, but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Denmark.

How to set up a Denmark Subsidiary

Setting up a subsidiary in Denmark? First, you need to choose a company type.

Most typically, the choice will be between a branch and a private limited liability subsidiary known as an Anpartsselskab (ApS). The subsidiary is a legal entity entirely independent of the parent company and is incorporated in Denmark as a local company. 

Various documents and procedures must be completed to set up the subsidiary. These include:

  • Selecting a company name, which does not need to be the same as the parent company and can be unique to Denmark.
  • Necessary documents, such as the company’s Articles of Association, which do not need to be notarized.
  • Register with the Danish Business Authority (DBA) to obtain the Central Business Registration (CVR) number via the DBA website at a cost of DKK 670 (€90, US$107). For this, The DBA requires a ‘NemID’ signature to access internet services. To obtain this one member must be a Danish resident or have a work permit.
  • Register with the Customs and Tax Administration (SKAT) for withholding tax and remitting to the authorities.
  • Company must further be registered for VAT, for payroll tax, and import and/or export licenses (for business outside European Union).
  • Take out mandatory industrial injury insurance.
  • Open an account with a Danish bank to deposit share capital of at least DKK 40,000 (€5,400, US$6,440) and have a registered Danish office.

What you need to set up a Denmark Subsidiary

  • Company founder(s) - these need not be Danish citizens.
  • Articles of Association and Memorandum of Association before applying for registration with the Danish Business Authority (DBA) within two weeks of Memorandum being signed.
  • Central Business Registration (CVR) number from the Danish Business Authority (DBA).
  • Lists of shareholders and their investments.
  • A list of directors and their responsibilities.
  • Minimum share capital of DKK 40,000 (€5,400, US$6,440), paid before registration.
  • Register with the Customs and Tax Administration (SKAT) for withholding tax and remitting to the authorities.
  • Register for VAT, if revenue is above DKK 50,000 (€6,720, US$8,000).
  • Register for payroll tax, import / export licenses (for business outside European Union).
  • A bank account suitable for receiving public sector payments (a NemKonto/Easy Account), which cannot be opened until the company is incorporated and can take up to three weeks.
  • A registered office address: the property does not need to be owned or rented by the subsidiary.

Benefits of setting up a Denmark Subsidiary

Specific advantages for a foreign company opening a subsidiary in Denmark include not being responsible for the subsidiary’s debts or liabilities. Also, the foreign parent company’s financial statements and accounts do not need to be presented to Danish authorities.

The subsidiary can operate under a different company name and can pursue separate business interests. It operates under Danish law in the same way as local companies and is taxed on its worldwide income and liable for 22% Corporate Tax on business profits. The liability of the subsidiary’s shareholders is limited to their investment in shares.

Through its subsidiary, the parent company has the advantage of exploring the Danish market and further afield among other Nordic countries and the European Union’s 27 member nations.

Other benefits for a subsidiary:

  • Easier to obtain regulatory approvals, loans and finance and enter into contracts with other Danish and European Union companies
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches
  • Employees feel there is more stability and job security than from being with a branch

In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the European economy.

However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Denmark.

Using a global Professional Employer Organization (PEO) such as Bradford Jacobs means staff can be sourced, placed in their roles, and be up-and-running within days, rather than months, and with all the difficulties of payroll, taxation, and compliance under control thanks to our Employer of Record (EOR) services.

Denmark Subsidiary Laws

Subsidiaries operated in Denmark by foreign companies are subject to the Danish Companies Act, which is largely based on European Union corporate law. The Companies Act governs incorporation, share capital, requirement of audits and annual general meetings and the liabilities of managers and directors. All companies must register with the Danish Business Authority, the Danish Commercial and Companies Agency and be enrolled in the Commercial Registry.

Changes to the Companies Act, brought into force in 2021, stipulated that Entrepreneurial Companies (IVS) had to be converted into private limited liability companies Anpartsselskab (ApS) by April 2021. However, there are other laws that must be followed, which can be seen in the sections below.

Registration and Documentation:

  • Select a company name, which does not have to be the same as the parent company, unique to Denmark
  • Necessary documents include the parent company’s declaration intending to open a subsidiary, Articles of Association, details of the initial capital investment and of the shareholders. Documents do not need to be notarized
  • Register with the Danish Business Authority (DBA) to obtain the Central Business Registration (CVR) number via the DBA website at a cost of DKK 670 (€90, US$107)
  • The DBA requires a ‘NemID’ signature to access internet services. To obtain this one member must be a Danish resident or have a work permit
  • Register for export and import licenses (for business outside European Union)
  • Take out mandatory industrial injury insurance
  • Open an account with a Danish bank to deposit share capital of at least DKK 40,000 (€5,400, US$6,440) and have a registered Danish office

Accounts and Taxation:

  • Register with the Customs and Tax Administration (SKAT) for withholding tax and remitting to the authorities
  • Company must further be registered for VAT, if revenue is above DKK 50,000 (€6,720, US$8,000), for payroll tax
  • Limited liability companies pay corporate income tax at 22%
  • Shareholders are taxed on their company salary and profits
  • Annual accounts must be filed with the DBA

Management:

  • Minimum of one shareholder with no upper limit
  • Generally, no personal liability for the shareholders
  • Board of directors responsible for strategic management, with executive board handling day-to-day management

Take a faster route into the Danish economy

The cost-effective and time-saving alternative to the expensive and lengthy process of establishing your subsidiary in Denmark is to work alongside a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs.

We have over 20 years’ global experience and our in-country specialists will steer you through the complexities of setting up operations by locating and onboarding new employees, then ensuring compliance with all employment and tax regulations.

You retain day-to-day control of your staff – who are in place and operational within days rather than the months it could take to incorporate a legal entity. There is no reason for international borders to stand in the way of your international expansion. Contact us today!