TEN legal guide to doing business in Europe: Denmark

A short introduction to Danish company law, covering the rules and regulations about the types of business structure and activities permitted, limitations and taxation.

Types of companies in Denmark

Danish limited company, the most used are:

Public Limited Company(“A/S”)
- Ideal for major investments.
- Minimum share capital: DKK 500,000.
- Shareholders’ liability limited to the value of the shares.
Private limited company (“ApS”)
- Most popular.Best for medium-small businesses.
- Minimum share copital: DKK 50,000.
- Shareholders’ liability limited to the value of the shares.
Entrepreneur Limited Company (IVS)
- Best for start-ups.
- Minimum share capital: DKK 1.00 (maximum DKK 49,999).
- Shareholders’ liability limited to the value of the shares.

Branch (“filial”)depending on the branch’s head office abroad. Taxation is equivalent to taxation of the Danish company.

Joint Venture, the main vehicle is:

Sharing the capital of anA/S, ApS& IVS.

Setting up a Company in Denmark

Setting up a companycan quickly be implemented online: The usual steps are:

The name of the future company is certified by the Danish Business Authority.
Transfer of the share capital to the founding law firm’s client account or a certificate from a Danish bank stating that the shareholders have deposited the share capital with a bank account opened in the name of the future company.
Name, address, and identification number of the board and/or the management.
Name, address, and identification number of the owner(s) to identify the ultimative owners.
Identification documents of the board, management, and owners.
The shareholders sign an incorporation deed.
The incorporation deed and the by-laws are registered by the Danish Business Authority.

Formation of companies with business purposes within the scope ot regulated markets are subject to specific requirements and formalities.

Restrictions to Foreign Investment

There are very limited restrictions to foreign investment.

Exchange Control

There is total freedom of capital movements. Capital, dividends, profits, and any kind of incomes can be withdrawn by foreign investors without restrictions.

Money Laundering

Cash movements over € 100,000 are forbidden within the country. Cash entry over € 10,000 is to be declared at the customs (Not wire-transfers).

Labour law Framework

Regulation: Labour relations are governed by the Employees’ Statute and collective agreements between the companies and the employees’ representatives.

Types of contracts: By-laws, employment agreements, lease agreement, client/customers agreement etc.

Social Security: Registration with the Social Security is compulsory. The social security contribution is paid partly by the company and partily by the employee.

Dismissals:

Minimum wage:There is no mandatory minimum wage in Denmark

Taxation

Corporate tax:

Danish companies and foreing companies with an residency in Denmark are levied with a corporate tax rate of 22%.

Publisher: Virtus Advokater – Danish Law Firm