Starting A Business in Denmark: Everything You Need To Know

Setting up a business in Denmark can be an exciting opportunity for any entrepreneur looking to break into a new market.

Denmark in particular has attracted the attention of business owners, due to its thriving economy, great location in Europe and high quality of living.

Here, we talk you through everything you need to know about setting up a business in Denmark, even as a non-EU citizen.

Why Choose Denmark for Your Business?

Before moving to Denmark and start a business, it’s worth looking into why it might be a good, strategic move.

For example…

Stable Economy And Good Location

Denmark not only has a stable and growing economy, it also is a country with low public debt – providing a reliable financial safety net.

It is also well positioned in Northern Europe, close to Scandinavia and other EU markets, making it a great location for businesses looking to expand across the continent.

Startup-Friendly Environment

The Danish government actively supports new businesses coming to the country through initiatives like the Startup Denmark programme, which offer visas for entrepreneurs outside the EU/EEA.

This has helped attract non-European entrepreneurs to the country, further boosting their growing economy.

Tax Benefits

Denmark has a relatively low flat corporate tax rate of 22% on taxable profits, making it an appealing option for business owners.

What To Consider Before Moving To Denmark

Before moving to Denmark to start a business, it’s worth considering a few factors, such as:

Cost of Living

Denmark is a country that is known for its high standard of living.

Whilst residents enjoy good infrastructure and public services, this does come at a cost. Compared to other European countries, Denmark is considered to be on the more expensive side – though this will be higher in urban areas.

Make sure you research all living costs before moving so you can comfortably live and run a business.

Visa and Residency

If you are a non-EU citizen, you will need to apply for a visa to live and start a business in Denmark.

EU/EEA citizens will not need a visa, but they do need to register for residency. However as mentioned, initiatives like the Startup Denmark Visa are great options for entrepreneurs looking to break into this market.

A Step-by-Step Guide To Starting A Business In Denmark

Step 1: Choose Your Business Structure

Before starting a business in Denmark, you’ll want to decide exactly what type of business you want to start.

This will depend on a few things – such as if you want to have shareholders, employees and how you want to pay taxes. Some of the options include:

Public Limited Liability Company (A/S): An option for big companies that want their shares to be publicly traded. This structure requires a minimum share capital of DKK 400,000 and is liable for corporate taxes.

Private Limited Liability Company (ApS): Better for smaller companies, this structure requires a minimum share capital of DKK 40,000 and is privately owned by the shareholders.

Sole Trader: Almost like a freelance structure, the owner has full control and does not have to put any capital into the business.

Partnership (I/S): This is another option for smaller businesses. The company will need to have two partners who share full responsibility for all taxes.

Branch: A good option for foreign companies that want to have a presence in Denmark but don’t want their company to be registered there. The branch acts like a sort of extension of the business, which is headquartered elsewhere.

Step 2: Get Your NemID or MitID

Before you register your business, you’ll need to get a NemID or MitID (Danish digital signature).

You get this once you become a resident, so make sure you receive this when completing the visa process.

Step 3: Register Your Business

Once you’ve decided the business structure, it’s time to get it registered. The Danish Business Authority (Erhvervsstyrelsen) has an online platform (“Start Virksomhed”) that is set up for company registration.

Once registered, businesses get a unique CVR number, which is used to identify the company.

Step 4: Open A Business Bank Account

You’ll need a business bank account, especially if your company structure requires a minimum share capital.

Whilst lots of Danish banks have good business bank account options, you can also use international banks if easier.

Step 5: Register For Taxes

Your business will also need to be registered with the Danish Tax Authority (SKAT). Usually, this is handled during the registration process, but ensure it’s completed before you start working.

When it comes to taxes in Denmark, here’s what you need to know:

Denmark’s corporate tax is a flat 22%, making it lower (and more appealing) than other countries in Europe.

VAT sits at 25% and is applied to most goods and services, however essential items are exempt. Only businesses that turnover more than DKK 50,000 must register for VAT.

Step 6: Hire Employees

If your business needs employees, make sure you know Danish employment laws inside out.

Danish employees are expected to work 37 hours every week, with maternity leave sitting at 52 weeks.

Employees are also entitled to five weeks holiday and whilst there is no official minimum wage, unions are vocal about fair pay.