How to Establish and Manage a Private Limited Liability Company (ApS) in Denmark- A Comprehensive Giude

Table of Contents

1. Understanding the Basics of an ApS in Denmark

• Why Choose an ApS? Balancing stability with flexibility.
• Key Benefits of Danish Private Limited Companies A detailed look at advantages.
• Legal Independence of an ApS How autonomy shapes business operations.

2. Starting Your Danish ApS

• Requirements for Establishing an ApS What you need to get started.
• Step-by-Step Guide to Setting Up an LLC in Denmark A practical approach.
• International Entrepreneurs and Danish ApS Why Denmark is a great option for global business.

3. Planning Your ApS Formation

• Choosing the Perfect Name for Your ApS Tips for standing out.
• Determining Your Industry Aligning with Danish market trends.
• Understanding Formation Costs What to budget for your ApS.

4. Financing and Capital Structure

• Capital Contribution Rules Minimum requirements for an ApS.
• Different Types of Capital Classes Structuring your company’s equity.
• Confirming Capital Contributions Legal compliance for founders.
• Financial Assistance for Entrepreneurs Danish programs supporting new ApS ventures.

5. Legal Documents and Ownership

• Essential Formation Documents The foundation of your ApS.
• Articles of Association Defining the rules of your company.
• Registering Ownership Transparency and legal compliance.
• Ownership Structures How shares are distributed in an ApS.
• Managing Share Transfers Ensuring smooth transitions of ownership.

6. Governing an ApS

• Board Member Responsibilities Key duties and obligations.
• Planning General Meetings Keeping stakeholders informed and involved.
• Setting Up a Bank Account Practical steps for Danish ApS banking.

7. Accounting and Reporting

• The Danish Accounting Act Its impact on ApS operations.
• Accounting for an ApS Key principles and best practices.
• Reporting and Auditing Ensuring financial transparency.
• Annual Financial Reporting Meeting your obligations under Danish law.
• Digital Tools for an ApS E-services to streamline operations.

8. Taxation in Denmark

• Corporate Taxation Overview Income tax and dividend implications.
• Understanding VAT Obligations Navigating value-added tax for your ApS.
• Asset Valuation Ensuring accuracy in financial declarations.
• Compensation for Owners Salary structures and distributions.

9. Employee Management in an ApS

• Danish Pension Scheme Rules Securing employee futures.
• Hiring Staff Legal requirements and processes.
• Handling Employee Dismissals Navigating sensitive situations within Danish law.

10. Legal Protections and Risks

• Limits of Liability in an ApS When personal assets might still be at risk.
• Comparing Business Entities ApS versus other company structures.
• Converting a Sole Proprietorship Transitioning to a limited company.

11. Closing or Transforming Your ApS

• Shutting Down an ApS Step-by-step process for dissolution.
• Using an ApS as a Holding Company Advantages of a strategic structure.

12. Leveraging Danish Systems for Your ApS

• The Importance of a CVR Number Official identification for your business.
• Digital Post in an ApS Staying connected in a digital-first economy.
• Employee Access to MitID Erhverv Simplifying operations with Denmark’s digital solutions.

When considering starting a business in Denmark, selecting the appropriate legal structure is vital, and one of the most common choices is forming a Danish Private Limited Liability Company (ApS). This structure offers a blend of reliability and adaptability, making it an attractive option for both local and international business owners. In this guide, we’ll explore the key aspects of establishing and operating a Private Limited Liability Company in Denmark. Topics will include capital requirements, the duties of owners and board members, tax implications, and employee-related considerations. If you’re looking to establish your presence in Denmark, Ragnum’s expertise can provide comprehensive support at every stage of launching and managing your Danish ApS.

Danish LLC: A Balance of Stability and Flexibility

A Danish Limited Liability Company (commonly referred to as a Danish LLC or ApS) is one of the most popular business structures in Denmark. This legal framework is particularly attractive to entrepreneurs due to its requirement for an initial capital investment, which can be provided in cash or assets. This ensures that the company starts on a solid financial footing, ready to support its operations from day one.

The defining feature of a Danish LLC is its limited liability structure, which offers substantial financial protection to its owners. Under this model, personal assets are shielded from the company’s debts and obligations, limiting the liability of owners to their original capital contributions. This financial security makes the Danish LLC an appealing choice for business owners who want to mitigate personal financial risks while exploring new ventures.

Combining strong financial safeguards with operational flexibility, the Danish LLC encourages entrepreneurial innovation and economic growth. Its design supports businesses in scaling operations while minimizing risk, fostering a dynamic environment for success in Denmark’s thriving business landscape.

Advantages of a Danish Private Limited Company

A Danish Private Limited Liability Company (ApS) is among the most popular legal structures for businesses in Denmark, valued for its flexibility and robust financial protection through limited liability. As a separate legal entity, the ApS has an identity distinct from its shareholders, ensuring their personal liability is limited to the amount they have invested. This safeguard makes the structure particularly appealing to entrepreneurs seeking to grow their ventures while minimizing personal financial risk.

The Danish Private Limited Company model is highly adaptable, making it suitable for both individual business owners and investor groups. It effectively combines financial security with the flexibility needed to navigate dynamic market conditions. To establish an ApS, a minimum initial capital of DKK 20,000 is required, providing a solid financial base for operations. Additionally, a registration fee of DKK 670 is necessary to cover administrative procedures, with an efficient process allowing businesses to launch quickly.

Ownership in a Danish Private Limited Company can be held by one or multiple parties, including individuals and corporate entities. A detailed ownership register is maintained to document share distribution, liens, and collateral associated with company assets. This transparency is vital for stakeholders and regulators, offering a clear overview of the company’s financial position.

The Companies Act also mandates that an ApS has a governing board of directors to oversee daily operations. The board’s structure can be customized based on the company’s specific needs, ensuring both compliance with legal requirements and operational efficiency. Comprehensive documentation of ownership agreements, liabilities, and financial transactions further enhances the company’s credibility, fostering trust among creditors and regulators alike.

By balancing limited liability, flexibility, and operational transparency, a Danish Private Limited Liability Company provides entrepreneurs with a reliable foundation to pursue their business ambitions while safeguarding personal assets.

Legal Independence of a Danish Private Limited Liability Company

The Danish Private Limited Liability Company (ApS) is a highly attractive business structure for entrepreneurs and investors in Denmark. Combining legal protection, operational flexibility, and tax efficiency, the ApS model offers a robust framework for running a business while minimizing personal financial risk.

1. Separate Legal Entity

One of the most notable advantages of a Danish Limited Liability Company is its status as a separate legal entity. This means that the company:

• Can independently own assets,
• Enter into contracts and obligations,
• Conduct transactions without impacting its shareholders’ personal finances,
• Exercise legal rights autonomously.

This legal distinction not only ensures operational flexibility but also allows the company to function with greater efficiency and independence, safeguarding the interests of both the business and its shareholders.

2. Shareholder Protection

The Danish LLC structure provides significant financial protection to its shareholders by legally separating the company’s obligations from their personal assets. This separation ensures that:

• Shareholders’ personal finances are shielded from company debts,
• Their liability is limited strictly to their initial investment.

This level of security makes the ApS model a preferred choice for individuals and groups looking to mitigate personal risk while pursuing business opportunities.

3. Tax Advantages

Operating as a Danish Private Limited Company offers notable tax benefits. With corporate tax rates typically lower than personal income tax rates, an ApS allows businesses to:

• Reduce costs associated with purchases and investments,
• Achieve greater financial efficiency compared to operating as an individual.

This tax structure is especially beneficial for companies involved in large-scale transactions or operating across multiple industries.

4. Strategic Tax Planning

A Danish Private Limited Liability Company also enables effective tax planning, offering opportunities to minimize tax liabilities. Businesses can:

• Employ accounting strategies to optimize operational costs,
• Leverage tax regulations to enhance profitability while reducing tax burdens.

This flexibility supports financial sustainability and competitiveness, ensuring businesses remain agile in an ever-evolving market environment.

Conclusion

The Danish ApS combines legal independence, shareholder protection, and financial efficiency, making it a top choice for entrepreneurs and investors. By providing a secure and flexible framework, the ApS supports sustainable business growth while reducing personal and financial risks. For anyone considering starting or expanding a business in Denmark, the Private Limited Liability Company model is a proven path to success.

Requirements for Establishing a Danish Private Limited Liability Company

Forming a Danish Limited Liability Company (LLC), commonly referred to as an ApS, involves meeting specific criteria based on whether the founder is an individual or a legal entity. Sole proprietorships are not eligible to establish an ApS, as Danish law does not recognize them as legal persons.

For Individual Founders

Individuals looking to establish a Private Limited Company in Denmark must meet the following requirements:

• Be at least 18 years old,
• Not be under legal guardianship or incapacitated,
• Have no involvement in the bankruptcy or restructuring of another business.

These straightforward conditions ensure that founders are legally competent and financially stable to operate a Danish LLC.

For Legal Entities

Legal entities face a more detailed set of criteria when forming a Limited Liability Company in Denmark:

• The entity must have legal capacity, meaning it cannot simultaneously be in the process of incorporating another company.
• It must not be subject to ongoing restructuring, bankruptcy, or compulsory liquidation.
• The entity must be capable of acquiring rights, entering into legal agreements, and assuming obligations.

However, entities undergoing voluntary liquidation are permitted to establish a new company, provided they meet the other eligibility requirements.

Conclusion

Establishing a Danish Private Limited Company requires careful consideration of legal and financial conditions for both individual and corporate founders. By ensuring compliance with these requirements, entrepreneurs can take advantage of the many benefits offered by the Danish ApS structure, including limited liability and operational flexibility.

How to Set Up a Danish LLC

Establishing a Danish Limited Liability Company (LLC), also known as an ApS, can be done through several methods, depending on the desired speed and convenience. Entrepreneurs have three primary options for company registration in Denmark:

1. Online Registration

This is the fastest and most cost-effective method. By using the Danish Business Authority’s online platform, the company can be established and operational within just a few hours.

2. Paper Registration

A more traditional approach, paper registration takes longer-typically two to three weeks to complete. This method may be suitable for those who prefer manual processes.

3. Purchasing a Pre-Registered Company

For those in need of immediate operations, buying a pre-registered company is an option. These companies are already registered but have not conducted any business. They can be activated within one day, making them ideal for urgent needs.

Simplifying the Capital Deposit Process

To streamline the formation process, founders can deposit the required share capital through a lawyer’s client account (klientkonto). This ensures a smooth payment process. Once the company is established, the share capital-set at a minimum of DKK 20,000-can be used for operational expenses such as salaries and dividends but cannot be transferred to personal accounts.

Steps to Establish a Private Limited Company in Denmark

1. Draft the Incorporation Document and Articles of Association

These documents must be signed by the founders, either electronically or manually. Once completed, they are submitted along with the minimum share capital deposit.

2. Register on the Danish Business Authority’s Platform

The next step is to register the company on virk.dk, the Danish Business Authority’s digital platform. During registration, founders must submit:

• The incorporation document,
• Articles of Association,
• Proof of the share capital deposit.

This step must be completed within 14 days of signing the incorporation document. A registration fee of DKK 670 is required.

3. Obtain a CVR Number

Upon successful registration, the Danish Enterprise Authority issues a unique identification number (CVR), officially establishing the company.

4. Open a Business Bank Account

Founders must open a business bank account where the share capital will be deposited. Banks may request the CVR number, company ledger, identification for at least one owner, and sometimes a business plan.

For Businesses Involved in International Trade

• Importing Goods from Outside the EU: Register for an EORI number, an EU-wide identifier for importers.
• Exporting Goods to EU Countries: Complete export registration.
• Intra-EU Trade: Comply with Intrastat reporting requirements to ensure adherence to EU trade regulations.

By following these steps, entrepreneurs can efficiently establish a Danish LLC, leveraging its legal and operational advantages to thrive in Denmark’s business-friendly environment.

Opening a Danish Limited Liability Company for International Entrepreneurs

Establishing a Danish Limited Liability Company (ApS) is a feasible option for international entrepreneurs, provided certain requirements are met. Foreign nationals can easily set up and operate their businesses in Denmark, with minimal hurdles along the way.

To register a Danish Private Limited Company, applicants need to submit the necessary documents via Virk.dk, the official online business registration platform. Required documents include a passport copy for identity verification, proof of residential address, and an identification number from the applicant’s home country. If the company is owned by another legal entity, a registration certificate in Danish or English is also needed.

The nature of the business activity is important when determining eligibility. Individuals who do not have a Danish personal number (CPR) may encounter limitations when registering an LLC such as an ApS or an A/S. However, those with a CPR number are also permitted to operate as sole proprietors.

A registered business address in Denmark is another essential requirement. This is necessary for both legal registration and to carry out business operations, whether the entrepreneur resides in Denmark or abroad.

Denmark is recognized for its business-friendly environment, providing excellent opportunities for international entrepreneurs. It’s crucial to understand the country’s laws and regulations and consult with experts when needed to ensure full compliance before launching a Danish LLC.

Choosing the Right Name for Your Danish ApS

Selecting an appropriate name for your new Danish Private Limited Company (ApS) is an important step that requires careful consideration of several factors:

The name should clearly reflect the business’s purpose and activities, ensuring that customers and partners can easily understand what the company does.

To avoid potential issues, the name must be distinct and not too similar to any other businesses already registered with the Central Company Registration (CVR). It’s essential that the name is neither identical nor confusingly close to another company’s name.

Incorporating the company’s legal structure in the name is also crucial. It should clearly state that the company is a limited liability entity, establishing its legal status to potential business partners. Be mindful of not using names, trademarks, or intellectual property that belong to others.

If your company plans to operate multiple brands, these names must be registered with the CVR and included in the company’s Articles of Association. For consistency, the primary name should appear in all official communications, business documents, and digital platforms. When setting up a website, make sure to include the registered office and CVR number alongside the main company name for easy identification. Finally, if the company’s core activity undergoes significant changes, consider updating the name to reflect the new direction.

Choosing the Industry for Your Danish ApS

Selecting the appropriate industry code is an essential step when registering a Danish Private Limited Company (ApS), as it defines the primary business activities. Careful selection of the industry code for the main activity, which generates the highest revenue, is crucial.

This decision not only impacts the business at its startup but also becomes important as the company evolves or shifts focus. If a secondary activity begins to generate more revenue, the primary industry code should be updated accordingly.

For businesses operating across multiple sectors, it is possible to register up to three additional industry codes. While registration of these extra codes is not mandatory, it becomes necessary if the secondary activity accounts for at least 10% of the total turnover and generates a minimum of 300,000 kroner annually. Even if these thresholds are not met, companies may still choose to voluntarily register extra industry codes.

It’s important to keep in mind that the industry code influences various legal obligations, including VAT and tax responsibilities. Therefore, if the company’s primary focus changes over time, the industry code should be updated to reflect the new business direction.

Costs of Setting Up a Danish ApS

The cost of registering a Danish Private Limited Company (ApS) can vary based on the method you choose to establish the business. Opting for online registration is the most cost-effective option if you handle the process on your own. However, hiring professional services, such as a lawyer or accountant, will increase costs, typically starting at 1,500 kroner or more. These fees may rise if the shareholders’ agreement is complex, especially when there are multiple stakeholders involved. Additionally, if the initial capital is not provided in cash, the professional service fees might be higher.

Establishing a Danish Limited Liability Company (ApS) involves several key expenses. You’ll need to pay a registration fee of DKK 670 to the Danish Business Authority, as well as a mandatory minimum capital investment of DKK 20,000 to officially register the company.

Verifying the capital contribution is an essential part of the registration process and may require professional assistance. It’s also important to budget for any unforeseen expenses during the setup, which may necessitate specialist support.

Capital Contribution in an ApS

In a Danish Private Limited Company, ownership is represented by shares, which can be distributed based on needs, typically with a nominal value of DKK 1 per share. Shareholders are entitled to receive dividends if the company is profitable, although they may also opt to reinvest the profits. Despite the company’s growth and rising profits, the initial share capital remains unchanged. For example, if the initial capital is DKK 20,000, it will stay the same, while the value of each share increases as the company’s assets and profits grow.

In addition to the minimum required capital of DKK 20,000, further capital can be injected into the company. One option is to create a capital premium, where the nominal share capital remains at DKK 20,000, and any additional investment is placed into the company’s free reserves. Another possibility is to fund the company with a personal loan, which may be tax-exempt under certain conditions. However, a promissory note should be drawn up to document the loan.

Usually, all shares in a Danish ApS carry equal rights, but the articles of association may allow for the creation of different share classes. These share classes can assign different rights to shareholders, such as prioritizing dividend payments for a specific class. The articles must clearly outline the rights and differences between the classes.

Share Classes in a Danish Limited Liability Company

A Danish Limited Liability Company (LLC) has the flexibility to categorize its equity shares into various classes, allowing for tailored rights and privileges. These share classes can include:

• Class A: Shares with enhanced voting rights.
• Class B: Shares with fewer associated rights.
• Class C: Typically, the least valuable or restricted shares.

This structure enables the company to assign specific privileges, such as:

• Differing levels of voting power at general meetings.
• Priority in purchasing additional shares.
• Preferences in profit distribution.

The ability to define distinct share classes allows businesses to align shareholder rights with the expectations of their investors and ownership strategies.

Each share class, along with its rights and restrictions, must be explicitly stated in the company’s articles of association. For companies that have not previously divided shares into classes, introducing such a system requires presenting the proposal at a general meeting and obtaining approval through a vote.

For instance, a Danish Private Limited Company seeking passive investors might issue Class B shares that lack voting rights. This ensures decision-making authority remains with active stakeholders, such as the company’s managing director. This approach balances investment opportunities with effective governance.

Capital Verification for a Danish LLC

To register a Danish Limited Liability Company (LLC), also known as an ApS, the minimum capital requirement of DKK 20,000 must be verified to ensure it is available at the time of incorporation. This verification can be done through a bank or a lawyer.

Banks typically charge a fee, often up to DKK 4,000 plus VAT, to confirm the availability of funds. This involves the bank stamping and signing a document to validate the deposit.

Alternatively, entrepreneurs can opt for capital approval via a lawyer’s client account. In this arrangement, the lawyer holds the funds in a designated account until the company is officially registered. Once the process is complete, the lawyer transfers the capital to the company. Many law firms offer this service as part of a company formation package, which may eliminate the need for a separate bank fee.

The required capital can be contributed in cash or as non-cash assets, such as vehicles, machinery, or tools, provided these have measurable economic value. However, contributions in the form of services are not accepted. For those unable to meet the full cash requirement, assets of equivalent value can be used to satisfy the capital threshold.

Confirming the capital is a critical step in forming a Danish Private Limited Company, as it guarantees the financial foundation is in place. When deciding on the method of verification, it’s important to consider associated costs and select the most suitable option for your circumstances.

Financial Support for Establishing a Danish LLC

If you’re planning to establish a Limited Liability Company in Denmark (Danish LLC), you may find the Founder’s Account Program and the Entrepreneur’s Program to be valuable tools for saving and funding your business. These programs offer notable tax benefits, helping entrepreneurs optimize their financial planning.

Here’s how the programs work:

• Founder’s Account Program: Best suited for individuals with lower tax rates, offering a tax deduction of approximately 27%.
• Entrepreneur’s Program: Tailored for those subject to the highest tax bracket, providing a more substantial tax deduction of about 52%.

Both programs can help cover the costs of setting up a Danish Private Limited Company. However, eligibility requirements and rules around amortization can be intricate. For example, you must qualify as a “founder” under specific criteria. To fully understand and utilize these benefits, consulting a professional accountant is highly recommended.

Your choice between these programs should align with your personal tax situation. By leveraging these accounts, you can reduce the financial burden of launching your Danish Private Limited Company while enjoying significant tax advantages.

Essential Elements of Incorporation for a Danish LLC

When establishing a Danish Limited Liability Company (Danish LLC), the incorporation document serves as the cornerstone of the registration process. This document must include certain mandatory details, while allowing for additional optional clauses depending on the founders’ preferences.

Mandatory Components

The incorporation document must include:

1. Commencement Date: The date when the company gains legal capacity. If no date is specified, it defaults to the date the document is signed.

2. Founders’ Details: Names, addresses, and identification numbers (if applicable) of the founders. Individuals must provide full names, while legal entities must list their company name, identification number, and address.

3. Accounting Start Date: Indicates when the company’s financial year begins.

4. Issue Rate: Specifies the price for issuing new shares in case of a future increase in share capital.

5. Deadlines: Establishes timelines for subscribing to shares and fulfilling payment obligations.

Optional Provisions

Founders can choose to include additional clauses, such as:

• Contracts: Agreements that may impose financial obligations on the company, including those with the founders.
• In-Kind Contributions: Details about non-cash contributions, such as equipment or property, made to the company.
• Special Rights: Specific privileges or benefits granted to particular parties, like founders or initial shareholders.
• Audit Exemption: If the company qualifies as a small enterprise, it may opt to waive the audit requirement.

The flexibility to tailor the incorporation document allows founders to align the structure and obligations of the Danish Private Limited Company with their strategic goals.

Articles of Association for a Danish LLC

Every Danish Limited Liability Company (Danish LLC) is required to draft an Articles of Association document. This legal document establishes the framework for how the company will operate and applies to all shareholders. As it is publicly accessible, the Articles of Association ensures transparency regarding the company’s structure and governance. While a standard format exists, companies can modify it to reflect their specific needs, provided the changes are relevant and align with legal requirements.

Essential Components

The Articles of Association must include:

• Company Name: The primary name, as well as any alternative or trade names.
• Purpose: A clear statement of the company’s activities and objectives.
• Share Capital: The minimum required capital (at least DKK 20,000).
• Shares: Details about the number or unit value of shares.
• Governance: Information about the company’s management structure, such as details of the board of directors or executive management.
• Shareholders’ Meetings: Procedures for convening and conducting general meetings.
• Financial Year: The company’s designated accounting period.

Optional Considerations

The Articles may also address additional matters, such as:

• Company Representation: Defining who is authorized to represent the company in legal and business matters.
• Additional Governance Rules: Tailored provisions for decision-making or shareholder rights.

This document plays a crucial role in the successful operation of a Private Limited Company in Denmark, offering clarity and legal structure to both founders and investors.

Ownership Register for a Danish LLC

Maintaining an accurate and up-to-date ownership register is a key requirement for any Danish Limited Liability Company (Danish LLC). This document serves as a record of all shareholding activities within the company, capturing details such as the number of shares held by each shareholder, the method of acquisition, and any associated rights, such as voting privileges.

Key Requirements

The ownership register must include:

• The full name and address of each shareholder or mortgagee. For corporate entities, it must list the company name, CVR number, and registered address.
• The total number of shares or mortgage rights held by each party.
• Dates of acquisition, pledge, or sale of shares.
• The quantity of shares at the time of these transactions.

Management and Transparency

It is typically the responsibility of the management team in a Private Limited Company in Denmark to maintain the ownership register. However, this task can also be delegated to third parties, such as accountants or legal advisors. The register can be stored physically or digitally, ensuring accessibility for regulatory inspections and, when necessary, for shareholders.

Public Disclosure

For transparency, companies are required to register shareholders who own 5% or more of the company’s shares or voting rights in the Public Owners’ Register on Virk.dk. This measure is vital for ensuring compliance and preventing financial misconduct, such as tax evasion.

Ownership Agreements

While not mandatory for a Danish Private Limited Liability Company, an ownership agreement is a private contract between shareholders outlining their rights and responsibilities. This agreement can prevent disputes among owners and remains confidential, unlike the publicly accessible ownership register.

By adhering to these requirements, a Limited Liability Company in Denmark ensures clarity in its ownership structure and fosters trust among regulators, partners, and stakeholders.

Managing Share Transfers in a Danish LLC

In a Danish Limited Liability Company (LLC), transferring or selling shares is generally straightforward and governed by a share transfer agreement. This document outlines the details of the transaction, including the buyer, seller, number of shares involved, and any applicable terms, ensuring compliance with tax laws and company policies.

Conditions and Protections

Share transfers may involve specific conditions, such as non-compete clauses, adjustments to the board of directors, or seller financing. In some cases, the company or co-owners may establish an ownership agreement to clarify rights and responsibilities, safeguarding the interests of all stakeholders.

If the company seeks additional funds to expand, it can increase its share capital by inviting contributions from current shareholders or attracting new investors. This process requires a two-thirds majority vote during a general meeting. Contributions can be made in cash or as non-cash assets, providing flexibility to the business.

Right of First Refusal

Under the Articles of Association, existing shareholders in a Danish LLC may hold a right of first refusal, allowing them to purchase shares before they are sold externally. This right, however, is optional, and shareholders may waive it if they prefer not to acquire additional shares. Valuation methods, such as auditor assessments or auction-based pricing, help ensure a fair process.

For third-party sales, the share price is typically determined through negotiation. However, when shares are transferred within families, legal requirements may mandate an independent valuation by an auditor to comply with tax regulations.

By adhering to these practices, shareholders in a Private Limited Company in Denmark can manage share transfers effectively while upholding transparency and compliance with Danish law.

Board Member Responsibilities in a Danish LLC

As stipulated by the Danish Companies Act, a Danish Limited Liability Company (LLC) must have a board of directors. The board can consist of a single individual, often the company owner, but larger companies may benefit from appointing multiple members to enhance governance.

Governance Structure

For larger businesses, the governance model typically includes both a board of directors and an executive board. The executive board handles day-to-day management, including mandatory audits, while the board of directors focuses on strategic oversight and long-term planning. In this setup, the executive board reports to the board of directors, ensuring clear accountability.

If the company operates with only an executive board, this body assumes responsibility for both operational and strategic decisions. Over time, companies may choose to add a supervisory board to enhance oversight, replacing or complementing the executive board.

By establishing a clear governance structure, Danish LLCs can ensure effective management, operational efficiency, and strategic alignment with their goals.

Organizing a General Meeting for a Danish LLC

In a Danish Limited Liability Company (LLC), the general meeting (generalforsamling) is a key event for making significant decisions about the company’s future. Danish law mandates holding such meetings at least annually, ensuring compliance and facilitating shareholder participation.

Shareholders can attend in person or appoint a representative with a power of attorney. Additionally, the company’s auditor and external advisors may be present unless restricted by the company’s Articles of Association.

Types of General Meetings

1. Ordinary General Meetings:

These focus on routine matters, such as:

• Approving financial statements.
• Allocating profits or addressing losses.
• Reviewing amendments to financial plans.

2. Extraordinary General Meetings:

These are convened for urgent decisions, such as:

• Modifications to the board of directors.
• Revisions to the Articles of Association.

Proper planning is vital to ensure the timely submission of the annual report to the Danish Business Authority. Meeting minutes must be recorded, including:

• The company’s name, type, and CVR number.
• The chairman’s name.
• Details of decisions made, along with the chairman’s signature and the meeting date.

These minutes serve as proof of the annual report’s approval and are submitted to the Danish Business Authority.

Opening a Bank Account for a Danish Private Limited Company

Establishing a business account (Erhvervskonto) is mandatory for every Private Limited Company in Denmark. This account separates the company’s finances from the personal finances of its owners, enhancing transparency and compliance.

Requirements and Process

• Choosing a Bank: Owners may opt for their personal bank or explore other institutions to find the best fees and services.
• Documentation: Opening a business account requires proof of the company’s legitimacy and personal identification. Having these documents prepared in advance can streamline the process.

In addition to the Erhvervskonto, a NemKonto business account is necessary for efficient financial management. Both accounts are tied to the company’s CVR number, ensuring proper tracking and oversight of its transactions.

By adhering to these guidelines, a Danish Private Limited Company can maintain a well-organized financial structure and meet legal requirements.

The Influence of the Danish Accounting Act on Danish LLCs

In Denmark, all Limited Liability Companies (LLCs), including ApS entities, must comply with the Danish Accounting Act, which regulates bookkeeping practices such as the recording and storage of financial records. These requirements apply to businesses not directly managed by government or municipal authorities. Non-compliance can result in additional requests for documentation or negative remarks in the company’s annual financial statements.

The Act sets clear standards to ensure that financial records are accurately maintained and not prematurely discarded. All transactions must be documented promptly, with appropriate supporting materials such as invoices or receipts. For transactions in foreign currencies, businesses must use either the average exchange rate or the rate on the transaction date. Companies are also required to prepare annual financial statements in accordance with their classification.

From January 2024, all Danish LLCs, including Private Limited Companies, must adopt digital accounting systems that meet legal standards. These systems must record essential details like dates, amounts, product or service descriptions, sender and recipient identification numbers, VAT information, and payment terms. Companies must store all financial documents digitally to comply with these new requirements.

The transition to digital accounting is being implemented gradually:

• From July 2024, companies in classifications B, C, and D must adopt electronic accounting.
• By 2026, classification A companies with an annual turnover above DKK 300,000 for two consecutive years will also be required to transition.

Accounting Practices for a Danish Private Limited Company

A Danish Private Limited Company (ApS) must follow stringent bookkeeping rules to ensure precise financial reporting. Transactions should be recorded systematically and immediately, preserving chronological order to avoid missing documents or receipts.

Each transaction must have supporting documentation, such as invoices or receipts, which can be stored physically or digitally. These records must be securely maintained for at least five years and made available for public authority inspections if needed.

Key Documentation Requirements:

1. Each document must have a unique, sequential number.

2. Essential details include:

• Invoice number.
• Date.
• VAT number and rate, if applicable.
• Seller identification details and tax ID.

Many Danish LLCs utilize online accounting tools like Billy, Dinero, or e-conomic to manage their bookkeeping. Others hire professional accountants or auditors to handle routine accounting tasks such as tracking income, expenses, assets, and liabilities.

To ensure compliance and streamline the annual reporting process, periodic afstemning (compliance verification) is recommended throughout the year. This practice minimizes the burden of year-end reconciliations and enhances accuracy.

Reporting and Auditing in Danish LLCs

Every Danish Limited Liability Company (LLC), including ApS entities, must prepare and submit annual financial reports that accurately reflect its financial position. These reports are essential for demonstrating transparency in income, expenses, liabilities, and assets. To ensure their reliability, most private limited companies in Denmark are required to undergo an independent audit.

Audit Exemptions for Small Businesses

Small companies classified as Type B may be exempt from mandatory audits if they meet the following criteria:

• A balance sheet total under DKK 4 million.
• Net turnover below DKK 8 million.
• Fewer than 12 full-time employees.

Even when an audit is not legally required, some Private Limited Companies in Denmark voluntarily opt for this additional financial scrutiny. This decision must be formalized during an extraordinary shareholders’ meeting, with the resolution recorded in the meeting minutes and submitted to the Commercial Office.

Benefits of an Audit

For many Danish LLCs, choosing to conduct an audit fosters transparency and trust. An independent auditor reviews the financial statements to provide a clear and accurate representation of the company’s financial standing. This process can reassure investors, board members, and other stakeholders, enhancing the company’s credibility.

Annual Financial Reporting for a Danish LLC

All Danish Limited Liability Companies (LLCs), including ApS entities, are required to prepare and file an annual financial report accompanied by supporting documentation. The company’s board of directors, or its management team, is responsible for ensuring the timely submission of these reports.

Submission Deadline and Process

The annual financial report must be submitted no later than six months after the end of the financial year. For companies operating on a calendar year (January 1 to December 31), the deadline is June 30. These reports are filed electronically via Virk.dk under the “Regnskab-basis” section.

Reporting Requirements Under the Danish Financial Reporting Act

The Danish Financial Reporting Act governs how financial statements are prepared and categorizes companies into different classes, each with specific reporting obligations. Most Danish LLCs, including ApS companies, fall under Class B. A Class B annual report must typically include:

• A management report (if the board consists of multiple members).
• A balance sheet.
• A profit and loss statement.
• The board of directors’ statement.
• Accounting policies.

Special Provisions for Micro-Enterprises

Class B companies may qualify as micro-enterprises, which allows for simplified reporting requirements. While standard Class B companies must include accounting policies, micro-enterprises are exempt from this obligation.

To qualify as a micro-enterprise, an ApS must meet the following criteria for the preceding two financial years:

• A balance sheet total not exceeding DKK 2.7 million.
• Annual net turnover of no more than DKK 5.4 million.
• A maximum of 10 full-time employees during the most recent financial year.

By adhering to these reporting standards, a Private Limited Liability Company in Denmark ensures compliance with Danish regulations while providing stakeholders with a clear overview of its financial health.

Digital Services for a Danish Limited Liability Company (ApS)

Establishing a Danish LLC involves several critical steps to ensure the company is properly set up and operates efficiently in Denmark.

1. NemID Application

The first step is obtaining a NemID, a secure digital signature required to access government platforms, online banking, and various other e-services. This digital tool verifies the identity of company representatives. Applications for NemID can be submitted via medarbejdersignatur.dk, though the website is available only in Danish.

2. Setting Up an E-Box

After securing a NemID, your next task is to create an e-box-a digital mailbox used for receiving official communications from Danish government authorities. The e-box serves as a secure online platform for important correspondence, accessible using your NemID. Many private organizations also utilize the e-box for professional communication.

3. Assigning a NemKonto

A NemKonto, or designated bank account, is essential for any Private Limited Company in Denmark. This account is used to receive payments from public institutions, including tax refunds and government subsidies. To link a NemKonto to your company’s CVR number, you’ll need to contact your bank. If you don’t have a Danish bank account, you may register a foreign account using a special form available on nemkonto.dk.

4. Minimum Capital Requirements

To register a Private Limited Liability Company in Denmark, the mandatory minimum capital of DKK 20,000 must be deposited into a lawyer’s client account during the setup process. Once the company’s bank account is operational, these funds can be transferred to the company’s account. If opening a traditional bank account proves challenging, alternative solutions like Revolut may be utilized.

Completing these steps ensures your Danish Limited Liability Company (ApS) complies with all legal and financial regulations, enabling smooth operations and efficient financial management.

Taxation for a Danish Private Limited Company

Corporate tax in Denmark is levied at a flat rate of 22%, making it a competitive option for businesses, including those structured as a Limited Liability Company in Denmark. This tax rate applies to taxable profits, calculated by subtracting deductible expenses-such as salaries, operational costs, and depreciation-from the company’s total revenue. Companies experiencing financial fluctuations may carry forward losses to offset future taxable profits. Similarly, investments or asset write-offs can reduce the taxable base, providing flexibility in tax planning. For smaller businesses, the tax landscape differs significantly. Many small, privately owned companies benefit from reduced rates or full exemptions, depending on their financial performance, structure, and compliance with Danish tax regulations. This supportive framework fosters growth and ensures the sustainability of smaller enterprises.

Taxation for a Danish Limited Liability Company (ApS)

Corporate Income Tax for a Danish LLC

The corporate income tax rate for a Limited Liability Company in Denmark (ApS) is set at 22%. This rate applies to the company’s taxable income, calculated by subtracting allowable expenses from total revenue. Accountants adjust the pre-tax income shown in financial reports, such as profit and loss statements, to account for items like depreciation or non-deductible expenses. These adjustments may slightly alter the taxable income compared to the pre-tax results. The final taxable income must be reported annually, with tax returns submitted to SKAT within six months of the fiscal year’s end.

Corporate Tax Payments

Tax obligations for Danish LLCs are typically fulfilled through two payments each year, on March 20 and November 20, based on estimated profits. These payments are referred to as “ordinary corporate income tax payments.” Additionally, companies may opt for a voluntary third payment on February 1 of the following year to reconcile any discrepancies after finalizing financial statements. This voluntary payment can help reduce interest on underpaid taxes. When a company is newly established in Denmark, the initial tax notice from the authorities often states that the company owes DKK 0. This occurs because sufficient data is not yet available to calculate the actual corporate tax owed.

Dividend Distribution and Taxation

Danish Private Limited Companies (ApS) are not required to distribute dividends, even when profitable. Dividends are typically paid out only when there are surplus funds, and the decision is made at the company’s general assembly. Ordinary meetings are held annually to approve the financial report and decide on dividend payments, while extraordinary meetings are convened for urgent decisions, including dividend approvals.

Dividends paid to individual shareholders are taxed at two rates:

• 27% for amounts up to DKK 56,500 (2021 threshold).
• 42% for amounts exceeding that limit.

For married individuals, the higher threshold applies if dividends exceed DKK 113,000. The company is responsible for withholding dividend tax and remitting it to the Danish tax authority, SKAT. Non-resident shareholders are taxed at 15%, subject to the provisions of double taxation agreements between Denmark and their home countries.

Tax Loss Carryforward

Danish LLCs can carry forward tax losses to offset future taxable income. For example, a company incurring a DKK 100,000 loss in one year can apply this loss to offset profits in subsequent years, potentially resulting in reduced or zero corporate income tax liability.

Filing and Reporting Deadlines

Annual reports must be submitted to the Danish Enterprise Authority (VIRK) within five months of the fiscal year’s end. Tax returns are due with SKAT within six months. Companies may also make partial or voluntary payments to manage their tax obligations.

Fiscal Year Flexibility

While December 31 is the standard fiscal year-end, Private Limited Liability Companies in Denmark can choose alternative dates, such as June 30 or January 31. Companies with extended fiscal years (e.g., 18 months) must make partial payments during the first and second years, with final reconciliation at the end of the fiscal period.

Managing VAT Obligations for a Danish Limited Liability Company (ApS)

A Danish LLC (ApS) must carefully handle its VAT responsibilities to remain compliant with local tax laws, especially if engaged in international trade or eligible for specific VAT exemptions. Professional guidance is highly recommended in these cases.

Once a Limited Liability Company in Denmark surpasses a turnover of DKK 50,000 within a 12-month period, VAT registration becomes mandatory. The company must provide the tax authorities with relevant documentation detailing its operations. Post-registration, the company is responsible for collecting VAT from customers, remitting it to the authorities, and making regular payments on time.

Certain businesses, such as those providing educational or medical services, may qualify for VAT exemptions. Additionally, Danish Private Limited Companies can deduct VAT on purchases related to taxable activities, such as materials and operational services, to lower their tax liability.

As per Danish tax regulations, an ApS must issue VAT-compliant invoices, which should include essential details:

• VAT ID
• Customer details (and VAT number, if applicable)
• Transaction description, date, and invoice number
• Quantity, unit price, total amount, and VAT charged

The standard VAT rate in Denmark is 25%, though some goods and services benefit from reduced rates. For example, food, medical services, and hotel accommodations are taxed at 12%, while books, newspapers, and cultural event tickets are subject to a 0% VAT rate.

Asset Valuation for a Private Limited Liability Company in Denmark

When establishing a Danish Private Limited Liability Company (ApS) with in-kind contributions, preparing an asset valuation report is a key step. This report, typically compiled by an independent accountant, assesses the precise value of the assets contributed to the company. Informal estimates from suppliers or manufacturers can be helpful as references but cannot replace the formal valuation required by Danish authorities.

The valuation report must be included in the company’s incorporation documents. It must reflect the true market value of the assets to ensure compliance and transparency. Furthermore, when forming an ApS with in-kind contributions, the contributor assumes personal liability for the assets’ value. If disputes over the valuation arise, or if the assets later present issues, the contributor may be held accountable.

Given the complexity of setting up a Danish LLC with non-monetary contributions, collaborating with professionals experienced in asset valuation and Danish business law is essential. This approach ensures accurate valuations and a smooth registration process, mitigating potential legal or financial liabilities.

Compensation for Owners of a Danish Limited Liability Company (ApS)

Owners of a Danish LLC (ApS) have two primary ways to receive compensation: salary or dividends. Direct transfers from the company’s account to the owner’s personal account are not permitted due to the separate legal and financial identity of the company.

To take a salary, the owner must:

1. Register the company as an employer on Virk.dk.

2. Draft an employment contract.

3. Create monthly payroll reports.

4. Report salary details to Skattestyrelsen for taxation.

The salary must reflect industry standards for similar roles; otherwise, tax authorities might reclassify excessive amounts as dividends, subjecting them to dividend tax rates. If no salary is paid in a given month, a “nil declaration” must be submitted to Skattestyrelsen to avoid penalties.

Alternatively, owners may opt for dividends, which require shareholder approval at a general meeting. Proper documentation and adherence to dividend taxation rules are critical.

For either method of compensation, the Limited Liability Company in Denmark must:

• Report payments through platforms like LetLøn on skat.dk.
• Deduct and pay relevant taxes.

Pension Schemes in a Danish Ltd (ApS)

While offering a pension scheme is not mandatory for a Private Limited Liability Company in Denmark, it is a common practice to attract and retain skilled employees.

Key aspects of implementing a pension scheme include:

• Voluntary Participation: Employees can choose whether to join, though most opt in to benefit from employer contributions.
• Employer Contributions: Typically between 4% and 12% of the employee’s salary, contributions are defined in contracts or collective agreements.
• Types of Agreements: Pension terms can be negotiated individually or follow collective agreements, ensuring clarity in employment contracts.
• Management of Funds: Employers must ensure contributions are handled by approved pension providers. Employees often select plans suited to their needs.
• Tax Advantages: Employer contributions are tax-deductible, while employee savings are exempt from social security contributions, offering mutual benefits.

Although not legally required, pension schemes enhance the competitiveness of a Danish Private Limited Company, fostering a supportive work environment.

Employing Staff in a Private Limited Company in Denmark

Hiring staff in a Ltd in Denmark involves adhering to labor, tax, and procedural regulations.

Employment Contract Requirements

Contracts must comply with Danish labor laws and include:

• Compensation: Specify salary and payment frequency.
• Duties: Clearly define job responsibilities.
• Working Hours: Detail expected hours and overtime rules.
• Paid Leave: Outline the mandatory five weeks of vacation annually.
• Termination Notice: Include notice periods based on employee tenure.

For fixed-term contracts, specify the employment duration and renewal terms.

Salary and Tax Obligations

Employers must:

• Pay fair wages per industry standards.
• Deduct taxes, pensions, and social contributions.
• Submit withholdings to SKAT in line with Denmark’s progressive tax system.

Registration and Reporting

Employers must register new hires with Denmark’s social security system for healthcare, pensions, and workplace accident coverage. Accurate wage reporting ensures compliance.

Workplace Safety and Equality

Employers are legally required to:

• Conduct safety training and provide protective equipment.
• Promote equal opportunity, avoiding discrimination based on gender, race, or other factors.

Union Relations and Collective Agreements

Trade unions play a significant role in Denmark. Employers should prepare for union negotiations on wages and working conditions.

Professional Guidance

Due to the complexity of regulations, consulting with legal and tax professionals ensures compliance and avoids costly mistakes.

By following these steps, a Danish Limited Liability Company can efficiently manage the employment process while upholding its legal obligations.

Legal Framework for Employee Dismissal in a Private Limited Company in Denmark

Dismissing an employee in a Danish LLC requires compliance with labor laws designed to ensure fairness for all parties involved. The process depends on the reason for termination, whether due to misconduct or economic challenges.

Key Steps in the Dismissal Process

1. Employer-Employee Dialogue:

The process begins with a discussion between the employer and employee, giving the employee an opportunity to address concerns and provide their perspective.

2. Grounds for Termination:

• Misconduct: Employers must present evidence of poor performance or inappropriate behavior and follow formal procedures.
• Economic Challenges: For dismissals arising from financial difficulties or restructuring, strict legal criteria apply.

3. Notice Requirements:

A written notice is mandatory, outlining the reason for dismissal and the termination date. Notice periods range from one to six months, depending on the employee’s tenure, allowing them time to seek alternative employment.

4. Severance and Support Measures:

Employees terminated for economic reasons may qualify for severance pay, often outlined in contracts or collective agreements. Employers may also provide support, such as time off for interviews or assistance with updating CVs.

5. Employee Protections:

Danish labor laws offer special protections for employees on parental leave, during pregnancy, or while on sick leave. Dismissing employees in such situations can result in legal consequences. For large-scale layoffs, employers must engage trade unions and comply with collective agreements.

Post-Termination Responsibilities

• Employment Documentation: Issue a certificate summarizing the employee’s role and tenure.
• Final Payments: Settle any outstanding wages, unused vacation pay, or severance.
• Reporting Obligations: Notify relevant authorities, such as the tax office, about the termination.

By following these steps, a Danish Limited Liability Company can ensure compliance with labor laws while upholding ethical practices.

When Limited Liability Doesn’t Fully Protect Owners in a Danish Private Limited Liability Company

Operating a Limited Liability Company in Denmark typically shields an owner’s personal assets from company debts. However, there are exceptions where personal liability may arise.

Circumstances Leading to Personal Liability

1. Loan Guarantees:

If a company’s share capital (minimum DKK 20,000) serves as collateral for a loan, lenders may require the owner’s personal assets as additional security. Once the company’s finances stabilize, personal guarantees may be released.

2. Negligence or Fraud:

Owners may face personal liability if they:

• Sign contracts on behalf of the company despite knowing it cannot meet its obligations.
• Engage in actions that harm creditors or customers due to gross negligence.

3. Capital Requirements:

Danish law mandates that if the company’s capital falls below 50%, the owner must call an extraordinary shareholders’ meeting within six months. At this meeting, the board must present a financial report and propose solutions, such as raising capital or liquidating the company.

Failure to adhere to these requirements can expose owners to personal liability for the company’s debts.

By understanding and meeting their legal obligations, owners of a Danish Ltd can minimize personal risk and maintain the protection afforded by limited liability.

Comparing a Danish ApS with Other Business Structures

When establishing a Danish Private Limited Company (ApS), entrepreneurs in Denmark can choose from several organizational and legal frameworks, each offering distinct advantages, requirements, and challenges. The Danish ApS, one of the most popular choices, stands out for its limited liability protection. However, other options, such as the stock corporation (A/S), the limited liability partnership (K/S), and the single-member limited liability company (E/ApS), provide alternatives that suit various business needs. Understanding the key differences between these structures is essential for selecting the right path.

Key Differences Between a Danish ApS and Other Structures

1. Minimum Capital Requirement

A significant differentiator of a Private Limited Liability Company in Denmark (ApS) is the capital requirement. Entrepreneurs can establish an ApS with a relatively low minimum share capital of DKK 20,000, making it ideal for small and medium-sized businesses. In contrast, a stock corporation (A/S) requires DKK 400,000, making it better suited for larger ventures with substantial funding.

2. Ownership Flexibility

The Danish Private Limited Company allows for sole ownership, which is particularly advantageous for independent entrepreneurs. Comparatively, a stock corporation requires at least three shareholders, reflecting its suitability for larger operations. The E/ApS variant offers additional simplicity for sole proprietors seeking limited liability with minimal complexity.

3. Registration Costs and Complexity

Registering a Limited Liability Company in Denmark varies in cost and complexity depending on the type. Establishing an E/ApS is the simplest and least expensive option. In contrast, setting up a Danish ApS involves slightly higher costs and administrative work but remains more accessible than registering an A/S, which entails extensive documentation and higher fees.

4. Share Management

A stock corporation facilitates easier share transfers, making it a preferred choice for businesses seeking external investment or planning for a public listing. Conversely, the stricter transfer rules of an ApS provide greater protection for existing shareholders, ensuring control remains within a select group.

5. Capital Raising Potential

A Danish Limited Liability Company (A/S) offers more avenues for raising capital, such as selling shares publicly. In contrast, an ApS relies on private funding or loans, which can limit growth opportunities for businesses aiming for rapid expansion.

Choosing the Right Structure

For entrepreneurs seeking limited liability protection and manageable capital requirements, the Danish ApS is often the preferred choice. Its flexibility, especially for small to medium-sized businesses, makes it attractive for those wanting to balance legal protection with operational simplicity. However, larger enterprises or those planning for significant funding might find the A/S more suitable. Consulting professionals such as lawyers or accountants is crucial to ensure the selected structure aligns with long-term business objectives.

ApS vs. Sole Proprietorship

Opting for a Private Limited Company in Denmark (ApS) over a sole proprietorship provides enhanced asset protection. With an ApS, personal assets remain secure even in case of company losses. However, entrepreneurs must meet the DKK 20,000 initial capital requirement and handle administrative obligations such as salary payouts and tax withholdings. This structure is particularly beneficial for those anticipating profitability, as it combines liability protection with a professional business framework.

Converting a Sole Proprietorship into a Danish ApS

Transferring a sole proprietorship into a Danish LLC (ApS) can be handled in two primary ways, depending on the value of the business.

1. Taxable Conversion

A taxable conversion is the most straightforward and cost-effective option when the business has little to no value. Since this approach results in minimal or no profit, the associated taxes are kept low. This method is particularly advantageous for smaller businesses transitioning to a Limited Liability Company in Denmark.

2. Tax-Free Conversion

For businesses with substantial value, a “tax-free” conversion may be more appropriate. Despite the term, this process doesn’t eliminate taxes but defers them until the shares in the newly formed Danish Private Limited Company are sold. An auditor must evaluate the business’s worth and oversee the registration of the ApS, which generally incurs fees ranging from DKK 5,000 to 20,000, excluding VAT.

Closing a Danish Limited Liability Company

Shutting down a Private Limited Liability Company in Denmark (ApS) involves several steps, depending on the company’s financial situation:

1. Bankruptcy

If the company is insolvent, it will go through bankruptcy proceedings.

2. Restructuring

For businesses near insolvency, restructuring through the courts may be an option. This process aims to restore the company’s financial health under the guidance of a court-appointed administrator.

3. Voluntary Liquidation

Solvent businesses can opt for voluntary liquidation. In this case, all debts must first be paid, and shareholders must confirm the company’s solvency through a signed declaration. A public announcement allows creditors three months to file claims.

4. Liquidation via Shareholder Declaration

Another route for solvent businesses is liquidation through a shareholder declaration. A liquidator is appointed to manage the process, and once finalized, shareholders are protected from future claims.

5. Compulsory Dissolution

If a Danish Ltd fails to meet legal requirements-such as submitting annual reports or appointing a managing director-the court may order its dissolution. If insolvent, the company undergoes bankruptcy proceedings; if solvent, it is dissolved directly.

Key Steps for Closing a Danish Private Limited Company

1. Finalize Accounting

Complete all accounting tasks, including submitting the final VAT declaration if the company is registered for VAT.

2. Settle Employee Obligations

Pay outstanding wages, file employee taxes, and deregister the company as an employer.

3. Notify Tax Authorities

Inform the authorities of the intent to deregister for corporate income tax and submit the final income tax return.

4. Clear Liabilities

Obtain confirmation from the tax authorities that all VAT, employee taxes, and other obligations are settled, typically within 3–6 months.

5. Submit Closure Documentation

Prepare and submit a statement signed by shareholders confirming that all debts are cleared. File the closure application via the VIRK system.

Once these steps are completed, the Danish Limited Liability Company (ApS) will be officially closed within two weeks. Proper compliance with VAT, tax returns, and deregistration requirements ensures a smooth process.

Using a Danish LLC as a Holding Company

One significant benefit of establishing a holding and operating company simultaneously is the potential for a “capital roll-over.” Rather than providing DKK 20,000 in share capital for each entity individually, you can allocate the same DKK 20,000 across both companies.

In this structure, the Danish Private Limited Liability Company (holding company) holds the shares of the operating company, offering a layer of asset protection. If the operating company encounters financial difficulties or declares bankruptcy, the holding company shields its assets from creditors.

It’s essential to understand that the holding company is not a distinct legal entity but is specifically designed to manage and own shares in another Limited Liability Company in Denmark.

The Importance of the CVR Number for a Danish Limited Liability Company

When registering a Private Limited Company in Denmark (ApS), the business receives a unique eight-digit CVR number. This identifier is equivalent to a CPR number for individuals and is crucial for various administrative and operational activities.

The CVR number:

• Identifies the company in business and administrative contexts.
• Enables the creation of a NemKonto, essential for receiving payments from public institutions.
• Is required for accessing systems such as MitID for digital identification and Digital Mail, which facilitates secure communication with authorities.

Ensuring the company has a CVR number is a legal necessity and allows the Danish ApS to operate lawfully.

Obtaining a CVR Number for a Danish ApS

The timeframe for obtaining a CVR number depends on the company’s legal structure. For a Danish LLC (ApS), the process generally takes 1 to 4 days, provided the registration documents are correctly submitted.

To avoid delays or rejections:

• Work with a lawyer familiar with setting up Danish Ltd entities.
• Ensure all legal documentation is accurately prepared.

Proper guidance during the registration process helps expedite the issuance of the CVR number, ensuring compliance with Danish regulations and enabling the company to begin operations promptly.

Using Digital Post in a Danish Limited Liability Company

Once a Danish ApS receives its CVR number, it is assigned an electronic mailbox known as Digital Post. This mailbox serves as the primary channel for official communication from public authorities, making it essential for company representatives to check it regularly for updates. While most government correspondence is sent via Digital Post, some institutions may still use traditional mail, which, under Danish law, carries the same legal weight as electronic communication.

Access to the Digital Post mailbox is granted through personal MitID credentials via the Virk platform or the Digital Post app. If personal MitID isn’t configured for business use, access must be managed via MitID Erhverv on Virk, using the Digital Post Permissions Portal to assign necessary permissions.

Additionally, businesses in Denmark can exchange messages with other companies through private platforms like mit.dk or e-Boks. The free versions of these platforms allow only message reception, while the paid versions enable companies to send messages as well.

Employee Access to MitID Erhverv in a Danish Private Limited Company

For a Danish Private Limited Company (ApS) to utilize MitID Erhverv, the business must first register and set up an account on the MitID-Erhverv.dk platform. This system is tailored for businesses with employees who need access to various public and private self-service tools critical for day-to-day operations in Denmark.

With MitID Erhverv, employees can perform tasks such as managing company email, filing tax returns, or submitting reports for colleagues, including maternity leave claims. However, the company must grant specific authorizations within the MitID Erhverv system before employees can access these features. Certain services, such as those involving the Tax Office, may require additional, separate authorization procedures.

Employees can also use their personal MitID credentials to access both personal and business-related tools within the company’s platforms, provided there’s mutual agreement between the company and the employee. This ensures that personal and business information remains separate, even when the same login is used. Alternatively, employees can create a dedicated MitID account exclusively for work purposes.

Final Thoughts

Establishing a Private Limited Company in Denmark provides numerous advantages, such as legal protection and operational flexibility, making it a popular choice for entrepreneurs. Whether you’re a local business owner or an international entrepreneur, understanding the administrative tools like Digital Post and MitID Erhverv is essential for seamless operations. With proper guidance, navigating the complexities of managing a Danish LLC becomes much simpler, setting the stage for long-term success.