When you move to a different, new, and exciting country, there are a lot of hurdles to deal with, and if you have an entrepreneurial spirit it can seem particularly challenging to figure out all the opportunities and limitations of a bureaucratic jungle.
Denmark is no exception, and many have probably already encountered many confusing parts of your immigration journey.
This guide will hopefully serve as a springboard towards a better understanding of which types of companies the Danish system offers, and help you find the one suitable for your business.
Please be advised that the best course of action is to seek legal advice specifically pertaining to your individual case, to make sure you are following all necessary legislation.
Three types of companies
The three types this article will explain are enkeltmandsvirksomhed, shortened to EMV, with a subtype PMV, personligt ejet mindre virksomhed (for solo entrepreneurs); anpartsselskab, shortened to ApS (a private limited liability company); and aktieselskab, shortened to A/S (a public limited company or joint-stock company).
They all have benefits and limitations that are good to understand before starting on your own.
What you need to get started
As with everything in Denmark, you will need to have a few documents ready no matter which type of company you decide on. These are:
- A Danish bank account
- The MitID app
- Your residency permit
- A valid Danish address
- Access to MobilePay will make things easier, but is not necessary
Other resources
There are a number of useful government websites that you could benefit from becoming familiar with:
- Borger.dk – for access to citizen services
- Virk.dk – which is like Borger.dk but for all services related to having a company
- Skat.dk – for access to taxes
- Virksomhedsguiden.dk, for access to all the knowledge you could ever need as a business owner in Denmark
Specifically for internationals
Your ability to do business in Denmark, make decisions in a Danish-registered company, and stay compliant will depend on you having and keeping your residency permit.
You will also need to consult your visa type to make sure you are allowed to open a company. This is especially important if you are here on a student visa, have been sponsored by a company to gain residence in Denmark, or are a non-EU citizen.
Reach out to the authorities and get a clear answer based on your individual visa requirements before you jump into doing something that could affect your ability to stay.
It would also be pertinent to prepare the company for the possibility of visa changes or a founder moving away from Denmark, to prevent a lapse in service for potential customers or clients.
Denmark ranks high on the Ease of Doing Business Index as published by the World Bank Group, with the latest rating placing the country in fourth place worldwide.
So even with the necessary bureaucracy, it is a country where your idea or dream can be realised as part of the vibrant business community, whether in the capital or your local region.
Enkeltmandsvirksomhed (EMV)
There are two subtypes that are frequently referred to in the context of solo entrepreneurs: PMV and EMV.
These are the most popular choices for independent entrepreneurs, since these types have no requirement for minimum capital. There can only be one person in this kind of company, which ensures that all decisions are fully yours.
If you do not expect to need to hire employees, or to earn more than 50,000 Danish kroner per year, then a PMV is for you. With this type, you will need to repeat the registration every three years.
If you intend to import or export goods to or from countries outside the European Union, you cannot do that under a PMV and must register as an EMV, ApS, or A/S.
Trading outside the European Union can be complicated, and there will be taxes, import fees, and potential tariffs to consider. Always keep up to date with new developments.
You can only have one enkeltmandsvirksomhed, and you have to register your company under a particular industry type.
The type of industry you work in will determine which kinds of taxes you will pay and which kind of waste disposal fee you will need to pay. This registration will also give you a CVR number, the company equivalent of a CPR number.
If you think the company will have an annual income of over 50,000 Danish kroner, the EMV type is for you. In addition, you will need to register for VAT (called moms in Danish). The Danish term you will need to be familiar with is momsregistrering.
You will be personally liable for both a PMV and an EMV, so if you incur large expenses or losses, the separation between personal bank accounts and company money will not shield you from personal responsibility.
If you have employees and need to pay salaries, you cannot do that as a PMV and will need to register as an EMV. An EMV does not need to be re-registered once all the necessary paperwork has been completed, so you will keep the same CVR number throughout your time in business.
Anpartsselskab (ApS)
Only companies duly registered as such are entitled to use the term ApS. To avoid issues with other companies, you should look up the name you would like to give your company in the CVR register on Virk.dk and ensure that no other company has already been registered with that name.
You cannot name your company anything that indicates you are a governmental authority, you cannot choose a name belonging to someone else’s family, and you cannot infringe on other companies and their trademarks.
Bylaws sent in for registration at the Erhvervsstyrelsen must be written in Danish, Swedish, or Norwegian. English is not yet an approved language, so you must find a certified translation service or use legal assistance to ensure you understand what you are signing and what is in the bylaws of your company.
As opposed to the enkeltmandsvirksomhed, an ApS needs a minimum of 20,000 Danish kroner in start-up capital, recently lowered from the previous 40,000 Danish kroner.
You will need a lot of documentation, and your company must be founded by someone who is at least 18 years of age and who has not previously been declared legally incapacitated. None of the founders can have a company currently undergoing bankruptcy.
To start, you will need foundational documents including the bylaws chosen by the founder(s), and including their full names, any CVR numbers, and addresses.
If you have an ApS, having directors is all you need to fulfil the necessary company structure. You can choose whether decisions require all directors, or whether one director can act alone on behalf of the company.
You will need to set a tegningskurs for the company, which will essentially determine the value of the company based on the capital you and your potential co-founder(s) are able and willing to put in, subject to the minimum of 20,000 Danish kroner.
You will need to determine whether the founding capital must be paid on the date of foundation or at a later date stated in the document.
You will also determine whether the shares can be registered only on the date the document is created, or whether there is a deadline for registering them.
The founding capital must be paid either into the account of the business or into the account of a lawyer assisting in the creation of the company. All these bank transfers will need to be fully documented.
If you want to delay the first day on which the company can trade, that starting date will need to be specified in the document.
If it is not specified, the first date of business will be the date the document is signed. You will also need to choose the day from which the company’s accounting will commence.
You must determine whether the company or the shareholders will pay for the registration of the company, including the exact amount of expenses covered or not covered.
You will need to draw up company bylaws that all shareholders will be bound by. Through the guide on Virksomhedsguiden you can be guided through which information is necessary and how to format it in accordance with Danish law. In any case, Danish law must be followed when setting up company bylaws, and if there are discrepancies between the bylaws and Danish law, Danish law will take precedence.
If you will hold the general assembly of your company in languages other than Danish, Swedish, Norwegian, or English, it is necessary to note that in your bylaws, together with a determination of whether participation must be in person or can also take place by video call.
You must declare a company purpose when you register your company. A purpose can be, for example, providing translation services or running a ceramics store.
The ejerbog, the register of who owns what, will need to be documented and kept up to date. It must include correct information on the owners’ names, how many shares they own, their value, and the exact date of acquiring or relinquishing those shares.
If an owner of a share is a foreigner, their identity has to be verified through reliable identification such as a passport. Adding a residence permit may also be necessary.
Kurs, shares, and valuation
An important term is kurs – the rate or price.
With an ApS, the share capital has to be at least 20,000 Danish kroner, as previously stated. By starting at kurs 100, it is determined that the company will be worth 20,000 Danish kroner.
It is possible to set the kurs higher than the nominal valuation of the company; this is called overkurs. It makes it possible to put more money into the company tax-free without affecting the nominal valuation, and it can also allow potential investors to add more money without taking a larger shareholding.
The overkurs can also indicate that the company is bringing in more value than the initial capital, for instance through a valuation of patents, technology, or a portfolio.
Aktieselskab (A/S)
As with an ApS, the A/S designation can only be used by a company that has been registered as such. The start-up capital required is 400,000 Danish kroner. This will also be the minimum value at kurs 100 of your company.
The same bylaws required for an ApS need to be written in one of the Scandinavian languages and sent to the Erhvervsstyrelsen.
You will furthermore need to establish a board and director(s). The board handles the strategic leadership of the company, whereas the director(s) handle the daily management.The director of the company cannot be either chairman or vice-chairman of the board, and there cannot be a majority of directors among the members of the board.
There is also a distinction between legal owners and beneficial owners of a company.
A legal owner has more than 5% of the company’s shares, whereas a beneficial owner has more than 25% of the company’s shares. A beneficial owner may also have the right to veto decisions or individually appoint members of the board.
All types of owners need to be registered with the Erhvervsstyrelsen. Guides are available if you search for “Erhvervsstyrelsen vejledning til legale og reelle ejere”.
Under most circumstances you will need an accountant to ensure that your annual audit, which must be submitted to the Erhvervsstyrelsen, is correct and accurate.
As with many things in the legal sector, there will be exceptions to most rules, so it makes sense to consult a lawyer with the necessary speciality in order to stay compliant with the ever-changing Danish legislation.
Kathrine Pandell is a 33-year-old Danish woman who has been living abroad for the last 10 years, in the Philippines, Georgia, and now Romania. She and her German husband co-own an IT company registered in the Philippines with two Filipino co-owners, with clients in fashion, tourism, and e-commerce.
