March 28, 2025
Incorporating an LLC in Denmark: A Comprehensive Overview
Denmark presents an attractive destination for entrepreneurs and businesses due to its robust economy, favorable business environment, and strong infrastructure. Among the various business structures available, the Limited Liability Company (LLC), referred to in Denmark as Anpartsselskab (ApS), is a popular option for both local and foreign investors. This article provides a detailed look at the process of incorporating an ApS in Denmark, outlining the benefits, legal requirements, and essential steps for a successful business establishment.
What is an ApS (LLC) in Denmark?
An Anpartsselskab (ApS), or Limited Liability Company, is a widely adopted business structure in Denmark. It is particularly beneficial for small to medium-sized businesses due to their flexibility and the protection it offers to shareholders. Shareholders are only liable for the company’s debts up to the amount of their investment, which means personal assets are safeguarded from business liabilities.
Key Benefits of Incorporating an ApS in Denmark
- Limited Liability: The ApS structure ensures that shareholders are only financially responsible for company debts up to the extent of their investment in the business, protecting personal assets from potential business risks.
- Enhanced Credibility: Operating as an ApS can increase the business’s credibility, helping to foster trust with customers, investors, and suppliers.
- Favorable Tax Environment: Denmark’s corporate tax rate of 22% is competitive within Europe, making it an attractive location for businesses.
- Business-Friendly Regulations: Denmark offers a smooth process for company registration and efficient public services, along with the availability of digital tools to manage business operations.
- Access to the European Union Market: As a member of the European Union, Denmark provides businesses with access to the EU’s single market, making it easier to trade within the region.
Steps to Incorporate an ApS in Denmark
Incorporating an ApS in Denmark is a relatively straightforward process. The following steps outline the general procedure for establishing a company:
Step 1: Select a Business Name
The first step is to choose a unique name for the business. The name must not be identical or too similar to that of an existing company registered in Denmark. Availability can be checked through the Danish Business Authority (Erhvervsstyrelsen).
Step 2: Register the Company
To officially register an ApS, an application must be submitted to the Danish Business Authority. Required documentation includes:
- Articles of Association: This document outlines the company’s purpose, internal structure, and operational rules.
- Completed Registration Form: This form, which can be submitted online, is necessary for the registration process.
Once the registration is approved, a CVR number (business registration number) will be issued.
Step 3: Meet the Minimum Capital Requirement
An ApS must have a minimum share capital of DKK 40,000 (approximately EUR 5,400). The capital can be paid in cash or as in-kind contributions (assets). The full amount must be paid up before registration is finalized.
Step 4: Open a Business Bank Account
After registration, a business bank account must be opened in Denmark. The share capital should be deposited into this account. The bank will require proof of registration to complete this step. Once the deposit is made, the incorporation process is nearly complete.
Step 5: Register for VAT (if applicable)
If the company’s taxable turnover exceeds DKK 50,000 within a 12-month period, VAT registration with the Danish tax authorities, SKAT, is mandatory. This step is required for businesses engaged in the sale of goods or services.
Step 6: Obtain Required Permits or Licenses
Certain industries may require additional licenses or permits to operate legally in Denmark. For example, businesses in the healthcare, hospitality, and construction sectors often need specific approvals. It is important to ensure that all necessary regulatory requirements are met.
Legal Requirements for ApS in Denmark
After establishing the ApS, it is essential to comply with ongoing legal requirements to maintain good standing:
- Accounting and Auditing: ApS companies must maintain accurate financial records and submit annual financial statements. Depending on the size of the business, the company may be required to appoint an external auditor to review the financial documents.
- Corporate Taxation: ApS companies are subject to corporate tax, with a standard rate of 22%. Accurate tax reporting and compliance with VAT regulations are crucial.
- Annual General Meeting (AGM): An AGM must be held each year to review financial statements, elect board members, and discuss other important company matters.
Shareholder Information: It is required to keep the shareholder and director information updated and available to the Danish Business Authority.
Costs and Fees of Incorporating an ApS
The costs involved in incorporating an ApS in Denmark are relatively low compared to many other countries. However, several expenses should be considered:
- Share Capital: The minimum capital requirement is DKK 40,000 (EUR 5,400), which must be fully subscribed at the time of registration.
- Registration Fees: The registration fee for the Danish Business Authority is typically around DKK 670 (EUR 90).
- Legal and Accounting Fees: While not mandatory, it is advisable to seek legal and accounting assistance to ensure proper documentation and compliance with Danish regulations.
Ongoing Compliance and Maintenance
After incorporation, the business must adhere to several ongoing compliance obligations:
- Annual Reporting: ApS companies must file annual financial statements with the Danish Business Authority. These statements should include a balance sheet, profit and loss statement, and other financial disclosures.
- Tax Filing: Companies are required to submit annual corporate tax returns. It is important to keep accurate records of all business transactions to meet tax obligations.
- AGMs: The holding of an AGM is a legal requirement for all ApS companies. This meeting provides an opportunity to review the company’s financial status, elect new directors, and make important decisions.
Conclusion
Incorporating an ApS in Denmark offers numerous benefits, including limited liability, access to a favorable tax regime, and the ability to operate within the EU market. The process of setting up an ApS is straightforward, though it is essential to follow the correct procedures and ensure compliance with all legal obligations. By adhering to the necessary steps and maintaining ongoing compliance, a business can successfully operate within Denmark’s stable and transparent business environment.
For more information or queries, please email us at
enquiries@chandrawatpartners.com
Key Contact
Surendra Singh Chandrawat
Managing Partner