Denmark is a country with a high level of economic development and a high standard of living. One element of this success is a stable and predictable tax policy. In this article, we will discuss why and what kind of business to set up in Denmark and how they are accounted for.
Why should you go and set up a company in Denmark?
Denmark is a country with a high level of economic development and a high standard of living. It has a stable and predictable economic policy, which encourages business development. The government also offers support for new businesses, in the form of grants and training programmes. Denmark also has a strong and advanced technological infrastructure, which facilitates access to modern solutions and technologies for companies.
Types of business in Denmark
We list the types of business in Denmark below.
Sole proprietorship (Enkeltmandsvirksomhed): this is a form of business where one person is responsible for the entire business and has total financial responsibility for it.
Public limited company (Aktieselskab – A/S): this is a form of business in which shares are issued and traded on the stock exchange. This company is only responsible for its activities up to the amount of its share capital.
Limited liability company (Anpartsselskab – ApS): This is a form of business in which liability for the business is limited to the amount of the contributions made by the shareholders.
General partnership (Interesselskab – I/S): this is a form of business in which all partners are liable for the business of the company without limitation.
Limited partnership (Kommanditselskab – K/S): this is a form of business in which there are both limited partners, responsible for the business only up to the amount of their contributions, and general partners, responsible without limitation.
Branch of a foreign company (Filial af udenlandsk selskab): this is a form of business in which a foreign company opens a branch in Denmark, subject to the laws and regulations of the country.
Representative office of a foreign company (Salgskontor): is a form of business where a foreign company opens a representative office in Denmark with the purpose of promoting and selling
What is the tax treatment in Denmark?
When it comes to setting up and running a company in Denmark, there is a CIT (corporate income tax) of 22%. However, if the company’s annual turnover exceeds DKK 20,000, it will also have to pay VAT, which is 25%. In contrast, for individuals, Denmark has a flat income tax of 32%, which is paid to the local authorities, and a progressive income tax, which is 5.64% or 15% depending on the level of income. An individual’s income tax burden cannot exceed 59%.