Denmark Companies

General Introductory and Offshore Tax Information

Unlike most offshore jurisdictions where taxes are applied based on residency; that is; if a person (legal or natural) resides or earns income in the jurisdiction, Denmark imposes tax on international income. But, Denmark makes provisions for persons to be fully or partially liable to tax.  As such, a person who generates revenue in Denmark but is a non-resident may have limited tax liability by being only subject to tax on income earned in Denmark.  However, given that this creates the possibility for double taxation (having to pay income tax both in Denmark and the country of residence), tax credits and exemptions are available through Anti-Double Taxation Agreements.  Denmark companies can be used both onshore and offshore.  The main corporate forms used as Denmark business entities are very similar to those legislated under Common Law, such as partnerships and companies with limited liability.

For the years 2010-2019, Denmark intends to carry through with different fiscal reforms with regard to tax cuts and financing without jeopardizing fiscal sustainability.  This plan was formalized between the Government of Denmark and The Danish People’s Party in March 2009 as the Forarspåkke 2.0, and is expected to have both medium to long-term benefits whilst assuaging the negative impact of the international economic downturn.

With respect to Denmark companies, a few of the reforms for corporate bodies are expected to create a uniform tax (harmonize) for share income and to eliminate deductions for claims on legal and accountant expenses incurred from setting up companies, thereby making operating costs the only deductibles; just to name a few.  To abolish the middle tax whist decreasing the top tax base, less exemptions and special arrangement for Danish companies and business entities will be used for financing.

Denmark Offshore Business Entities:

• Denmark Public Limited Company
• Denmark Limited Company
• Denmark Branch and Representative Office
• Denmark General Partnership
• Denmark Limited Partnership

Denmark Public Limited Company (Aktieselskab – A/S)

Main Features:

• Must have a minimum capital of DKK500,000
• Contributions to capital can be made in the form of technological know-how or expertise, fixed assets or goodwill
• An A/S must register with the Commerce and Companies Agency
• An A/S is registered at no cost to the beneficial owner(s), but foreign companies must pay the necessary fees for assistance and professional advice
• An A/S can be acquired as an ‘off the shelf entity’
• Upon formation a memorandum of association providing a proposal for the number of shares to be subscribed and a proposal for the articles of association must be signed by at least one promoter
• The promoters are not required to subscribe to any of the company’s shares
• A statutory meeting must be called to appoint an auditor, elect directors and adopt the proposed articles of association
• The Board must have a minimum of three (3) members
• Management is undertaken by the Board of Directors
• General management is decided by the Board and contains a minimum of one (1) member who manages on a day to day basis
• The Board must consist of only a few executive directors

Denmark Limited Company (Anpartsselskab - ApS)

Main Features:

• Must have a minimum capital of DKK125,000 which must be fully paid – up at the time of incorporation
• There is no maximum limit set on the share capital
• Can be  formed with only one founder
• There is no maximum limit set on the number of members an ApS can have
• Directors and shareholders do not have to be residents of Denmark
• Meetings held by shareholders can take place outside Denmark if so provided for in the articles
• Flexible management structure: Management can include a combination of one or more executive directors and a Board of Directors, or, only the Board of Directors or, only one or more executive directors
• An ApS must be registered with the Commerce and Companies Agency which assigns a registration or CVR number to the company
• The ApS can begin to trade once all necessary documents are filed with the Commerce and Companies Agency
• An ApS can be acquired as  a ready-made or off the shelf company
• All shares must confer the right to vote
• There is no need to write  the company’s name in Danish
• The company name must end with ApS

Denmark Branch and Representative Office Main Features

• A Denmark branch office must inform the Commerce and Companies Agency about its setup in Denmark before operations begin
• Denmark branches can be established by foreign joint stock company which are legally registered in their respective jurisdictions
• The branch must be managed by any one or more of the signatories for the company
• A POA must be issued to each of the persons who manage the branch in Denmark
• The costs incurred for setting up a branch in Denmark include the relevant fees for local assistance and professional advice
• Denmark branches are required to file a certified copy of the annual accounts and auditor’s report of its main office with the Commerce and Companies Agency

Denmark General Partnership (Interessentskab – I/S)

Main Features:

• The partners are severally and jointly responsible for the general partnership’s debts and obligations
• An investor who intends to minimize his risk can do so through the intermediary of a limited company
• The possibility of governing the relationship between partners as no Partnership Act can be done in Denmark through a partnership agreement
• A general partnership whose partners are limited liability companies are required to be registered with the Danish Commerce and Companies Agency
• Annual financial statements do not have to be audited
• A company must show that it is a general partnership by ending its name with Interessentskab or I/S

Denmark Limited Partnership (Kommanditselskab – K/S)

Main Features:

• A Denmark limited partnership must have at least one or more general partners and limited partners
• A partner may be a juridical or natural person, or a local or foreign entity
• A limited partnership whose partners are limited liability companies are required to be registered with the Danish Commerce and Companies Agency
• Financial statements must be prepared as stipulated in the Annual Accounts Act
• Annual financial statements do not have to be audited
• The name of the partnership must end with Kommanditselskab or K/S to indicate limited partnership
• The partners of a Denmark partnership may not use their names as the name of partnership

Denmark Sole Proprietor

Main Features:

• A sole proprietorship can be established in Denmark by anyone
• Denmark sole proprietors must register their business with the tax authorities if they are engaged in trade, activities subject to valued added tax (VAT) or employ staff
• Annual financial statements do not have to be audited
• A Denmark sole proprietorship can be registered under any name so long as it is unique and not identical to that of any other company registered in Denmark
• The sole proprietor may use his name as the business’ name
• Special permission must be sought before conducting certain types of business activities