Limited liability company in Denmark (ApS): Features, benefits and practical steps

An ApS (Anpartsselskab) is a popular and flexible form of limited liability company in Denmark, ideal for entrepreneurs and businesses seeking a structured yet straightforward way to operate. With an ApS, the company’s liability is limited to the amount of capital invested, protecting the owners' personal assets. This type of company offers various benefits, such as easier access to funding, credibility with customers and suppliers, and the ability to grow without the complexities of sole proprietorships or partnerships.

Starting and managing a Danish ApS company can be a complex process, but Proaktif is here to make it easy for you. Our expert team provides comprehensive support every step of the way, ensuring your business is set up correctly and runs smoothly. Contact us today to get started and let us help you navigate the process with confidence!

Danish ApS: What it is and how it works?

An ApS, short for "anpartsselskab," refers to a popular form of Danish Private Limited Liability Company. This type of company requires financial input, such as assets or cash, during its creation, ensuring that capital is available from the outset.

A defining characteristic of an ApS is its limited liability structure. This means that the owners' personal assets are protected from the company's debts, a feature that significantly contributes to the widespread use of this business model in Denmark.

Essential characteristics of an ApS

A limited liability company (ApS) is a widely chosen business structure in Denmark, largely because of its adaptability and the protection it offers through limited liability. This model appeals to both solo entrepreneurs and groups of investors. It strikes a balance between the flexibility needed for entrepreneurship and financial security, making it ideal for those who wish to reduce personal risk while adjusting to changing market conditions.

As an independent legal entity, the ApS has its own legal standing, separate from its owners. A key advantage of this structure is the limited liability of its shareholders, meaning their financial obligation is restricted to the capital they have invested. This protection of personal assets is particularly appealing to entrepreneurs who wish to focus on growing their business without the concern of exposing their personal finances.

I. A key feature of an ApS is its adaptable ownership structure. The company can be owned by a single individual or multiple parties, including both private persons and business entities. The ownership details are clearly outlined in a comprehensive register, which includes a record of shareholder stakes and any financial liens or collateral associated with the company's assets. This register promotes transparency, offering regulators and other stakeholders an accurate insight into the company's financial status.

II. The process of forming an ApS begins with the payment of initial capital, which must be at least DKK 20,000. This capital provides the financial foundation for the company. A registration fee of DKK 670 is also required to cover the necessary administrative procedures. The registration process itself is simple, allowing for a swift and efficient business setup. Furthermore, an ApS must keep comprehensive financial records and submit annual reports electronically, ensuring transparency in its operations.

III. An ApS must have a board of directors, as outlined by the Companies Act, to supervise its daily activities. The structure of this board can be adapted based on the company's requirements, offering flexibility in how it is managed. In addition, the company is obligated to record ownership details, both legal and beneficial, along with any agreements, contracts, and legal responsibilities that influence its operations and assets. Maintaining such detailed records ensures the company's adherence to regulations while boosting its financial stability and creditworthiness.

Steps to establish an ApS in Denmark

Establishing a private limited company (ApS) in Denmark involves several essential steps. The process begins with the creation of the incorporation document and Articles of Association, which must be signed by the founders. This can be done digitally, and once signed, the necessary documentation is provided to proceed with the payment of the minimum required share capital, DKK 20,000.

After securing the share capital, the next step is to register the company with the Danish Business Authority (DBA) through their digital platform, virk.dk. The registration requires uploading the incorporation document, Articles of Association, and proof of the capital deposit. A registration fee of DKK 670 applies. It is important to submit the incorporation document within 14 days of signing; otherwise, the registration will be invalid.

Once registered, the Danish Enterprise Authority will issue a unique identification number (CVR) for the company. This marks the official establishment of the company. At this point, the founders must also open a business bank account, where the share capital will be deposited. To do so, the CVR number, a company ledger, and identification for at least one of the owners will be required. Banks may also ask for a business plan before opening the account.

For entrepreneurs planning to engage in international trade, Denmark imposes additional registration requirements. Companies involved in importing goods from outside the EU must register for an EORI number, which acts as an EU-wide importer identifier. Additionally, businesses exporting goods to EU member states must complete export registration, and those involved in intra-EU trade must fulfill Intrastat reporting obligations, ensuring compliance with EU trade regulations.

There are three main options for registering a company in Denmark, each varying in speed and convenience:

- Online registration: The fastest and most economical option, allowing a company to be established and operational within a few hours.
- Paper-based registration: This method typically takes two to three weeks.
- Purchasing a pre-registered company: These "off-the-shelf" companies have already been registered but have no prior activity. They can be activated within a day.

The process also includes the possibility of using a lawyer's client account (klientkonto) for the share capital payment, simplifying this step. Once the company is established, the capital deposit can be used for operational costs such as salaries or dividends but cannot be moved into the private accounts of the owners.

Setting up an ApS as a citizen from abroad

Denmark is highly accommodating to international entrepreneurs, providing favorable conditions for the growth of new businesses. However, it’s crucial to thoroughly understand Danish laws and regulations and, if needed, consult experts to ensure all requirements are met before engaging in specific activities.

The type of business activity plays a fundamental role in determining what is possible. Those without a Danish personal number (CPR) may encounter restrictions when forming limited liability entities like an ApS (private limited company) or an A/S (public limited company). Conversely, individuals holding a CPR can also opt to operate as sole proprietors.

Establishing a limited liability company (ApS) in Denmark is feasible even for non-citizens, provided that specific conditions are satisfied. Furthermore, foreign nationals can run their own businesses in Denmark with relatively few barriers.

Another essential aspect is securing a registered business address within Denmark. This is mandatory for legal company registration and conducting operations. It doesn’t matter whether the entrepreneur lives in Denmark or abroad.

The process for registering an ApS company requires submitting the necessary documentation through Virk.dk, Denmark’s online business registration platform. Applicants must include a copy of their passport for identity verification, along with their residential address and identification number from their home country. If the business is owned by another company, a registration certificate in either Danish or English must be submitted for verification purposes.

Conditions for starting an ApS

When establishing a limited liability company (ApS) in Denmark, the criteria for founders vary depending on whether they are individuals or legal entities. For individual founders, the requirements are simple: they must be at least 18 years old, not under legal guardianship, and not incapacitated. Additionally, they cannot be involved in the restructuring or bankruptcy of another company.

For legal entities, the conditions are more intricate. The company must have legal capacity, meaning it cannot be in the process of incorporating another entity. It must also be free from any ongoing restructuring, bankruptcy, or compulsory liquidation and must be able to acquire rights, engage in legal action, and take on obligations. Notably, a legal entity undergoing voluntary liquidation is still allowed to form a new company.

It is crucial to note that sole proprietorships are excluded from setting up a limited liability company in Denmark, as they are not recognized as legal persons under Danish law.

Choosing a name for your ApS

When picking a name for your new ApS company, there are a few key things to keep in mind. First, the name should reflect the company’s purpose and activities clearly, so customers and business partners aren't confused. It's also important to include the company’s legal structure in the name, so it’s clear that it's a limited liability entity. This helps make its legal status obvious to anyone considering a partnership.

To avoid any issues, the name must be unique and not too similar to any other registered companies in the Central Company Registration (CVR). Make sure it’s not identical or too close to another business's name. Also, steer clear of using names, trademarks, or intellectual property owned by someone else.

If your company plans to have multiple brands, it can use different names alongside the main one. These names also need to be registered with the CVR and included in the company’s articles of association.

For consistency, the company should use its main name on all correspondence, business documents, and online communication. If you have a website, make sure to include the registered office and CVR identification number along with the company’s main name so customers and partners can easily find your business.

Lastly, if the company’s main focus changes significantly, you’ll need to update the name if it’s tied closely to a specific activity.

Deciding on the industry for ApS

When you register a Danish Ltd, selecting an appropriate industry code that reflects your business activities is essential. The industry code for the primary activity, which generates the highest value, must be chosen carefully. This decision is important as it affects various legal aspects, including VAT and tax responsibilities, and should be updated if the main business activity shifts over time.

In cases where the company is involved in multiple sectors, additional industry codes can be registered. Up to three extra codes are allowed, although registering them is only mandatory if the secondary activity makes up at least 10% of the total turnover and generates a minimum of 300,000 kroner annually. Even if these conditions are not met, it is possible to voluntarily register additional industries.

The selection of the main industry is significant not only at the start of the business but also when the company grows or shifts its focus. If a secondary activity becomes dominant, the primary industry code must be updated accordingly.

Costs of setting up an ApS and registration fees

Establishing a limited liability company (ApS) in Denmark comes with various expenses. Initially, you will face a fee of DKK 670 payable to the Danish Business Authority, along with a mandatory minimum capital investment of DKK 20,000 to officially register the company.

The cost of registration can fluctuate based on your chosen method. Opting to set up the company by yourself allows you to cut costs, as online registration is now available. However, hiring a lawyer or an accountant introduces additional expenses, generally beginning at 1,500 kroner or more. The price may rise if the shareholders' agreement is complicated, particularly with multiple stakeholders. Moreover, if the initial capital isn't contributed in cash, fees for professional services might be higher.

An important part of the registration process for a LLC in Denmark is verifying the initial capital, which requires professional assistance. It’s also recommended to budget for unexpected needs that may arise during the registration process, which could require specialist support.

Savings programs for ApS founders

If you're thinking about launching your own limited liability company (ApS) in Denmark, two savings options could greatly benefit you: the Founder’s Account Program and the Entrepreneur’s Program. These programs allow you to save for your future business through special accounts, offering the advantage of tax deductions.

The Founder’s Account Program is ideal if your tax rate isn't among the highest, as contributions provide a tax break of roughly 27%. In contrast, if you're taxed at the highest rate, the Entrepreneur’s Program might be the better choice, with a tax deduction of around 52%.

Both programs can be used to fund the expenses involved in establishing your limited liability company. However, there are specific regulations that determine when you're considered a “founder,” along with more intricate procedures for amortization. These rules can be complicated, so it's advisable to seek guidance from a knowledgeable accountant to ensure you understand how they apply to your situation.

In the end, the decision between these two programs depends on your individual circumstances and tax status. Contributing to these accounts can help you build the necessary funds to start and expand your business while taking advantage of tax relief.

Share capital requirements

To set up an ApS (Danish limited liability company), the required minimum capital is DKK 20,000. If you don't have this amount or equivalent assets, you can secure the necessary funds through loans or investments. After the capital is contributed, shareholders are issued shares in exchange.

Shares in an ApS reflect ownership stakes in the company and can be distributed freely, though they are typically valued at DKK 1 per share. If the company makes a profit, dividends are paid to shareholders, or they may choose to reinvest those profits. Despite the company’s growth and increased profits, the share capital remains unchanged. For instance, if DKK 20,000 is contributed as share capital, that amount stays the same, while the value of each share rises in line with the company’s growing assets and profits.

Beyond the minimum DKK 20,000 contribution, it's also possible to invest additional capital. This can be done by setting up the company with a capital premium, where the nominal capital is recorded as DKK 20,000, and any extra contributions are added to the company’s free reserves.

Alternatively, funding can be sourced through a personal loan to the company. This type of loan is tax-free, which can offer advantages in some cases, but a promissory note must be prepared to document the loan.

Generally, all shares in the company have equal rights, but the articles of association may create different share classes. These classes can be used to assign varying rights to shareholders, such as determining which class receives dividends first. The articles must clearly outline the distinctions between each class and the corresponding rights.

ApS capital classifications

In a limited liability company in Denmark equity shares can be categorized into different classes to modify their rights. Commonly, these classes include Class A, which grants more voting power, and Class B, which provides fewer rights. Occasionally, a Class C may be added, usually representing shares with the least value.

The primary aim of creating these classes is to allocate diverse rights, such as varying voting powers at general meetings, priority for share purchases, or profit distribution. This structure allows companies to customize shareholder rights according to the preferences of their owners and investors.

For example, a company looking to attract passive investors may offer shares from a lower class, such as Class B, which come without voting rights. This arrangement ensures that decision-making authority remains with active owners, like the managing director.

The specifics of each class and its associated rights must be clearly defined in the company's articles of association. If the shares haven't been previously divided, the proposal for creating different classes must be presented at a general meeting and approved through a vote.

Approving capital for an ApS

As mentioned earlier, a minimum contribution of DKK 20,000 in capital is required to set up a private limited company (ApS) in Denmark. This amount can be provided in cash or as an in-kind contribution, such as industrial equipment, vehicles, or tools. However, non-cash contributions must hold actual economic value, and services are not acceptable. If you lack the necessary DKK 20,000 in cash, you can still fulfill the capital requirement by contributing assets of equivalent value.

Capital approval is necessary to verify that the capital has been correctly deposited and is available at the time of company registration. This confirmation can be obtained from a bank or a lawyer. Banks typically charge a fee of up to DKK 4,000 plus VAT for this service. To verify the availability of funds, the bank will stamp and sign the payment.

Alternatively, capital approval can be secured through a client account with a lawyer. In this case, the funds are placed in a separate account until the company is formed, at which point the lawyer will transfer the money to the newly established company. Some law firms include capital approval as part of their company formation package, potentially eliminating the bank fee.

Obtaining capital approval is vital, as it confirms that the required capital has been provided. There are various ways to achieve this approval, with costs varying depending on the method you choose. It’s important to evaluate the available options and select the one that best fits your situation.

Incorporation document for an ApS

To formally establish a Private Limited Liability Company in Denmark (ApS), the founders are required to sign the incorporation document. This document is crucial for the company's registration and may include both compulsory and optional provisions based on the founders' choices.

The incorporation document must include the following mandatory elements:
- Founders: The names, addresses, and, if applicable, identification numbers of the founders. For individuals, their full names are required, while legal entities must provide the company name, identification number, and address.
- Issue rate: The price at which new shares will be issued when the company’s share capital is increased.
- Accounting start date: The date marking the beginning of the company’s financial year when its accounts are first recorded.
- Commencement date: The date on which the company acquires legal capacity. If not specified, this occurs when the founders sign the incorporation document.
- Deadlines: Specifies the timeframes for the subscription of shares and payment obligations.

Optional elements that can be included in the incorporation document are:
- Special rights or benefits: Any particular rights or advantages granted to the involved parties, such as the founders.
- In-kind contributions: If the company is not established solely with cash contributions, this section should outline any in-kind assets, such as movable or immovable property.
- Audit exemption: Companies below a certain size may opt to waive the audit requirement.
- Contracts: Any agreements that may create financial obligations for the company, such as those with the founders.

It's important to note that this list provides examples of optional content, and the founders have the discretion to determine which elements they wish to include in the incorporation document.

Company constitution (Articles of Association)

The Articles of Association for a limited liability company (ApS) is a legal document that outlines how the company will operate and applies to all its owners. It’s also publicly available. These articles set the ground rules for the business, specifying how it will be managed and run. While there's a standard format, they can be tailored to fit the specific needs of the company as long as the provisions are relevant and significant.

Some key details that must be included in the Articles of Association are:
- The company name and any alternative names
- The purpose of the company’s activities
- The share capital amount (at least DKK 20,000)
- The number of shares or their unit value
- The company’s governance structure, including information about the board of directors or management
- The procedures for calling a shareholders' meeting
- The company’s financial year.

It’s also important to decide whether other significant matters, like how the company will be represented, should be included in the articles.

Owners' register

The ownership register is an essential record that monitors the history of share ownership in a company. It includes information like the number of shares each shareholder owns, how they obtained them, and any rights associated with the shares, such as voting rights. This register must be updated whenever the ownership structure changes to maintain its accuracy.

Although it is typically the company management’s duty to maintain the ownership register, this task can also be assigned to other parties, such as an accountant or lawyer. The register can be stored in either physical or digital formats, such as a Microsoft Word file or an online document, but it must always be available for inspection by public authorities when requested. Furthermore, the company’s shareholders should have access to the register whenever necessary.

For capital companies, it is mandatory to register shareholders holding 5% or more of the company's shares in the Public Owners' Register on Virk.dk. This registration ensures the transparency of the company’s ownership structure.

The owner’s register must contain the following information:
- Details of the owners, including the total number of shares or mortgage rights held.
- The name and address of each owner or mortgagee, and for legal entities, the company name, CVR number, and address.
- The date when shares were acquired, pledged, or sold.
- The amount of shares at the time of acquisition, pledge, or sale.

Owners of an ApS can include individuals or legal entities, such as corporations, as long as they are distinct legal entities.

While not mandatory for a Danish LLC, an ownership agreement is a private contract between the owners that specifies their rights and responsibilities. This agreement helps avoid conflicts between the owners and remains confidential, without being disclosed to the public.

Structure of ownership in an ApS

In Denmark, it is essential for the ownership structure of a limited liability company (ApS) to be transparent in order to prevent financial crimes like tax evasion. Both legal and beneficial owners must be registered with Erhvervsstyrelsen, enabling regulators to effectively monitor compliance with rules regarding ownership and business practices.

Beneficial owners are individuals who hold at least 25% of the shares or voting rights and may have additional privileges, such as the ability to appoint board members or veto decisions. Legal owners, on the other hand, can be either individuals or companies holding at least 5% of the shares or voting rights. It's also possible for the same person to be both a legal and beneficial owner, which is common when one person fully owns the company.

If a company lacks both de facto and legal owners, it must officially declare this. This ensures that the company's ownership structure is well-documented and easily understood, promoting transparency and accountability.

Registering ownership details not only helps companies avoid legal complications but also supports proper oversight of their activities and structure.

Share management in an ApS

Shares in a private limited company (ApS) in Denmark can generally be sold or transferred with minimal restrictions. Ownership may shift between individuals or entities, typically facilitated by a share transfer agreement. This agreement serves as the legal foundation for the transaction, detailing the seller, buyer, the number of shares involved, and the terms of the exchange, while ensuring adherence to tax regulations.

To support growth, companies have the option to increase their capital. This can be achieved by encouraging existing shareholders to contribute additional funds or by welcoming new investors. Approval for such a move requires a two-thirds majority vote during a general meeting, and contributions may take the form of cash or non-cash assets.

Specific conditions often accompany share transfers, such as non-compete clauses, modifications to the board of directors, seller financing terms, or the creation of an ownership agreement. These provisions help safeguard the company’s and shareholders’ interests.

When the Articles of Association include a right of first refusal, co-owners are granted the opportunity to purchase shares before they can be offered to external buyers. This right is optional, meaning that if co-owners decide not to use it, the seller is free to sell to third parties. To ensure a fair transaction and align with market standards, valuation methods like independent auditor assessments, third-party tenders, or auction-based approaches (such as the Mousetrap Clause) are often employed.

For shares sold to third parties, the price is typically open to negotiation. In contrast, transfers within a family are subject to specific legal requirements, which often involve an auditor’s valuation. By adhering to these established procedures, shareholders and co-owners in Danish Ltd companies can manage share transfers and capital changes effectively while staying compliant with local laws.

Role of board members in an ApS

In Denmark, every ApS (limited liability company) is required by the Danish Companies Act to have a board of directors. This board must consist of at least one person, typically the company owner, though additional directors may be appointed. The company's articles of association outline the structure and duties of the board.

For larger companies, it is strongly advised to have both a board of directors and an executive board. The executive board handles the daily management and carries out audits, while the board of directors, responsible for the company’s long-term strategy, supervises its overall direction. While their roles are distinct, both boards collaborate closely. The board of directors ensures the implementation of the company’s strategic objectives.

When both boards are in place, the executive board reports to the board of directors. However, if only an executive board is established, it serves as the highest authority, overseeing both daily operations and strategic management.

In situations where the executive board is created first, the individuals who initially serve on it are often the same ones who later take positions on the board of directors. If necessary, the executive board can later be replaced by the supervisory board.

Organizing a general meeting for a Danish Private Limited Liability Company

A general meeting, or generalforsamling, is a vital event for a Danish limited liability company (ApS), where key decisions regarding the company's future are made by its owners. These meetings are required by law and must take place at least once per year. The owners of the company’s capital are entitled to attend the meeting, either personally or by authorizing a representative with a power of attorney. The company’s auditor can also participate, and external advisors may attend unless restricted by the company’s Articles of Association.

There are two types of general meetings: ordinary and extraordinary. Ordinary meetings are typically held to discuss and make decisions on various topics, including approval of financial statements, the allocation of profits or coverage of losses, and potential amendments to future financial plans. Other matters stipulated by the company’s Articles of Association may also be addressed during these meetings.

Extraordinary meetings are called when urgent decisions are required, such as changes to the board of directors or revisions to the company’s Articles of Association.

Careful organization is essential when preparing for a general meeting. These meetings must be scheduled promptly so the approved annual report can be submitted to the Danish Enterprise Authority within the deadline. Minutes must also be recorded, detailing the company type, name, and CVR number, as well as the chairman's name. A report from the management or supervisory board must confirm whether the annual report was approved.

The minutes should document all decisions made, including the meeting date and the chairman’s signature. These minutes are then submitted to the Danish Business Authority as proof that the annual report was approved.

The independent legal entity status of an ApS

A notable benefit of establishing a limited liability company in Denmark, referred to as an anpartsselskab (ApS), is its tax efficiency. The corporate tax rate is lower than the rate applied to individual income, which allows companies to save on expenses related to purchases, investments, and other financial activities. This setup often makes managing such transactions through a company more economical than doing so as an individual.

An ApS also offers the advantage of being recognized as a separate legal entity. This status enables the company to independently own assets, take on obligations, engage in transactions, and exercise legal rights. The clear distinction between the company and its shareholders adds operational flexibility.

One crucial aspect of this legal separation is the protection it provides to shareholders. Their personal liability is limited to the capital they have invested in the company, ensuring that their personal assets remain unaffected by the company’s debts or financial obligations.

Furthermore, the ApS structure facilitates efficient tax planning. Businesses can adopt accounting and tax strategies designed to reduce operational expenses and minimize their overall tax liability while optimizing profits.

Circumstances where limited liability does not apply in an ApS

When operating a Danish limited liability company (ApS), it is often emphasized that the owner is not personally responsible for the company’s debts, meaning private assets are typically protected. However, this rule has exceptions, and in certain cases, personal liability may still apply.

For instance, if an ApS owner applies for a loan and the only collateral offered is the company’s share capital of DKK 20,000, the bank may require a personal guarantee or the pledge of the owner’s private assets. The same conditions may be imposed by larger creditors. Once the company’s assets are adequate to cover the liabilities, personal guarantees and collateral can potentially be released.

In some extreme cases, such as when an owner acts negligently and causes substantial harm to customers and creditors, personal liability may be triggered. For example, if an owner signs contracts on behalf of the company while knowing the company is in no position to repay due to severe financial difficulties, this could lead to personal liability.

Danish limited liability companies also must adhere to specific regulations. If the company loses half of its capital, the owner has a 6-month deadline to convene an extraordinary shareholders’ meeting. At this meeting, the board of directors must present a financial report and suggest actions, which could include considering liquidation.

If the company fails to raise the necessary capital, the owner could be held personally liable to creditors, jeopardizing private assets. Therefore, it is essential for the owner to follow these rules carefully.

Hiring employees in a Danish ApS company

Hiring employees in a Private Limited Company in Denmark (Anpartsselskab) involves several legal and procedural requirements that must be followed to ensure compliance with Danish law. Below is a detailed overview of the processes involved in hiring employees in a Danish ApS company.

In Denmark, the hiring process begins with the creation of an employment contract. According to Danish labor law, this contract must be in writing and contain essential details about the terms of employment, including:
- Salary - The contract must specify the amount the employee will be paid for their work, as well as the frequency of payment (e.g., monthly, weekly).
- Job responsibilities - The position and the employee’s duties must be clearly outlined.
- Working hours - The contract must specify working hours and any rules about overtime.
- Vacation - Employees are entitled to at least five weeks of paid vacation per year, and the contract should include vacation policies.
- Notice period - The contract should outline the notice period for termination, which varies depending on the employee’s length of service.

Additionally, in the case of fixed-term contracts, the contract must specify the duration of employment and conditions for extension or termination.

In Denmark, employers are required to ensure that employees are paid fairly, in accordance with the minimum wage regulations, if applicable in the specific industry. Gross salary is subject to taxation, and the employer is responsible for withholding the appropriate contributions for social security and income taxes directly from the employee’s salary.

Denmark follows a progressive tax system, meaning that the income tax rate depends on the salary level. Employers must withhold taxes from employees' wages and remit them to the Danish tax authorities (SKAT). Employers are also required to ensure that deductions for pensions, health insurance, and other social benefits are made correctly. Additionally, Denmark’s social security system requires contributions to cover health insurance, pensions, and other social services, which are mandatory for both employees and employers.

Once an employee is hired, the company must register them with the Danish social security system. Employees are covered by the social security system, which includes health insurance, pension contributions, and insurance in case of illness or accidents. The amount of the contributions depends on the employee's salary, and it is the employer’s responsibility to ensure these contributions are made.

Employers are also required to report employee salaries to the tax system. The employer is responsible for calculating and remitting all social security contributions, as well as adhering to the tax laws related to employee wages.

In Denmark, there is a strong emphasis on adhering to health and safety regulations. Employers are required to provide safe working conditions that protect the health and well-being of their employees. This includes conducting regular health and safety training and ensuring that the necessary protective equipment is provided, if required by the nature of the job (e.g., protective clothing).

When hiring employees, companies must also comply with regulations on gender equality, non-discrimination, and ensuring equal opportunities in the workplace. Denmark is known for its strong stance against discrimination, and employers must ensure that all employees are treated fairly, regardless of gender, age, race, religion, or sexual orientation.

There are different types of employment contracts in Denmark, including fixed-term and permanent contracts. For fixed-term contracts, the company must meet specific conditions, such as specifying the contract’s duration and the reason for the fixed term (e.g., employee replacement, project work). After the contract expires, the employee should receive an offer for continued employment or termination.

Denmark has active trade unions that play a significant role in protecting employees' interests. When hiring employees, a company should be aware that trade unions are involved in negotiating work conditions, salaries, holidays, and other benefits. Although union membership is voluntary, many employees are represented by unions, and employers must be prepared to engage in collective bargaining.

Hiring employees in Denmark involves adhering to numerous legal, tax, and social security requirements. As a result, many business owners seek the assistance of local tax and legal advisors to ensure compliance with all applicable rules. Using professional services helps avoid mistakes that could lead to serious financial or legal consequences.

Pension scheme requirements for employees in a Danish ApS

In a Ltd in Denmark (Private Limited Company), offering a pension scheme to employees isn’t a legal requirement, but many companies choose to provide one as part of their benefits package to stay competitive and attract talented employees. If a pension scheme is offered, there are a few key things to know:

1. Employer contributions: When a pension scheme is in place, the employer is expected to make regular contributions to the plan. These usually range from 4% to 12% of the employee's salary, depending on the terms agreed in the employment contract or any collective agreements.
   
2. Employee participation: Employees can choose whether or not to join the pension scheme. While it’s entirely voluntary, most employees decide to opt in, since they benefit from the employer’s contributions.
   
3. Agreement types: The pension scheme can be part of a collective agreement (overenskomst) or set up through individual agreements between the employer and employee. It’s important that these terms are clearly stated in the employment contract to avoid any confusion.
   
4. Tax benefits: Both the employer’s contributions and the employee’s pension savings come with tax advantages. The employer’s contributions are tax-deductible, and the pension savings are exempt from social security contributions, providing financial benefits for both parties.
   
5. Pension fund management: Employers are responsible for making sure the pension contributions are handled by a licensed pension provider. Employees typically have the option to choose their preferred pension plan or fund, based on their individual preferences.

While providing a pension scheme isn’t mandatory, it’s a common and recommended practice for ApS companies in Denmark, as it plays an important role in attracting and retaining employees. Just be sure that any pension offering aligns with the relevant regulations and agreements in place.

Terminating employees in an ApS

In Denmark, when an employer decides to let someone go, it’s not just about making a decision-it’s a process that’s shaped by specific labor laws. There are different rules depending on whether the dismissal is due to misconduct or economic reasons. If it’s a case of misconduct, like not meeting performance expectations, the employer needs to provide solid proof and follow the proper steps. On the other hand, if the dismissal is due to company changes or layoffs, there are still strict legal procedures to follow. The dismissal process in Denmark is designed to be fair and legal, ensuring that both the employer and employee are protected. Before making any final decisions about firing someone, the employer should have a conversation with the employee. This is the moment for the employee to share their side of the story, giving them a chance to respond to the concerns that have been raised.

Once the decision is made, the employer must send a written notice to the employee, explaining why they’re being let go and when the dismissal will take effect. The notice period is usually at least four weeks, but this can vary depending on how long the employee has been with the company. In Denmark, how long the notice period lasts depends on the employee’s time with the company. It can range from one to six months, giving the employee time to look for a new job while respecting the contract terms.

If the dismissal is due to economic reasons, the employer might need to provide severance. The amount usually depends on how long the person has worked with the company, and it can be outlined in the employment contract or collective agreements. Sometimes, employers offer assistance to help the employee find a new job. This could mean allowing them time off to attend interviews or even helping to put together a CV. Danish labor laws protect employees from unfair dismissals, and if an employee feels they’ve been treated unfairly, they have the right to challenge the dismissal in a labor court.

Employees also have extra protection from being fired in specific situations, like during pregnancy, illness, or parental leave. Firing someone during these times could be illegal and come with serious consequences for the employer. If the dismissal affects a large group of employees, the employer will usually need to negotiate with trade unions. Unions play a crucial role in defending workers' rights, especially in bigger companies. In these cases, the employer needs to consult with the union and follow any relevant collective agreements.

After the dismissal, there are a few things the employer has to wrap up, including:
- Providing an employment certificate that details the person’s role, responsibilities, and how long they’ve worked.
- Settling any outstanding wages, vacation days, or severance.
- Reporting the termination to the necessary authorities, like social security or the tax office.

By following these steps, both the employer and employee can ensure that the process is as smooth and fair as possible.

How the Danish Accounting Act affects ApS companies

ApS companies are required to follow the rules set out in the Accounting Act, which provides guidelines for bookkeeping, including procedures for recording documents and storing financial records. These rules apply to all companies in Denmark that are not controlled by government or local authorities. Failure to comply with these requirements may result in requests for further information from public authorities or remarks in the company’s annual financial statements.

The Accounting Act sets specific standards for bookkeeping, including safeguarding accounting records from being destroyed or disposed of. Timely recording and documentation are essential, and every accounting entry must be supported by the relevant documents. When transactions are recorded in a currency other than Danish krone, the appropriate exchange rate must be applied, either the average rate or the rate on the transaction date. Additionally, the Act outlines the preparation of annual financial statements, which differ based on the company’s accounting category.

A new accounting law, effective from January 2024, requires all companies to adopt digital accounting. Companies must use accounting systems that comply with legal standards. All financial documents must include essential information such as the date, amount, product or service details, identification numbers for both the sender and recipient, VAT amount, and payment terms. This data must be stored digitally.

The implementation of electronic accounting will be phased in based on the company’s classification:
- From January 1, 2024, the Danish Business Authority will offer an overview of available accounting systems.
- Starting July 1, 2024, companies in classifications B, C, and D will need to transition to electronic accounting.
- By 2026, companies in classification A with an annual net turnover exceeding DKK 300,000 for two consecutive years will also be required to switch to digital accounting systems.

Bookkeeping for an ApS

In Denmark, specific rules govern the bookkeeping process for a limited liability company (ApS) to guarantee precise financial reporting. These rules mandate that every financial transaction be recorded in an organized manner, with several important guidelines to follow:

1. Transactions need to be documented shortly after they occur, maintaining a chronological order that facilitates easier financial management. This practice also helps avoid issues like forgotten documents or misplaced receipts.
   
2. Proper documentation, such as an invoice, receipt, or bill, must back every transaction. Both paper and digital versions are acceptable.
   
3. Records related to bookkeeping must be preserved and cannot be discarded or destroyed.
   
4. These records must be kept for a minimum of five years and made available for review by public authorities upon request.
   

In Denmark, many business owners opt to manage their own bookkeeping with the help of online accounting tools like Billy, Dinero, Uniconta, e-conomic, or Dynaccount. Alternatively, they may choose to hire a professional accountant or auditor to take care of regular accounting duties, which include documenting income, expenses, and both assets and liabilities.

To ensure all transactions are fully documented, each attachment linked to a transaction is given a unique, sequential number. The essential information included in the attachment should contain: the invoice number, date, tax identification number (TIN), VAT number and its rate (if applicable), as well as the seller's details. These attachments must also comply with accounting regulations.

Afstemning, or compliance verification, is a crucial aspect of accounting control for an ApS. It is advisable to conduct afstemning periodically throughout the year instead of waiting until the year’s end. This approach eliminates the need to review the entire year’s financial records at once, making the process of preparing the annual report both faster and more accurate.

Financial reporting and auditing

All Danish limited liability companies (ApS) must submit annual financial reports. These reports aim to provide an accurate picture of the company’s financial status. To ensure this accuracy, most private limited companies are required to have their financial statements reviewed by an independent auditor. The auditor’s role is to confirm that the financial statements reflect the company’s actual assets, liabilities, income, and expenses.

Small businesses categorized as category B are exempt from the audit requirement if they meet certain criteria: - their balance sheet total is under DKK 4 million, - their net turnover is below DKK 8 million, - and they employ fewer than 12 full-time staff.

Even if a company isn’t required to have an audit, it may choose to have its financial statements reviewed voluntarily by a certified public accountant. This decision can be made by the company’s owners during an extraordinary shareholders' meeting and must be recorded in the meeting minutes, which should then be filed with the Commercial Office.

Many private limited companies in Denmark opt for an audit to maintain financial transparency and reliability. This not only ensures an accurate representation of the company’s financial health but also provides assurance to investors, board members, and other stakeholders. The auditor acts as an independent public assessor, offering an external perspective on the company’s financial condition.

ApS annual financial statement

In Denmark, it is mandatory for every limited liability company (ApS) to submit an annual financial report, along with the necessary supporting documents. The board of directors, also referred to as the company’s management, holds the responsibility for preparing and submitting the report.

The submission deadline for the annual report, which includes the relevant financial statements, is six months following the end of the company’s financial year. For companies with a financial year that matches the calendar year (from January 1 to December 31), the report must be filed no later than June 30. The annual report must be submitted through Virk.dk under the "Regnskab-basis" section.

Limited liability companies in Denmark are governed by the Financial Reporting Act, which categorizes companies based on specific criteria. This classification sets out the reporting obligations for the annual report. Typically, an ApS falls under Class B, which requires the following documents to be included in the report: - a management report (if there is more than one board member), - a balance sheet, - a profit and loss statement, - the board of directors’ opinion, - accounting policies.

Class B reporting is further divided into two groups: reporting class B and reporting class B for micro-enterprises. While both groups must meet nearly identical reporting standards, micro-enterprises are exempt from including accounting policies, which are required for other Class B companies.

An ApS is considered a micro-enterprise if it meets the following conditions for the past two financial years:
- A balance sheet total of no more than DKK 2.7 million,
- A net turnover that does not exceed DKK 5.4 million,
- A maximum of 10 full-time employees in the most recent financial year.

Digital services for an ApS

To establish a company in Denmark, several key steps must be followed to ensure smooth operations and access to governmental services.

The initial step is to apply for a NemID, which is a digital signature needed for logging into government websites, online banking platforms, and other digital services. This signature is crucial for verifying your identity and accessing various services. You can request a NemID through medarbejdersignatur.dk, though the site is only available in Danish.

After obtaining a NemID, the next step is to set up a mailbox on "e-boxes." In Denmark, all official correspondence from government agencies to private companies is sent to this digital mailbox. Some private companies also use e-boxes for communication. This digital mailbox functions similarly to an online inbox, where you can view messages after logging in with your NemID.

The third step involves assigning a NemKonto to your company. A NemKonto is a specific bank account used for receiving payments from public authorities, such as tax refunds and government subsidies. Once you have your company’s CVR number, you will need to contact your bank to assign a NemKonto. This can either be a pre-existing bank account or a newly designated one for this purpose. Without a NemKonto, tax refunds cannot be processed. To confirm if your account qualifies, visit nemkonto.dk or contact your bank. If you don’t have a Danish bank account, you can apply to use a foreign account as your NemKonto by submitting a special form.

Finally, the company’s equity needs to be transferred from the lawyer. During the registration process, the required minimum capital of DKK 20,000 is deposited into the lawyer’s client account. Once the company’s bank account is set up, you can instruct the lawyer to transfer the capital to your company’s account. If you face issues with setting up a traditional bank account, services like Revolut can be considered as alternatives.

By completing these procedures, your company will be properly registered in Denmark’s system, ensuring efficient management of finances and the receipt of government payments.

Taxation of Danish private limited company (ApS)

Danish private limited companies face a corporate tax rate of 22%, which is relatively low and attractive. This tax is applied to the company’s taxable profits, determined by subtracting deductible expenses from income. However, during years when taxable income fluctuates-such as when losses are carried forward, write-offs are made, or investments lower the taxable base-companies may not be required to pay corporate tax. On the other hand, small businesses that are privately owned usually fall under different tax rules and are generally exempt from this tax.

Income taxation and dividends

Ltd in Denmark must pay corporate income tax on their earnings, with a rate of 22% set for 2021. To determine a company’s taxable income, its expenses are subtracted from its revenue, and this figure is referred to as the "pre-tax result." This result is also reflected in accounting reports, such as the income statement in e-conomic or other accounting software. The accountant or auditor will then make necessary adjustments, such as for depreciation or non-deductible expenses, to calculate the company’s actual taxable income.

The taxable income usually differs slightly from the pre-tax result due to adjustments for certain expenses that either are not fully deductible or may have different tax treatment than what was recorded in the accounts. This taxable income is reported annually in the company’s tax return, which must be submitted within six months of the end of the tax year.

Corporate income tax payments are due twice yearly, on March 20 and November 20, based on estimated profits. These are known as “ordinary corporate income tax payments.” Additionally, there is an optional third payment, a “voluntary payment of company income tax,” which can be made on February 1 in the year following the fiscal year. This allows companies to adjust their tax payments after completing their financial statements for the previous year. Paying more in taxes during this third installment can help lower the interest charged for late payments.

When you own an LLC in Denmark, the first correspondence from the tax office regarding corporate income tax will likely indicate that the company owes DKK 0. This occurs because the tax office has not yet received sufficient information to estimate the exact amount of tax owed.

Dividends, which are portions of a company’s profits paid to shareholders, are not mandatory even if the company is profitable. However, they are typically paid when there are surplus funds. For individuals who are both owners and directors, receiving dividends can offer tax benefits. The decision to distribute dividends is made during the general assembly, and the amount must be approved at the meeting.

There are two types of general meetings: ordinary and extraordinary. The ordinary meeting is held annually to approve the annual report and decide on dividend distribution. Extraordinary meetings occur when important decisions must be made between the regular meetings, such as appointing a new board member, auditor, or approving dividend payments.

In Denmark, tax on dividends is withheld when paid to individual shareholders. For 2021, the first DKK 56,500 of dividends is taxed at 27%, with any amount above that taxed at 42%. For married individuals, the higher tax rate applies if the dividend exceeds DKK 113,000. The company is responsible for withholding the dividend tax and sending it to the Danish tax authority, SKAT Erhverv.

For non-residents, the dividend tax rate is generally 15%, depending on the double taxation agreement between Denmark and the shareholder’s home country. In most cases, the company will deduct the 15% tax before paying out dividends.

Sometimes, a company may carry forward its tax loss to offset future taxable income. For instance, if a company has a DKK 100,000 loss in 2020 and makes a DKK 100,000 profit in 2021, the 2020 loss can be used to reduce the taxable income in 2021, meaning no corporate income tax would be owed for either year.

The deadline for submitting annual reports to the Danish Enterprise Authority (VIRK) is five months after the end of the fiscal year, and tax returns must be filed with SKAT Erhverv within six months. Corporate tax payments are due on March 20 and November 20 each year, with the option of making a voluntary payment on February 1 of the following year to reconcile any discrepancies.

Companies in Denmark can choose their fiscal year-end date, with December 31 being the most common. However, businesses can opt for other dates, such as June 30 or January 31, which can complicate tax reporting. If a company has an 18-month fiscal year, the tax year will end after 18 months, with partial tax payments made in both the first and second years.

Managing VAT payments for a Danish Private Limited Liability Company

Navigating Denmark's VAT system can be tricky, but for limited liability companies (ApS), it’s important to stay informed about tax obligations and seek professional advice when needed to avoid mistakes. This is particularly important for businesses involved in international transactions or those eligible for specific VAT exemptions or deductions.

For example, an ApS may qualify for VAT exemption if it offers educational or medical services. VAT deductions can also be claimed on purchases tied to taxable activities, like materials or services, which helps reduce the company’s overall tax burden.

An ApS must issue VAT invoices regularly, as they are essential for both tax compliance and bookkeeping. These invoices should include the company’s VAT ID, customer details (including their VAT number when relevant), a description of the transaction, as well as the date, invoice number, quantity, unit price, total amount, and VAT charged.

Once an ApS’s turnover exceeds DKK 50,000 in a 12-month period, it must register for VAT. This requires submitting necessary documentation to the tax authorities to confirm the business details. After registering, the company is responsible for collecting and remitting VAT from customers, as well as making regular payments to the tax office.

The standard VAT rate in Denmark is 25%, though reduced rates apply to certain goods and services. For instance, food, medicines, medical services, and hotel stays are taxed at 12%, while products like books, newspapers, and tickets for cultural events are taxed at 0%. The applicable VAT rate depends on the company’s activities.

ApS asset pricing

To establish your private limited company (Danish LLC) with an in-kind contribution, you will need an asset valuation report, which is usually prepared by an independent accountant. It is crucial to understand that preliminary assessments from suppliers, manufacturers, or car dealers are not adequate for the valuation, although they can help the accountant in creating the final report. The valuation document must be included with the incorporation papers. Moreover, if in-kind contributions are used to set up your ApS, you assume personal responsibility for the contributed assets.

Compensation for ApS owners

In a Danish limited liability company (ApS), the owner has two ways to receive compensation: through a salary or dividends. However, transferring funds directly from the company’s account to the owner's personal account is not allowed, as the company and the owner must maintain separate financial records due to their distinct legal statuses.

To receive a salary, the owner must first register the company as an employer on Virk.dk, draft an employment contract, prepare a monthly payroll report, and report the salary to Skattestyrelsen for proper taxation.

The salary cannot exceed what is considered reasonable for similar work, or the tax authorities may classify the excess amount as a dividend, which would be subject to dividend tax.

If the owner decides not to take a salary in a specific month, they must submit a "nil declaration" to Skattestyrelsen. Failing to do so will result in a penalty.

Alternatively, the owner can opt for dividends. Dividends are distributed to shareholders and investors, and it’s essential to ensure their accurate documentation. Regardless of whether the owner chooses a salary or dividends, taxes must be paid, and the company must report this to Skattestyrelsen using platforms such as LetLøn on skat.dk.

Distinctions between ApS and other business forms

In Denmark, businesses can be established under various legal and organizational structures. One of the most commonly chosen is the ApS (Anpartsselskab), along with other options such as the stock corporation (A/S), limited liability company (IVS), limited liability partnership (K/S), and the single-member limited liability company (E/ApS).

Key differences between an ApS and other company types include the following:
- Minimum capital: An ApS requires a minimum share capital of DKK 20,000, whereas an A/S needs DKK 400,000.
- Number of owners: An ApS can be owned by one or more individuals, while an A/S mandates at least three owners. The E/ApS is designed for a sole proprietor.
- Registration and expenses: Registering an E/ApS is more straightforward and less costly compared to an A/S.
- Management and control: Shares in an A/S are generally easier to transfer compared to those in an ApS.
- Capital acquisition: Raising capital via the stock market is more accessible for an A/S than for an ApS.

Selecting the most appropriate business form depends on the specific needs of the entrepreneur, and it is advisable to seek guidance from a professional or lawyer before making a decision. The ApS remains a favored choice among Danish entrepreneurs.

ApS vs sole proprietorship

Opting for a limited liability company (ApS) can be a smart decision if you anticipate breaking even or generating profit. Unlike a sole proprietorship, an ApS shields your personal assets, ensuring that even if the company incurs losses, your personal property remains protected. However, starting an ApS requires an initial capital of DKK 20,000, and it’s important to note that personal income cannot be used to cover the company’s losses. If you decide to pay yourself a salary, the company must issue a payslip, withhold taxes, and remit them to the government. As a result, even in the event of a deficit, you will still be liable to pay taxes on your personal earnings.

Transitioning from a sole proprietorship to an ApS

Option 1 - Taxable conversion: When the business has little or no value, choosing a taxable conversion is the most efficient option. This means that transferring a sole proprietorship to an ApS will result in minimal to no profit, with taxes being kept to a minimum. For smaller businesses, this option is a more affordable solution than a tax-free conversion.

Option 2 - “Tax-free” conversion: If the business holds substantial value, a "tax-free" conversion can be advantageous, as it lets you delay paying taxes until you sell shares in the newly formed ApS. Despite its name, it isn’t truly "tax-free" but rather tax-deferred. In this case, an auditor is still required to assess the company’s value and oversee the ApS registration process. The auditor's fee usually falls between DKK 5,000 and 20,000, excluding VAT.

Steps to closing an ApS in Denmark

To shut down a Danish limited liability company (ApS), the owner must first evaluate the company's financial health and choose the best course of action. The closure process depends on the company's financial status and can follow different paths:

1. Restructuring - When bankruptcy is imminent, the company can request the court to initiate a restructuring process aimed at financial recovery and operational revival. A court-appointed administrator will oversee the restructuring efforts.
   
2. Liquidation through shareholder declaration - For solvent companies, voluntary liquidation is an option. The company must make a public announcement and give creditors a three-month period to file claims. A liquidator is designated to manage the process, and after completion, shareholders are shielded from any future claims.
   
3. Voluntary liquidation - To proceed with voluntary liquidation, all outstanding debts must be cleared first. Shareholders are required to sign a declaration confirming the debts will be paid, and they become fully responsible for any new debts that may arise. The liquidation process should also be free from unresolved legal disputes or claims.
   
4. Bankruptcy - If the company is financially insolvent, bankruptcy proceedings will be initiated, resulting in its closure.
   
5. Compulsory dissolution - In certain circumstances, the court may order the dissolution of the company, such as when the annual report is not submitted on time, the managing director resigns, or a new auditor is not appointed after the previous one steps down. A liquidator is appointed, and if the company is insolvent, bankruptcy proceedings begin; if the company is solvent, it will be dissolved.

After selecting the appropriate closure process, the following actions must be taken:
- Complete all necessary accounting tasks before the company is closed. If the company is registered for VAT, submit the VAT declaration for the final period prior to deregistration.
- Settle any unpaid wages for employees, file the required employee taxes, and ensure that the company is officially deregistered as an employer.
- Inform the tax authorities about the planned corporate income tax deregistration, which usually occurs after the company’s formal closure date.
- Submit the final income tax return by the last tax filing deadline. The tax office will then issue a concluding statement confirming that VAT and other taxes have been resolved. This process generally takes 3-6 months.
- Obtain confirmation from the tax authorities that all liabilities have been cleared.
- Prepare and submit a statement signed by the shareholders, confirming that all company debts have been settled, along with the final application for closure.
- The company will be officially closed within two weeks following the submission of the closure application.

Throughout this process, ensure that all accounting is finalized, VAT and employee taxes are filed for the remaining periods, and any unpaid amounts on the tax account are settled. The company must be deregistered as both an employer and a VAT payer, and a tax return for the previous fiscal year should be submitted. A separate manual tax return must also be filed for the year of closure, with the income tax adjusted to reflect the actual tax liability for the closing year. After completing these tasks, request a statement from the tax authority (betalings-erklæring) and prepare a final statement signed by the shareholders. Once these steps are done, proceed to close the company via the VIRK system.

How an ApS can function as a holding company

Establishing two companies simultaneously can be beneficial as it allows for "capital roll-over." This means the same DKK 20,000 can be used as initial capital in both companies, rather than paying DKK 20,000 for each company separately.

A structure involving a holding company and an operating company provides a method to safeguard the assets of the operating company. In this setup, the holding company holds the capital shares of the operating company, protecting the holding company’s assets from creditors in the event of the operating company's bankruptcy.

The holding company itself is not an independent legal entity. It is specifically established to own shares in another company and manage the ownership of those shares.

Opening a bank account for a Danish LLC

In Denmark, every limited liability company (ApS) must have a business account, referred to as an Erhvervskonto. This account is crucial for keeping the company's finances distinct from the personal finances of its owners. Furthermore, a NemKonto business account is required to maintain transparency and support effective financial management.

The first step in opening an account for an ApS is selecting a suitable bank. You can either use the bank where you hold a personal account or consider other banks. It's recommended to compare several options, as services and fees can differ considerably between financial institutions.

To open a company account, it's necessary to provide specific documentation. This includes evidence of the company’s legitimacy, as well as personal identification documents. Having these documents prepared in advance helps prevent any complications during the account setup process.

An Erhvervskonto is the official business account in Denmark, tied to the company through its tax identification number (CVR). It operates in a similar way to a private business account, which is associated with the business through an individual's personal number.

ApS and its CVR number

When registering a limited liability company (ApS) in Denmark, the company will be assigned a unique CVR number, which consists of eight digits. This number serves a similar purpose to the CPR number for individuals and is crucial for the company's operations. It enables the company to be recognized in administrative and business procedures and is required to obtain a NemKonto for receiving payments from public institutions.

Moreover, the CVR number is essential for using MitID, the digital identifier for companies, and for accessing Digital Mail for businesses, which streamlines communication and administrative tasks online. Having a CVR number ensures the company can operate legally and comply with Danish laws and regulations.

The time needed to acquire a CVR number generally depends on the company’s legal structure. For a Danish Ltd, this process typically takes between 1 and 4 days, assuming the registration is completed correctly. To avoid delays or the need for resubmission, it is recommended to seek assistance from a lawyer experienced in setting up LLCs in Denmark. This will help ensure that all legal documents are correctly filled out, allowing for the prompt issuance of the CVR number.

Electronic correspondence in an ApS

A LLC in Denmark automatically receives an electronic mailbox, called Digital Post, when it is assigned a CVR number. This mailbox is used by public authorities to send various communications to the company. It is essential to regularly check the mailbox for updates. While most public institutions prefer Digital Post, some may still send physical mail, but both electronic and traditional mail are legally equivalent under Danish law.

To access the Digital Post mailbox, authorized company representatives can log in using their personal MitID through the Virk platform or the Digital Post app. If you're not authorized to use your personal MitID for business purposes, MitID Erhverv must be used to access the mailbox via Virk. Your MitID Erhverv account will need the necessary permissions, which can be easily managed through the Digital Post Permissions Portal.

Besides receiving messages from public institutions, companies in Denmark can also use private platforms like mit.dk or e-Boks to exchange messages with other businesses. The free versions of these platforms only allow for receiving messages, but businesses need to subscribe to the paid version to send messages.

Using MitID Erhverv for an ApS

To acquire MitID Erhverv, a company must first register and create an account on the MitID-Erhverv.dk website. This service is specifically designed for businesses with one or more employees who need access to various public and private self-service options on behalf of the private limited company in Denmark.

MitID Erhverv offers several features for employees, such as accessing the company’s email, filing tax returns, or submitting maternity leave reports for colleagues. However, employees must be properly authorized by the company before using certain self-service functions. In most instances, authorizations can be managed directly through MitID Erhverv, though some services, such as those related to the Tax Office, may require separate authorization management.

Employees also have the option to use their personal MitID for logging into the company’s self-service platforms, allowing them to handle both personal and business matters through a single account. For this to work, both the company and the employee must agree to the terms for using a personal MitID for work-related activities. It is important to emphasize that personal and company information will always remain completely separate, regardless of the login method. Alternatively, employees can choose to create a separate MitID, dedicated solely to company-related tasks.

If you have any questions regarding a Private Limited Company in Denmark, feel free to reach out. Proaktif is here to assist you with all aspects of setting up and managing your ApS. Our team is ready to provide expert guidance tailored to your needs.