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Liquidating a company is a complex process that involves a number of different steps and requires a careful approach. During this process, it is extremely important that each step is carried out in the correct order. Adhering to the established order of activities allows you to maintain access to your company's online systems, which is crucial for a smooth wind-down. In addition, the proper order of activities avoids unnecessary costs, such as taxes, duties or other fees that may arise if the liquidation process is not carried out correctly.
We realize how crucial it is to properly carry out all the formalities related to liquidation, so we offer you our support at every stage of the process. With our help, you can be sure that all the formalities are carried out in accordance with the norms and standards in force in Denmark.
The process of winding up a business in Denmark involves a number of administrative and legal steps that must be carefully followed. This significant undertaking requires careful planning and precise execution of each step. Regardless of the reason for winding up the business, it is crucial to meet all the formalities and legal requirements to ensure that the process is carried out in accordance with applicable Danish laws.
Verification of liabilities is the first step to be taken. At this stage, it is important to carefully check whether the company has any financial arrears to employees, customers, suppliers and authorities. It is important to make sure that all debts have been paid and all obligations settled to avoid legal or financial problems during and after the liquidation process.
The next step is to decide to terminate the business. The decision to liquidate the company must be officially approved by the owner in the case of a sole proprietorship. In a situation where the company operates as a partnership, the approval of all shareholders or board members is required. A formal decision to terminate the business is crucial to proceed to the next steps in the liquidation process.
Notifying the relevant authorities is the next important step. The relevant Danish authorities must be informed of the decision to close the company. To do this, the termination of the business must be reported to the Central Register (CVR) and the Tax Authority (SKAT). Informing these institutions is necessary to formally terminate the company in the public registers.
When conducting the liquidation process, it is important to prepare a liquidation balance sheet that accurately reflects the company's assets as of the date of liquidation. In the case of companies, it is also possible to conduct a liquidation audit, which ensures the accuracy and completeness of the accounts. Once all liabilities have been settled, the distribution of the company's remaining assets among the partners or owners must be carried out.
The next step is to report the liquidation to Erhvervsstyrelsen. Every Danish company is required to report the liquidation process to the Danish Enterprise Authority (Erhvervsstyrelsen). This notification can be completed online via the authority's website.
Possible additional steps to consider when liquidating a company include several important actions:
- Inform business partners, suppliers and customers: It is advisable to contact all individuals and companies with whom the company had regular relationships. They should be informed of the company's termination. Such a step ensures that all stakeholders are aware of the upcoming changes and can adjust their actions in response to the termination. It is also worth ensuring that information about possible alternative contacts or a plan for another company to take over responsibilities, if applicable, is communicated.
- Closing the company bank account: Once all financial obligations have been settled and the company's current operations have been completed, the next step is to close the company bank account. It is important to make sure that all transactions are completed and the account balance is zero before closing it. This process should also include accounting for any unused funds and ensuring that no further activity is anticipated on that account.
According to Danish regulations, you are required to keep all documents related to your business for a set period, usually five years.
The reasons for the termination of a company in Denmark are varied and can arise from a variety of circumstances. However, they can be simplified and classified into several main categories. One is bankruptcy, which can be initiated by both the company and its creditors. There is also the possibility of forced liquidation, which is ordered by the court. In addition, the company's shareholders can choose to voluntarily terminate the business. Other reasons include restructuring, which aims to reorganize the company, and liquidation of the company.
I. Declaring bankruptcy
The main reason why companies are declared bankrupt is the lack of liquidity, which means that the company is unable to pay its current obligations to its creditors. This state of affairs leads to difficulties in the continued operation of the company, which may prompt the company's management to decide to declare bankruptcy. However, before the company is formally declared bankrupt, it is necessary to initiate legal proceedings, which involves filing an appropriate application with the court. It is worth knowing that such an application can be filed not only by the company itself, which perceives the inability to meet its financial obligations, but also by creditors who have not received their due payments. The court, upon receipt of the application, conducts a detailed investigation to assess the company's financial situation and decides on further proceedings, which may include both liquidation and restructuring of the company.
II. Forced liquidation
Typically, the decision to close a company, made without the owner's participation, results from court orders. Such situations most often occur in the case of:
- Failure to submit the company's annual report on time,
- failure to conduct a mandatory audit when the auditor has resigned and a new one has not been appointed,
- resignation of the Managing Director.
When a company is dissolved by court judgment, the court appoints a liquidator, who is responsible for a thorough evaluation of the company's financial situation. The liquidator must analyze all financial aspects of the company, including its liabilities and assets, to determine whether the company is able to continue operating. If the company is found to be insolvent, the court will initiate bankruptcy proceedings, which may lead to the sale of the company's assets and the distribution of funds to creditors. In the event that the company still maintains liquidity, it will simply be closed down and a liquidator will carry out the necessary procedures for winding up the business.
III. Voluntary termination of the business
Voluntary closure of a company by shareholders is possible only if the company is solvent. In practice, this means that its total assets exceed its financial liabilities. In such a case, the company must publicly announce its decision to terminate operations before the liquidation process begins. This announcement should be made in a way that allows creditors to access information about the planned liquidation, giving them at least three months to file any claims. In addition, the company should also announce the liquidation in the commercial register to ensure that all interested parties have the opportunity to learn of the decision. At the end of this period, the liquidator will carry out termination procedures, including payment of liabilities and distribution of remaining assets.
IV. Restructuring
To avoid bankruptcy proceedings, one possible solution is to decide to restructure the company. Such a step allows a company to reorganize and repair its financial situation without having to declare bankruptcy. In this process, the court appoints a restructurer, who formally assumes responsibility for managing and overseeing the entire restructuring process. His tasks also include monitoring the implementation of the plan, negotiating with creditors and taking measures to optimize the company's operations and finances. The goal of these actions is to restore liquidity and enable the company to continue operating in a more sustainable manner. Good management of the restructuring process can result in the financial stabilization of the company and avoid further legal complications associated with bankruptcy.
V. Liquidation of the company
If the company is being liquidated based on the decision of the shareholders, there is no obligation to wait three months for creditors to file claims. Nevertheless, it is extremely important that all formalities are carefully attended to in order to avoid future problems. Failure to observe any obligations can lead to liabilities that will have to be covered by shareholders. In addition, it is important to carefully review and close all bank accounts and terminate contracts with suppliers and service providers. Only then will it be possible to terminate the company legally and without risking additional costs to shareholders.
We will handle the implementation of all key steps for both companies and sole proprietorships. This process includes the following activities:
- Settlement of tax liabilities
It is important to settle all tax issues, including VAT, excise duties, salaries and other dues to the Danish state, before closing the company. You should also file reports for all periods up to the closing date to avoid late penalties, which can be as high as DKK 800. Also, don't forget to file a final report. This is necessary even if the amount is DKK 0 for the period.
- Filing the closing form
Officially closing a sole proprietorship or company in Denmark requires obtaining an official closing certificate, which may be needed in the future, for example by banks or the unemployment insurance fund.
- Correcting the advance declaration
In order for the tax to be calculated correctly and consequently paid, it is necessary to adjust the profit in the tax return after the company has closed.
- Verification of the company's tax account
Before ending the business, it is important to check the status of reports and payments on Skattekonto to make sure that all payments, such as VAT or A-skat, are ureluged.
- When closing a business, it is important to prepare a skatteregnskab and calculate profits and losses. In this process, a tax return should be prepared for the period from January 1 to the closing date. The profit and loss balance sheet should include all items that have been taken out of the company, such as machinery, cars or inventory. Oplysningskema must be declared in the year following the termination of operations, and the deadline for filing is July 1. Delay in filing the declaration results in a fine of 200 kr. for each day of delay, with a maximum penalty of 5,000 kr.
- Maintaining access to a company's digital mail after the company's operations end can be a challenge, as NemID is deactivated, with the loss of access to Digital Post. Regardless of this fact, messages may still arrive in the company's mailbox. In order to ensure that you can continue to use Digital Post after your business is shut down, you should properly configure access to Digital Post before closing your business. It's worth taking these steps to avoid post-closing communication problems.