Liquidating a company can feel pretty overwhelming, as it involves quite a few steps that need careful attention. It’s really important to tackle each step in the right order to keep access to your company’s online systems, which makes the whole process go a lot smoother. Plus, getting it right helps you avoid unnecessary costs, like taxes and fees that could crop up if things aren’t handled properly.
We know how important it is to get all the formalities sorted out during liquidation, and that’s why we’re here to help you every step of the way. With our support, you can relax knowing that everything will be managed according to Denmark's rules and standards.
How to carry out the process of closing a business in Denmark?
The process of winding up a business in Denmark involves several administrative and legal steps that must be followed carefully. This significant task requires thorough planning and precise execution. No matter the reason for closing the business, it’s essential to meet all the necessary formalities and legal requirements to ensure everything is done in line with Danish laws.
The first step is verifying any outstanding liabilities. At this stage, it's crucial to check if the company owes money to employees, customers, suppliers, or authorities. Ensuring that all debts are settled and obligations fulfilled helps prevent legal or financial issues during the liquidation process.
Next, you need to make a formal decision to wind up the business. For sole proprietorships, this decision must be approved by the owner. In the case of partnerships, all shareholders or board members need to agree. This formal decision is vital for moving on to the next steps in the liquidation.
Informing the relevant authorities is another important step. You must notify Danish authorities about your decision to close the company. This includes reporting the termination to the Central Register (CVR) and the Tax Authority (SKAT). Notifying these institutions is necessary for officially closing the company in public records.
As part of the liquidation process, preparing a liquidation balance sheet is essential. This document should accurately reflect the company's assets as of the liquidation date. For companies, conducting a liquidation audit may also be beneficial, ensuring that all accounts are accurate and complete. Once all liabilities are settled, the remaining assets can be distributed among partners or owners.
Reporting the liquidation to Erhvervsstyrelsen is the next step. Every Danish company is required to notify the Danish Enterprise Authority (Erhvervsstyrelsen) about the liquidation process. This can be done online through their website.
There are also additional steps to consider during the liquidation process. It’s a good idea to inform business partners, suppliers, and customers about the closure. Communicating with all parties involved helps ensure everyone is aware of the changes and can adjust accordingly. If there are alternative contacts or a plan for another company to take over responsibilities, that information should be shared as well.
Closing the company bank account is another crucial step. After settling all financial obligations and completing current operations, make sure all transactions are finalized and the account balance is zero before closing it. This process should also account for any unused funds and confirm that no further activity is expected on that account.
Finally, Danish regulations require you to keep all business-related documents for a set period, typically five years.
Closing a company in Denmark
In Denmark, companies can be terminated for various reasons, and these situations often fall into a few main categories. One common reason is bankruptcy, which can be initiated either by the company itself or by its creditors. There’s also forced liquidation, which a court can order, and shareholders can choose to voluntarily close the business. Sometimes companies might also undergo restructuring to fix their financial issues before going for liquidation.
I. Declaring bankruptcy
Bankruptcy usually happens when a company runs out of cash and can’t pay its bills. If this occurs, the company’s management might decide to declare bankruptcy. But before that can happen, they need to file a request with the court. Interestingly, creditors can also file this request if they haven’t been paid. Once the court gets the application, it investigates the company’s finances to see whether it should go into bankruptcy or be restructured.
II. Forced liquidation
Forced liquidation often happens when a company is closed down by a court order, usually without the owner's say-so. This can occur for various reasons, like missing the deadline for submitting annual reports, not conducting required audits after an auditor resigns, or if the Managing Director steps down. When a court decides to dissolve a company, it appoints a liquidator. This person looks closely at the company's finances to see if it can keep operating. If the company can’t pay its debts, bankruptcy proceedings may start, leading to asset sales and settling up with creditors. If the company is still in the black, it will just be shut down, and the liquidator will manage the necessary winding-up procedures.
III. Voluntary termination
Shareholders can voluntarily close a company, but only if it’s still solvent, meaning its assets are greater than its debts. Before kicking off the liquidation process, the company needs to announce its decision publicly. This announcement gives creditors at least three months to file any claims. The company also needs to inform the commercial register to make sure everyone knows what’s happening. After this waiting period, the liquidator takes over, settling debts and distributing any remaining assets.
IV. Restructuring
If a company wants to avoid bankruptcy, it might choose to restructure instead. This option allows it to reorganize and fix its financial situation without formally declaring bankruptcy. The court appoints someone to oversee the restructuring process, making sure everything runs smoothly. This person works with creditors, monitors the restructuring plan, and takes steps to streamline the company’s operations. The goal is to help the company regain liquidity and operate more sustainably, ultimately avoiding legal troubles tied to bankruptcy.
V. Liquidation of the company
When shareholders decide to liquidate the company, they don’t have to wait for three months for creditors to file claims. However, it’s super important to handle all the formalities correctly to avoid any future headaches. Ignoring any obligations can lead to liabilities that shareholders will have to cover. Plus, it’s essential to wrap up all banking activities and cancel contracts with suppliers and service providers. Once all that’s done, the company can be legally closed without risking additional costs for the shareholders.
How can we help with the closing of a Danish company?
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.
