Denmark annual company accounts
Denmark, located in northern Europe and part of Scandinavia, boasts a highly developed economy, a high standard of living, and an advantageous setting for commencing a business. Learn more about the paperwork, documents you must prepare and submit to the public authorities in order to properly file your company's annual financial statements.
How does the company return in Denmark?
Running a company involves fulfilling certain obligations. One of these is filing a tax return. In Denmark, business owners have to file an annual return with the Danish Tax Authority (SKAT). The company's settlement can be done electronically, via the website www.skat.dk
. If you choose this form of settlement, you must use one of two codes - Tastselv or NemID. These codes must be ordered in advance.
Entrepreneurs have full tax liability, which means that they must include all income - both from Denmark and outside Denmark - in their return. In doing so, the double taxation agreement must be taken into account, so that the company must not pay the same taxes twice. In order to settle your accounts, you will need the Selvangivelse - a tax return form, which is sent by the Tax Office to the address you provided when registering your business.
The company's settlement should be sent by 1 July. SKAT then sends an Arsopgorelse document to the entrepreneur. This document contains the tax decision within it, which is marked with different colours. The amount of the refund (Skat til udbetaling) is marked in green and the surcharge (Restkat til betaling) is marked in red. The annual financial statements do not necessitate a cash flow statement, consolidated financial statements, or a management's commentary. Small companies are eligible for an exemption from the yearly audit requirement.
The settlement can also be checked via SKAT's website. To do this, use your individual SKAT account and then click on the Se arsopgorelsen tab. If you wish to make an adjustment or take into account allowances for Danish entrepreneurs, point the cursor to Ret arsopgorelsen/oplysningsskemaet. The tax refund is paid to NemKonto, which every entrepreneur must set up in advance. It is important to know that Danish entrepreneurs can appeal the decision of the Tax Office or make a correction to their tax return and change company information within three years.
What annual tax returns can we encounter in Denmark?
The type of annual tax return depends on the company form we have chosen:
- the annual tax return for a sole proprietorship (Enkeltmandsvirksmhed);
- the annual tax return for a limited liability company (Anpartsselskab - ApS);
- the annual tax return for a general partnership (Interesselskab - I/S);
- the annual tax return of a public limited company (Aktieselskab - A/S);
- the annual tax return of a limited partnership (Kommanditselskab - K/S);
- the annual tax return of a branch of a foreign company (Filial af udenlandsk selskab);
- the annual tax return of a representative office of a foreign company (Salgskontor);
- the annual tax return of a cooperative association (Andelsforening/Brugsforening);
- the annual tax return of a limited liability company (from 1 January 2014 Iværksætterselskab - IVS).
Accounting deadlines in Denmark
Settlement of a sole proprietorship in Denmark
Tax on a sole proprietorship is declared on a single tax return, as the income earned is deemed to be the income of the owner. In other words, the owner is accounted for in the same way as an employed person
. The owner is entitled to the same pension and health benefits as an employed person in Denmark. A tax return must be submitted once every three or six months via the Danish Tax Administration's website.
Advance income tax payments can be made twice a year, the first due date being 20 March and the second due date being 20 November. If you choose the first deadline, you can pay a higher advance payment and a tax refund received by the danish business will be with interest higher than that offered by the bank. When you choose the second deadline, you have to reckon with the fact that the interest rate is reduced by 0.4 - which means lower interest.
Please note that you can only choose one of the tax options presented.
Costs that Danish entrepreneurs can write off against tax:
- heating costs,
- electricity charges,
- costs of maintenance work and repairs to business premises,
- company insurance costs,
- expenses related to the company car,
- purchase of machinery, equipment, appliances (if this is not possible at the time of purchase,
- deduct the costs in depreciation),
- rental charges for premises,
- expenses for the services of a lawyer or auditor,
- business telephone costs.
Settlement of companies in Denmark
Operating companies in Denmark involves accounting for income tax on the total income (including income from property and capital). A tax return must be filed within 6 months of the end of the financial year.
The taxes that apply to all Danish registered companies are CIT at 22% or, if the annual turnover is more than DKK 50,000, VAT at 25%.
What are the accounts of the individual companies?
- Limited liability company (Anpartsselskab - ApS) and joint-stock company (Aktieselskab - A/S) - settlement for taxation of shareholders' income or dividends.
- Limited liability company (Ivoerksietterselskab - IVS) - settlement is related to taxation according to company law, to which the owners of a limited liability company are not subject.
- General partnership (Interesselskab - I/S) - settlement depends on the form of taxation chosen. Three forms are left to the taxpayer's choice:
- taxation of profit as personal income, as in the case of employed persons;
- taxation in accordance with the Share Capital Act (Kapitalafkastordning), whereby part of the company's profit may be transferred to personal income and part to capital income;
- taxation in accordance with the Enterprise Act (Virksomhedsordning), according to which it is possible to deduct costs from credit interest as well as allowing profits from the company to be retained in the form of bank savings.
A company situated within the EU or EEA, or based in the US, Switzerland, South Korea, or Georgia, engaging in business activities in Denmark, has the option to register a branch office with independent management in Denmark. Businesses established in other countries can also register a branch in Denmark; however, they must provide a declaration from the relevant business authorities in which the company is incorporated.
The Company Articles of Association represent a legal company document that establishes the constitution and internal regulations governing the operation of the Denmark company. Records of directors and shareholders must be maintained and stored at the registered office of the company. The company is also obligated to conduct annual general meetings during which shareholders vote on specific matters, including the adoption of the annual report, allocation of profit or loss stated in the approved annual report, and more. They must be conducted in Danish, General meetings must be conducted in Danish, unless otherwise decided. There are no residency or nationality prerequisites for management, including members of the board, Board of Directors, or Supervisory Board. A Danish ApS necessitates at least one shareholder. The company's primary management body, frequently the board of directors, bears the responsibility of ensuring that essential information is registered with the Danish Business Authority within two weeks. It is the responsibility of the director's details changed are legal and true. The limited company must also ensure to annually file its annual accounts with the Danish Business Authority. Upon registration in the Danish Business Authority's IT system, the company will be assigned a registration number (CVR no.).
All Danish companies must file annual financial statements with the Danish Commerce and Companies Agency (DCCA). The Danish Business Authority must receive the annual report no later than 5 months after the end of the company's financial year. It is feasible to have a financial year distinct from the calendar year, such as from July 1 to June 30. To find the annual report of a specific company, consider searching for its website. Notably, listed companies often provide access to their annual reports. Most company information is accessible for public scrutiny; however, the government does not keep a register of company shareholders.
Accounting for Danish companies - the necessary documents
In addition to taking care of the settlement of the company, Danish company owners are required to provide the necessary documents to their employees. One of the documents needed by the employees is the Lonseddel, or so-called 'payslips', which can be issued weekly or monthly. Oplysningsseddel, on the other hand, is the equivalent of the PIT-11 document, which summarizes the employee's earnings. All companies registered in Denmark are obligated to submit, among other documents, an audited and approved annual report to the Danish Business Authorities (Erhvervsstyrelsen). Danish employers are obliged to issue this document to employees by the end of the tax year. A limited company falling under reporting classes B, C, or D, as per the Danish Financial Statements Act, must have its annual report audited by one or more independent auditors. When a general partnership meets following conditions related to partners, average number of employees, balance sheet total, and net turnover, the appointment of an authorized or approved auditor and the submission of annual reports become mandatory. Only auditors registered with the Danish Business Authority may conduct audits; however, auditors from another EU or EEA country can also be registered in Denmark. Each taxpayer then receives a Selvangivelse, or tax return form, from SKAT. The form is sent to the registered address provided by the taxpayer, either Polish or Danish. You should also prepare the Memorandum of Association, including registered office, registered agent, members of the executive board, business activities, authorized share capital, as well as the objects and powers of the company. The last important document is the Arsopgorelse, which is the tax decision sent by the Danish Tax Authority after 2nd July.
The Danish Companies Act (Selskabsloven) governs the requirements regarding accounting and financial reporting. The Bookkeeping Act in Denmark (Bogføringsloven) dictates how companies must keep their books and records. Applicable to all businesses that must annually file financial statements, the law stipulates requirements for the content and arrangement of accounting records, encompassing invoices, receipts, and bank statements. Its aim is to ensure that companies uphold precise and comprehensive financial records.
Expressions that can be found on the tax return
- 8 per cent contribution to the Labour Fund,
- travel allowance,
- relief for work,
- accrued tax,
- bottom tax (8%),
- own share of pension contribution (5%),
- property tax,
- relief deducted from income,
- craftsmen's relief,
- capital income,
- municipal tax,
- municipal tax and health tax relief,
- labour income,
- lower tax free amount,
- municipal tax free amount,
- employee allowances,
- personal income from work,
- interest income,
- interest expense,
- tax calculation,
- taxable income,
- personal and capital income after deducting taxable income costs,
- the limit of tax to the municipality and to the state not including contributions to the Labour Fund and church tax,
- the highest tax threshold (15%).
- Danish Tax Authority website - Skattestyrelsen, skat.dk.
- The website of the Danish Aliens Office - Udlændingestyrelsen, nyidanmark.dk,
- website of the Danish Ministry of Employment - Beskæftigelsesministeriet, workindenmark.dk,
- the website of the information service for foreign nationals - International Citizen Service, icitizen.dk,
- website Borger.dk, lifeindenmark.dk.