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The limited liability company, known in Denmark as ApS (Anpartsselskab), is one of the most popular forms of doing business in Denmark. Due to its flexibility, relatively low share capital and simplicity of the registration process, ApS is a popular choice for both Danish and foreign entrepreneurs. Many companies, regardless of their size, opt for this legal form because it combines the benefits of limiting the owners' liability with the ease of managing the business.
If you are planning to establish a limited liability company in Denmark and need support, we are here to help you every step of the way. From advising you on choosing the right legal form, to helping you gather documentation, to finalizing your registration, we'll provide you with comprehensive support that will allow you to start your business in Denmark quickly and smoothly.
ApS (Anpartsselskab) in Denmark is formally recognized as a legal entity. Its operations and legal structure are governed by the Danish Private Limited Liability Company Act, which sets out detailed rules for the operation of such companies.
To establish a limited liability company, it is necessary to:
I. draft a memorandum of incorporation,
II. prepare of the Articles of Incorporation,
III. raise initial capital of at least DKK 40,000,
IV. register with the Agency for Enterprise and Trade within two months of signing the founding agreement.
One of the key aspects of an ApS company is that the owners are protected from financial liability for the company's obligations. This means that in the event of financial problems or insolvency of the company, the financial risk of the shareholders is limited only to the value of their capital contributions to the company. This arrangement provides security for the owners, minimizing the risk of losing personal assets as a result of the company's business activities.
Management of a limited liability company (ApS) in Denmark can be carried out by one or more directors. Likewise, the company can have one owner or multiple owners, giving flexibility in the organization of the company's ownership and management structure. The company's owners have the right to serve as directors, which means they can manage the company if they choose that role. In the context of the regulations, directors do not have to be tax residents of Denmark - they can be individuals from other countries.
In a Danish limited liability company, the minimum share capital is DKK 40,000. This contribution can be made in cash or non-cash form. Depositing cash is the easiest and fastest option. Alternatively, assets such as cars, goods or inventory can be deposited. In the case of depositing non-cash items, it is necessary to provide documents proving their value, which can increase costs and the time it takes to set up the company. The cost of an auditor's services for assessing the value of assets is DKK 5,000 to 15,000 plus VAT.
In some cases, VAT registration may also be required for your ApS company, depending on the nature of your business activities and annual turnover. Engaging a Danish tax representative can simplify this process and ensure that you meet all regulatory requirements. A tax professional will help you navigate the complexities of VAT compliance, allowing you to focus on running your business efficiently.
Furthermore, you might also be required to file an Intrastat declaration in specific circumstances. Intrastat reporting is necessary for businesses engaged in trade with other EU member states and is used to track the flow of goods. Ensuring timely and accurate submission of these reports helps maintain compliance with EU regulations.
The capital of an ApS company is clearly separated from the personal capital of its owners, which emphasizes the company's financial independence as a legal entity. This capital is necessary to cover the company's operating costs and to achieve its business goals, and the owners are not allowed to use the company's funds for private purposes, ensuring financial transparency and professional management.
Here are the main advantages of running an ApS company in Denmark:
1. Registering a company in Denmark is quick and comes with low administrative costs. The entire process is designed to be efficient, allowing entrepreneurs to get started quickly without unnecessary paperwork and costs.
2. Corporate income tax in Denmark is 28%, a relatively low rate compared to many other European countries. Such an attractive tax rate encourages business development and attracts foreign investment.
3. Employer charges for social and health insurance are among the lowest in the world in Denmark, amounting to just 1% of the wage fund. This makes it more cost-effective to run a company in Denmark in terms of employment costs.
4. Companies based outside Denmark enjoy equal rights and obligations as Danish companies. This means that foreign investors can enjoy the same benefits and must comply with the same regulations as local entrepreneurs.
5. Denmark offers a free market that encourages free competition. Entrepreneurs do not have to worry about restrictions or regulatory barriers, allowing them to fully realize their business ambitions.
Anpartsselskab (ApS) must be registered with the Danish Enterprise Authority (Erhvervsstyrelsen). Registration of this legal form is relatively easy and less costly compared to other forms of business in Denmark. To register a company, several key documents must be prepared. Among them are incorporation documents (stiftelsesdokument), Articles of Incorporation (vedtægter), and payment of the required share capital. The cost of registration alone is DKK 670, while if you opt for legal assistance for incorporation, the total cost can range from DKK 3,000 to 5,000, depending on the law firm and the scope of services provided.
An important part of the process of setting up an ApS company is raising share capital, which must be a minimum of DKK 50,000. This capital is necessary to cover the company's initial operating costs, such as operating fees, salaries for employees and dividends for owners. The accumulated capital must be placed in a company bank account but cannot be transferred to the owners' private account. The funds are used exclusively for the company's needs.
In addition, within 8 weeks of the incorporation of an ApS company, it is necessary to register with the Trade and Enterprise Agency. This registration is important for the formal recognition of the company as an active legal entity and allows the company to fully commence business operations in Denmark.