Embarking on the journey of expanding your business into Denmark requires a solid understanding of corporate compliance and the various entity structures available in the Danish legal landscape. In this comprehensive guide, we unravel the intricacies of corporate compliance and provide insights into the establishment of your business entity in Denmark.
1. Forms of Entity:
Denmark offers several forms of entities, each with distinct characteristics and legal implications:
- Limited Liability Company (Kapitalselskab): This entity structure is owned by shareholders, who exercise control through shareholders’ meetings. Shareholders are not personally liable for corporate debts beyond their capital contributions.
- General Partnership (Interessentskab, I/S): Founded by an agreement between partners, a general partnership requires a minimum of two partners who are personally liable for the debts of the partnership.
- Limited Partnership (Kommanditselskab, K/S): Consisting of at least one general partner with unlimited liability and one or more limited partners, a limited partnership offers a blend of limited and unlimited liability.
- Branch Office (Filial): A branch office of a foreign-based company operates in Denmark but is not a separate legal entity, with assets and liabilities being part of the foreign company.
2. Incorporation Process:
Establishing a business entity in Denmark involves a series of steps, including:
- Limited Liability Company: Preparation of memorandum and articles of association, application for registration with the Danish Business Authority, appointment of board of directors, and setting up of shareholder register.
- General Partnership: Founded by agreement between partners, registration with the Danish Business Authority is optional but advisable for legal clarity.
- Limited Partnership: Filing for registration with the Danish Business Authority, appointment of general and limited partners, and submission of annual reports.
- Branch Office: Registration with the Danish Business Authority, appointment of branch managers, and filing of annual reports of the foreign company.
3. Minimum Capital Requirement:
Limited liability companies in Denmark have varying minimum share capitals depending on their type:
- Private Limited Company (Anpartsselskab): DKK40,000
- Public Limited Company (Aktieselskab): DKK400,000
- Limited Partnership Company (Partnerselskab): DKK400,000
The share capital may be paid in cash, assets, or a combination thereof, with at least 25% of the nominal share capital required upon formation.
4. Legal Liability:
In limited liability companies, shareholders enjoy limited liability, with their liability generally limited to their capital investment in the company. However, shareholders may be held liable for damages caused by intentional or negligent actions that harm the company or other stakeholders.
5. Tax Presence:
Limited companies in Denmark are subject to corporate income tax on their earnings, with shareholders taxed on distributed profits. The current corporate income tax rate stands at 22%.
Conclusion:
Navigating the landscape of corporate compliance in Denmark requires a thorough understanding of entity structures, incorporation procedures, and ongoing compliance obligations. By adhering to legal frameworks and fulfilling regulatory requirements, businesses can establish a solid foundation for their operations in Denmark and embark on a path to sustainable growth and success.
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