Denmark is widely recognized as one of the best countries in the world to start and run a business. With a strong economy, a transparent legal system, a high level of digitalization, and efficient public administration, Denmark offers a supportive environment for entrepreneurs. Whether you’re a local resident or an international investor, setting up a business in Denmark is a relatively straightforward process — but it’s still important to understand the legal, administrative, and financial steps involved. This guide outlines everything you need to know about how to start a business in Denmark, from choosing a business structure to registering for taxes and hiring employees.
Choosing the Right Legal Structure
The first step to starting a business in Denmark is deciding on the most suitable legal structure. Your choice will affect your personal liability, tax obligations, and the complexity of your business operations.
The most common types of business structures in Denmark include:
- Sole proprietorship (Enkeltmandsvirksomhed) – Easy to set up and ideal for freelancers and small businesses. The owner is personally liable for debts and obligations.
- Private limited company (Anpartsselskab or ApS) – A separate legal entity requiring a minimum share capital of 40,000 DKK. Offers limited liability and is suitable for growing businesses.
- General partnership (Interessentskab or I/S) – Formed by two or more individuals or entities who share liability. Often used by small teams or families.
- Public limited company (Aktieselskab or A/S) – Requires a minimum share capital of 400,000 DKK. Intended for larger companies or those planning to go public.
For most small and medium-sized businesses, the ApS is the preferred structure due to its flexibility and limited liability protection.
Registering Your Business
Once you’ve selected a business structure, the next step is to register your company with the Danish Business Authority (Erhvervsstyrelsen) via the digital portal virk.dk. The process is entirely online and usually quick, especially for sole proprietorships.
To register a business in Denmark, you will need:
- A NemID/MitID (digital signature used for secure login)
- A Danish address for your business
- Information about the type of business activity
- Details of the business owner(s) or shareholders
- Share capital (for companies like ApS and A/S)
Once your business is registered, you’ll receive a CVR number (Central Business Registration number), which acts as your company’s ID number and is required for issuing invoices, paying taxes, and dealing with public authorities.
Opening a Business Bank Account
All companies (except some sole proprietors) are required to open a dedicated business bank account. For ApS and A/S companies, the bank account is needed to deposit the initial share capital and to activate the company legally.
To open a business account, Danish banks will typically ask for:
- Company registration documents (CVR number)
- Proof of identity for the owner(s)
- Business plan or activity description
- Address verification
Some banks may also request additional information, especially if the owners are non-residents. It’s recommended to compare banking services and choose one that integrates well with accounting software and supports international payments if needed.
Registering for VAT and Taxes
If your business expects an annual turnover exceeding 50,000 DKK, you are required to register for Value-Added Tax (VAT). Registration can be completed through Virk.dk when setting up your company or anytime afterward.
VAT in Denmark is set at 25%, and it applies to most goods and services. Once registered, your business will receive a VAT number and must:
- Charge VAT on sales
- File periodic VAT returns via TastSelv Erhverv
- Keep accurate records of VAT collected and paid
In addition to VAT, businesses must also register with SKAT (the Danish Tax Agency) for other taxes such as corporate income tax or payroll taxes if employing staff.
Setting Up Accounting and Bookkeeping
Accurate accounting is essential for compliance and good financial management. Danish law requires all businesses to maintain up-to-date and transparent financial records in accordance with the Bookkeeping Act (Bogføringsloven).
From 2024 onwards, most businesses are required to use a digital accounting system that complies with government standards. This system must:
- Record all income and expenses
- Store receipts and invoices digitally for at least 5 years
- Allow for easy reporting and auditing
Popular accounting software in Denmark includes Dinero, Billy, e-conomic, and Visma. These platforms are user-friendly and compatible with the Danish tax system. You may also choose to work with an accountant, which is highly recommended if you’re unfamiliar with local tax laws.
Hiring Employees and Payroll Registration
If you plan to hire employees, there are several legal steps to follow. First, you must register as an employer with SKAT and report all wage information through the eIndkomst system.
Employers are responsible for:
- Withholding and paying income tax on behalf of employees
- Paying contributions to ATP (Labour Market Supplementary Pension) and other mandatory benefits
- Managing holiday pay through the FerieKonto system
- Issuing monthly payslips (lønsedler)
Denmark has strong labor laws and collective agreements in many sectors. Be sure to comply with employment contracts, working hours regulations, and minimum wage rules. Many businesses choose to outsource payroll tasks to professional service providers.
Complying with Annual Reporting Requirements
Depending on your business structure, you may be required to submit annual financial reports. While sole proprietors have simpler reporting obligations, limited liability companies (ApS, A/S) must submit financial statements to the Danish Business Authority.
An annual report typically includes:
- Balance sheet
- Income statement
- Notes explaining financial results
- Management report (for larger companies)
Reports are submitted online via the government’s Regnskabssystem, usually within 5 months after the end of the financial year. Audits may also be required for larger companies or those above certain thresholds.
Understanding Business Insurance and Licenses
While not all businesses in Denmark require a license, some sectors such as finance, food services, or construction may need special permits or approvals. Before launching your operations, check with the relevant authorities or municipalities.
It’s also important to consider business insurance, such as:
- Public liability insurance
- Employee accident insurance
- Cybersecurity insurance (for digital businesses)
Although some insurance types are optional, they may protect your company from significant financial losses in case of legal claims or accidents.
Seeking Business Support and Resources
Denmark offers a wealth of resources for entrepreneurs. Whether you’re looking for business advice, funding, or networking opportunities, the following institutions can help:
- Erhvervshusene (Business Houses) – regional centers offering free guidance to startups
- Virk.dk – the central portal for business registration and compliance
- Startvækst.dk – provides information for startups, especially in Danish
- Vækstfonden – a public investment fund offering loans and venture capital
If you’re a foreign entrepreneur, additional support is available through Invest in Denmark and local expat business communities.
Starting a business in Denmark is a structured and accessible process thanks to digital tools, transparent regulations, and government support. Whether you’re planning a small consulting business or launching a new tech company, knowing the legal and administrative steps in advance will save you time and effort.
From choosing a legal structure and registering your CVR number to handling taxes, accounting, and payroll, each step plays a role in building a solid foundation for your venture. With the right preparation and tools, your business can thrive in one of Europe’s most business-friendly countries.
