11 Things You Need to Know about Tax in Denmark
- 1. When do You Become Taxable in Denmark
- 2. How to Register in the Danish Tax System
- 3. What is Included in Your Taxable Income
- 4. How Much Tax Do You Need to Pay
- 5. Social Security Network for Work within the EU
- 6. Does Your Company Need Foreign Workers
- 7. Company or Self-Employed
- 8. How to Pay Salary to Yourself as a Major Shareholder
- 9. Securities and Other Activities Abroad
- 10. How to Avoid Double Taxation
- 11. Tax in the Time of Corona: A Must-Read if You Live or Work in Denmark
- Starting a Business
- Does Your Company Need Foreign Workers?
- COVID 19 - THE DANISH TAX AUTHORITY OFFERS AID PACKAGES FOR YOU AND YOUR BUSINESS
- Larger deductions for companies that need to invest in fixed assets or small assets
7. Company or Self-Employed
If you want to start a business in Denmark, you can choose to start it in company form or as self-employed person. In general, the company form entails more obligations. At the same time, however, you have limited liability for your actions.
As a self-employed person you can still save up a surplus, as in a company, and be taxed when you withdraw money to yourself privately. You will still need to do bookkeeping and an annual account, but the annual account does not need to meet the Danish Company Accounts Act standards. However, it must be reported to the authorities. Conversely, you will be held personally responsible for your actions. There are many advantages to this form of business and SkatteInform can help you, if you want to hear more about forming this type of business.
You can start up an entrepreneurial (lværksætterselskab) company for as low as 1 DKK in Denmark . The company must save up 25 % of the surplus until it reaches 50 000 DKK . When it reaches 50 000 DKK it can be converted to a Private Limited-Liability Company (Anpartsselskab). The advantage with this company form is that the owner only is only liable for their payment of shares.
A Private Limited-Liability (Anpartsselskab) is the next step and can be obtained with a deposit of 50 000 DKK. The entrepreneurial company has the same obligations as the Private Limited-Liability Company, but it does not need to save up 25% of its surplus. In order to create either of these forms, you need at least one director.
If there are more investors and you would like more certainty for your creditors, a Limited-Liability Company (Aktieselskab) is a third option. This company form requires a board of at least three members. The capital requirement is 500 000 DKK. These requirements give more credibility to the company. Furthermore, the bank will be more willing to lend the company money. Finally, the company will be more attractive than a Private Limited-Liability Company, in terms of attracting investors.
In Denmark, Limited Partnerships (Kommanditselskab) and Partner Companies (Partnerselskab) still have same the limited liability as the company forms above, but from a tax perspective, the company forms are transparent. Thus, the owner must pay tax on the income as they earn it.
SkatteInform can help you decide which company form suits you best. Call us to hear more about how to set up the best option for you.
*SkatteInform does not take any responsibility for any actions taken based on the information provided in this article, before receiving individual tax advice.