Commercial objectives, the extent of proposed activities, tax considerations, and business structures would be key factors behind any decision to doing business in Denmark.



Should you choose to setup a business on your own, you would have the options to establish a branch (“filial”) or to form a seperate Danish subsidiary. Get an answer to your questions in the following:

The branch of a foreign company, although not a separate Danish  legal  person,  must  keep  its  own accounts, and its profits would be taxed in Denmark. Profits would also be taxable in the foreign company of which it is part, but in most OECD countries and many others, tax paid in Denmark is deductible.

The Danish tax authorities may audit the branch and the foreign company in order to assess the taxable profit of the branch. If, however, you form a subsidiary, the tax authorities would not be permitted to audit the parent company.

A  Danish subsidiary would normally be set up as a company limited by shares (“limited liability company”) with one or more shareholders (who may be individuals or legal persons). The shareholders’ liability would be limited to the amount invested in the company.

A limited liability company may be public or private. A public company may apply for its shares to be listed on the stock exchange, or offered to the public at large to issue or acquire shares or other securities. The minimum issued share capital (to be paid in cash or contributed as assets) required for  a private  limited  liability  company (“anpartsselskab,  ApS”)  would  be  DKK 40,000 (EUR 5,400) and for a public limited liability company (“aktieselskab, A/S”) DKK 400,000 (EUR 53,800).

A limited liability company is a legal person, which means that it can own property, enter into agreements, and employ staff.

Establishing a  limited liability company, including registration with the Danish authorities, can be done online and typically within a few days.

A limited liability company may be given any name that is not too similar to that of an already existing company or trademark, provided that the name is not offensive. The name has to include ApS or A/S, depending on which type of limited liability company is chosen. If a branch office is chosen, the name must include “filial” (branch office).

There  are  more  differences  in  the  legal requirements to operating an ApS or an A/S. Today most companies are incorporated as an ApS. Provisions regarding the setting up and operating a company with limited liability in Denmark are listed in the Danish Company Act.

A  public  limited  liability company can choose to have either a board and a managing director or a supervisory board and a managing director. A private limited liability company can choose either to have just a managing director or to have a board and a managing director. In either case, the board must consist of at least three board members (A/S) and minimum two members in an ApS.

The managing director and the board would be  responsible for the management of the business and organisation of the limited liability company. There are no mandatory rules regarding the frequency of board meetings. The board would be responsible for the following:

  • Issuing written instructions on how work is to be divided within the board and between the board and the managing director
  • Ensuring that taxes are paid on time
  • Ensuring that the annual accounts are prepared and filed with the authorities on time
  • Reporting any changes to the information kept in the official registers
  • Supervising that the managing director’s business conduct is in accordance with the instructions from the board
  • Ensuring fraud prevention
  • Taking out the relevant insurances

The joint board of directors will be authorised to sign on behalf of the company. The company may decide on the provisions regulating the power to bind the company. The managing director can often sign on behalf of the company – possibly together with a board member.

The  board  is  to  appoint  a managing director. The managing director is responsible for the day-to-day operations of the company if not otherwise instructed by the board.

A director or managing director would be liable for damages if, intentionally or gross negligently, he/she causes damage in performing his/her duties. The director or managing director may also be liable for any loss or damages suffered by a shareholder or another person due to material breach of the provisions of the Companies Act, the legislation applicable to annual accounts, or the memorandum and articles of association of the company. 

Any shareholder, who, intentionally or by gross negligence, causes damage to the company, another  shareholder or person by cooperating in breach of the Companies Act, legislation applicable to annual accounts, or the memorandum and articles of association could  also be held liable. If two or more persons were liable for the same damage, they would be jointly and severally liable.

A branch office would be a part of a foreign company with its own independent administration in Denmark. The foreign company and the Danish branch share a legal identity, and the foreign company is liable for the activities of the branch.

The branch  office  shall  be  managed  by at least one branch manager, who would be responsible for all business activities. The branch manager would sign on behalf of the branch office and thereby the foreign company’s activities in Denmark. A branch office shall be registered with the Danish Business Authority (Erhvervsstyrelsen).

The  branch  office  shall  keep  its  own accounts.  The provisions governing bookkeeping and accounts for Danish limited liability companies would, with some exceptions, also apply to foreign branches in Denmark.

The foreign owner of a branch office would be personally liable for the debts of the branch office. Persons, including the branch manager, who are in breach of applicable  laws, may become  liable for damages.


When acquiring an existing business in Denmark, you could purchase either its shares or its business assets and activities. If the existing business is conducted  through a limited partnership (“kommanditselskab”), or a branch office (“filial”), you can only acquire the business assets. This guide will, however, place its emphasis on share purchases.

The ownership of shares would be transferred when the parties have entered into a binding agreement on the transfer of shares - share purchase agreement. In order to exercise ownership rights, the buyer shall receive the original share certificates and be entered as the registered owner of the shares in the shareholders register. Also, the transfer should be registered at the Danish Business Authority (Erhvervsstyrelsen).

As in most other countries, shares may be freely transferred, and there are no restrictions on foreign ownership of shares. The only permitted restriction on free transfer would be any preemption rights, where the articles of association may provide that existing shareholders or other persons shall be entitled to purchase shares, which have been transferred to a new owner. Such provision would be common in companies with few owners. Free transfer of shares may also be limited by an agreement between the shareholders (shareholders agreement), but such agreement would only be binding on  the parties  concerned. An acquisition, which is contrary to a contractual restriction on the transfer of shares, would not prevent the buyer from exercising his/her rights in the company.

Denmark  has extensive  legislation, based on EU  law, regarding the right for an insider to sell and purchase  shares. Generally, the regulations would apply to securities normally traded in an organised market place. The definition of an insider is wide and would cover, for example, directors, the managing director, executive employees, and close advisers to the company. An insider who is in breach of the regulations may face a fine, imprisonment, or the forfeiture of any financial gains.


Rather than establishing a fully owned subsidiary, you may want to establish business in cooperation with a local partner. This can be done directly by establishing a joint venture, a limited liability company, a partnership, or a limited partnership; or indirectly by the appointment of a commercial agent or  a distributor or by setting up a network of franchisees.

Many companies, which lack sufficient capital, skills, or market knowledge to break into a new market, would prefer to establish a joint venture or another strategic  alliance. Joint ventures would have no legal status of their own but could be organised as limited liability or  companies partnerships. Your choice of of type structure or set-up would depend on commercial as well as tax considerations. A joint venture must address all major issues by way of a shareholders’ or partnership agreement, including initial and future funding, management structure, intellectual property rights, distribution of profits, and termination.

In the event that the joint venture is established as a limited liability company, it would be subject to the applicable company legislation.

If two or more persons decide to operate a business together, they have established a partnership. There are two types of partnerships: partnerships and limited partnerships. In a limited partnership (partnerselskab - P/S), the liability of at least one of the partners would be  limited to the amount  invested in the partnership by the said partner. A limited partnership is in general organized as an A/S (aktieselskab) and would also be overed by the Danish Company Act.

The partners may be foreign companies or citizens and are not required to be resident in Denmark. In a partnership (contrary to a limited partnership) there is no obligation to appoint a managing director or an accountant. If none of the partners in a trading or limited partnership are residents in Denmark, a person authorised to accept service in Denmark must be appointed.

Generally, the partnership agreement would regulate the shares in income of profits and losses. Where a partnership agreement is silent in this respect, profits and losses are divided equally among the partners. The partners are taxed on the profits of the partnership.

If you only have limited knowledge of the Danish market, the first step in establishing a business would normally be the appointment of an intermediary, be it either a commercial agent or a distributor. While the parties to a distribution agreement enjoy the freedom of contract, the Danish Commercial Agents Act governs an agency relationship.

The Danish Commercial Agents Act is partly mandatory, including provisions protecting the commercial agent with regard to the period of notice prior to termination and the possible.

The potential rights of the commercial agent to claim an indemnity upon termination (if and to the extent that qualifying conditions are met) certain may be considered a disadvantage for a company that wants to begin exporting to Denmark. However, there are certain advantages from operating through a commercial agent: in particular, the establishment of close and direct customer contact and the ability to control resale prices without having to consider competition law. There is a grey zone between self-employed commercial agents and employed sales people. In case of ordinary employment, the principal will have to pay national insurance contributions, withhold and pay tax on the salary paid, and make holiday payments. To avoid this, the principal shall make sure that the commercial agent is truly independent and self-employed.

As an option, rather than commercial agents, the company may want to appoint a distributor who buys the products in his/her own name and at his/her own expense for resale to the market. When appointing a distributor, the parties enjoy the freedom of contract without having to consider protective mandatory legislation. When appointing a distributor, competition law shall be applicable, in particular the EU Commission Regulation 330/2010 on vertical  restraints.

As an option, rather than appointing an intermediary, be it a commercial agent or a distributor, you may consider establishing a franchise system or a selective distribution system.

The establishment of a network of franchisees or selected distributors implies a more direct establishment on the market at the retail level. Such an establishment should be limited to business concepts that are well-structured and highly developed for the local market conditions.

In relation to these distribution systems, Danish legislation does not include any statutory provisions. Only general statutory provisions and competition law aspects need to be considered.

A franchise is a right granted by a franchiser to use certain intellectual property rights in exchange for direct or indirect fees, for the purpose of marketing particular goods or services.


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