KNOWLEDGE BASE

KEY CORPORATE FEATURES

GENERAL INFORMATION

Denmark is situated in Northern Europe and forms part of Scandinavia. Bordered in the south by Germany, it covers an area of approximately 43,094 square kilometres, excluding its dependencies of Greenland and the Faroe Islands. Denmark is divided into five regions. Greenland is also an autonomous province of Denmark.

Population

The population of Denmark is approximately 5.5 million; the majority are ethnic Scandinavians with Inuit, German, Turkish, Iranian and Somali minority groups. Nearly a quarter of the entire population lives in Copenhagen, the country's capital city.

Political Structure

The Kingdom of Denmark is a constitutional monarchy, but political power rests with a democratically elected parliament and is based on a written constitution of 1953. Margrethe II succeeded to the throne on the death of her father, Frederick IX, in 1972.

Local government was reorganised in January 2007 and now comprises of five regions and 98 municipalities.

Infrastructure and Economy

Denmark is modern European country with a high standard of living. Denmark benefits from a highly developed infrastructure, an advanced telecommunications network and a highly educated and stable workforce. Denmark has a free-market economy and is a member of the EU The global financial crisis cut Danish GDP by 0.9% in 2008 and 4.3% in 2009.

Language

The official and spoken language is Danish. However most people also speak English and some German.

Currency

Danish Krone (DKK) which is linked to the Euro.

Exchange Control

No exchange controls are imposed in Denmark although formal reporting requirements are required by the Central Bank - these are mainly for statistical purposes.

Type of Law

Civil Law.

Principal Corporate Legislation

As of March 2010 the main part of a new Companies Act entered into force in Denmark. The remaining parts of the act will come into effect by stages throughout 2010. The new Act replaced the 1973 Danish Public Companies Act and the Danish Private Companies Act establishing more uniform rules for public and private limited companies and accentuating the differences.

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DENMARK COMPANY INFORMATION

Type of Company

Anpartsselskab (ApS) - Private Limited Company.

Aktieselskab (A/S) - Public Limited Company.

Procedure to Incorporate

In general:

  • The promoter of the company will draw up and sign the Memorandum and Articles of Association which should contain the subscription price for share issuing, name and location of the company, the board of directors etc.
  • This together with evidence of the minimum share capital payment is then submitted to the Companies Registry for registration, (25% of the Share Capital).A statutory general meeting of shareholders must also be held for the purposes of adopting the Articles of Association, electing the board of directors or director and the auditors.
  • An Aps must register with the Danish Commerce and Companies Agency (DCCA) within two weeks.
  • All companies must register and acquire a CVR-number (Central Company Register Number) within six months of the date of formation; the founders are personally liable for the activities of the company until registration is completed.
  • The company must also register for taxation purposes with The Central Customs and Tax Administration (CCTA) which issues a proof of registration (serves as VAT Registration)
Restrictions on Trading

Yes, specified groups, which include for example, banking, insurance and financial services.

Powers of Company

A Company incorporated in Denmark has the same powers as a natural person.

Language of Legislation and Corporate Documents

Documents may be submitted in Danish, Norwegian, Swedish and English

Shelf Companies Available

Yes.

Time to Incorporate

Three to four weeks.

Name Restrictions

A name that is similar to or identical to an existing company. A well known name that is known to exist elsewhere.

Language of Name

The name of the company can be expressed in any language using the Latin alphabet. The Registrar may request a Danish or English translation to ensure that the proposed name does not contravene name restrictions.

Names Requiring Consent or a Licence

Bank, building society, savings, loans, insurance, assurance, reinsurance, fund management, investment fund, trust, trustees, Chamber of Commerce, co-operation, council, municipal or their foreign language equivalents or any name in English or a foreign language that may suggest association with the banking or Insurance industries.

Registered Office Required

Yes, must be maintained in Denmark.

Suffixes to Denote Limited Liability
  • Anpartsselskab (ApS), private limited company,
  • Aktieselskaber (A/S) public limited company,
Disclosure of Beneficial Ownership to Authorities

From 2010 the introduction of a public register of all shareholders holding 5% or more of the voting rights or the share capital in a company.

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DENMARK COMPLIANCE

Authorised and Issued Share Capital

The minimum capital requirement is:

Public Limited Companies: DKK 500,000 (approx. EUR 67,000). One of the changes in the Act relates to the capital structure, only 25% of the share capital or DK 125,000 must be fully paid up on formation. The capital may be obtained by injections of cash or other assets. It is possible for foreign individuals and companies to own 100% of a Danish company.

Private Limited Companies: DKK 80,000 (approx. EUR 10,700) minimum which must be fully paid up before registration.

Classes of Shares Permitted

Ordinary shares; preference shares, deferred shares, redeemable shares, shares with or without voting rights and shares without a nominal value (no par value shares).

Taxation

Taxation is paid by companies in Denmark based upon annual accounts, which are submitted to the Danish Tax authorities at the end of the company’s financial year. A company is free to choose its own year-end. The current tax rate is 25%.

As a member of the EU; Denmark is governed by the provisions of the EU's Parent-Subsidiary directive.

The Tax Reform introduced on 1st January 2010 provides a distinction in the taxation of gains and losses between companies that hold 10% or more of the shares in a company (a subsidiary), and companies that hold less than 10% of the shares in a company (a portfolio investment).

For companies that hold a subsidiary:

  • Tax exemptions on all dividends and capital gains. The tax exemption is no longer limited by ownership period or percentage, previously to qualify for tax exemptions required a 10% or more + one year holding and capital gains were exempt only after three years of ownership. Special anti-avoidance measures are introduced in order to prevent structures being established with the sole purpose of meeting the 10% threshold
  • Taxation according to the market-to-market principle at full corporate income tax rate of 25% on capital gains on convertible bond.

For companies that hold a portfolio investment:

  • Full corporate income tax rate of 25% on all dividends and capital gains (irrespective of ownership period and percentage)
  • Taxation according to the market-to-market principle.

Danish holding companies can rely on an extensive network of double taxation treaties the effect of which is to obtain a reduction in withholding tax rates on dividends remitted to Denmark from the subsidiary jurisdiction. Denmark has around 80 double taxation treaties in place.

Double Taxation Agreements

The combination of Denmark's tax treaty network (around 80 treaties) and its holding company regime means that there have traditionally been around 35 major countries which with proper structuring could route their dividends through Denmark and not incur any withholding taxes at any stage. These countries include: Argentina, Austria, Belgium, Brazil, China, Cyprus, Finland, France, Germany, Greece, Iceland, India, Ireland, Italy, Luxembourg, Malaysia, Mexico, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, UK and Malta. In about 40 other countries withholding taxes are substantially reduced owing to the double taxation treaty network.

Licence Fee

None.

Financial Statements Required

All Danish companies are required to file full annual Financial Statements with the Danish Commerce and Companies Agency (DCCA) and the Central Customs and Tax Administration (CCTA) not later than six months after the end of the financial year. All Danish companies require an audit by a State Authorised Public Accountant or a Registered Accountant. Exception to the audit is possible if the company does not cross two of the following thresholds for at least two consecutive financial years:

  • A balance sheet total of DKK1,500,000
  • A turnover of DKK3,000,000
  • An average full time employees of 12

If the company fulfils the above conditions it is possible to remove the audit requirement by the addition of a non-auditing clause in the articles of association upon formation.

Information filed with the Danish Commerce and Companies Agency is open to the public. The format and standard principles for the financial statements are provided by law.

Directors
  • Public Limited Companies (Aktieselskaber A/S):
  • The Management may consist of a board of Directors (minimum 3) and the managing director(s) (minimum 1) or a board of directors or managing directors supervised by a supervisory board (minimum of 3), who must be an EU citizen.
  • If the company employs more than 35 people, the employees are entitled to be represented on the board of directors or on the supervisory board.
  • Private Limited Companies (Anpartsselskaber ApS):
  • The Management may consist of a board of directors and the managing director(s) (minimum 1) or a board of directors or managing directors supervised by a supervisory board. They must be a natural person and an EU citizen.
Company Secretary

N/A.

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