Denmark consistently ranks among the world’s most business-friendly countries. With a transparent regulatory system, strong digital infrastructure and low levels of bureaucracy, it attracts entrepreneurs from across Europe and beyond. However, despite its reputation for simplicity, starting a business in Denmark still requires a clear understanding of legal structures, registration procedures and tax obligations. This guide outlines the essential steps to help you enter the Danish market smoothly and operate with confidence.
Understanding Denmark’s Business Environment
Denmark is known for its stable economy, innovative corporate culture and high level of digitalization. Almost every administrative process — from registering a company to filing taxes — is completed online. The country also offers strong protections for intellectual property, straightforward employment regulations and access to the EU single market.
Before launching, entrepreneurs should evaluate the competitive landscape, understand sector-specific requirements and consider the high labour and operational costs typical for the Nordic region. Although starting up is easy, running a business sustainably requires strategic financial planning.
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Choosing the Right Legal Structure
One of the first decisions is selecting a legal form that aligns with your business goals, liability expectations and capital resources. The most common structures include:
Sole Proprietorship (Enkeltmandsvirksomhed)
A simple and cost-effective option for freelancers and small businesses. It requires no minimum capital and is easy to manage. However, there is no separation between personal and business liability, meaning the owner is personally responsible for all debts.
Private Limited Company (ApS)
This is one of the most popular structures for both local and international entrepreneurs. An ApS requires a minimum share capital of 40,000 DKK. It offers limited liability, clear ownership structure and is often viewed as more credible by suppliers and partners.
Public Limited Company (A/S)
Suitable for larger ventures planning to raise capital or operate internationally. It requires a higher minimum share capital (400,000 DKK) and more formal corporate governance.
Branch or Subsidiary
Foreign companies can establish a Danish branch or subsidiary. A subsidiary (usually an ApS) provides local autonomy and limited liability, while a branch operates under the foreign parent company’s structure and responsibility.
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Getting a NemID/MitID and CPR or CVR Number
Digital identification is essential in Denmark. To register a company or access online public services, entrepreneurs generally need:
- CPR number (for residents) or an alternative tax number for non-residents
- MitID (formerly NemID), a secure digital login for business services
- CVR number, which is the unique business registration number listed in the Central Business Register
Foreign founders who do not hold Danish residency can still start a business but may need assistance from an accountant, a registration agent or a local representative to access digital systems.
Registering Your Company
Company registration is handled through Virk.dk, the official digital platform. The process usually includes:
- Preparing the articles of association
- Opening a temporary bank account and depositing share capital (for ApS/A/S)
- Completing the online registration form
- Obtaining the CVR number and official company certificate
Most companies are registered within a few hours to a few days, depending on the type of entity and documentation provided.
VAT, Taxation and Accounting Requirements
If your annual turnover exceeds 50,000 DKK, you must register for VAT (Moms). Denmark’s standard VAT rate is 25%, one of the highest in Europe, so accurate bookkeeping and timely reporting are essential.
Corporate income tax is set at 22%, and companies must file annual financial statements. Depending on size and structure, you may also need to submit audited accounts.
Many foreign entrepreneurs choose to work with a Danish accountant to ensure compliance with local regulations, especially when managing payroll, VAT settlements and corporate tax filings.
Hiring Employees and Employment Regulations
Denmark has a highly skilled workforce, but labour costs can be considerable due to social contributions and the strong welfare system. Employment relationships are often guided by collective bargaining agreements, even if the company is not formally part of a union.
Employers must be familiar with rules concerning working hours, paid leave, parental benefits, termination procedures and workplace safety. Hiring non-EU employees requires work permits, which are usually tied to salary thresholds or specialty professions.
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Banking and Payment Systems
Opening a corporate bank account can be one of the more challenging steps for foreign founders due to strict anti-money-laundering regulations. Expect a thorough verification procedure, including business plans, identification documents and proof of ownership structure. Once approved, Danish banks offer modern digital tools and seamless integration with accounting systems.
Funding and Support for Start-ups
Denmark offers various supports for innovative businesses, including:
- Grants and loans from the Danish Growth Fund (Vækstfonden)
- Innovation programs for technology and green solutions
- Incubators, accelerators and startup hubs in major cities such as Copenhagen and Aarhus
- EU-wide funding opportunities for research and digitalization projects
Local municipalities also offer advisory services to help new businesses establish operations.
Starting a business in Denmark is a clear, structured process driven by digital systems and transparent regulations. The country’s stable economy, innovation-focused culture and access to the European market make it an attractive location for entrepreneurs. The key to success lies in choosing the right legal structure, ensuring compliance with tax and employment rules, and understanding operational costs. With proper preparation and the right partners, Denmark can offer a secure and scalable environment for growing your business.
