Starting a Business in Denmark: Complete Tax and Registration Guide

Starting a business in Denmark is straightforward on paper — the digital registration system is fast, the bureaucracy is minimal by European standards, and the rules are clear. But the tax implications of your choice of business structure can cost or save you tens of thousands of kroner every year. This guide walks you through every decision, from picking the right entity type to filing your first tax return.

Business Types in Denmark

Denmark offers four main business structures. The right one depends on your revenue, liability tolerance, and long-term plans.

Enkeltmandsvirksomhed (Sole Trader)

A one-person business with no legal separation between you and the company. You are the business.

• Best for: Freelancers, consultants, early-stage entrepreneurs testing an idea
• Liability: Unlimited — you are personally liable for all business debts
• Tax: Taxed as personal income at your marginal rate (up to 52.5% including AM-bidrag)
• Minimum capital: None
• Setup cost: Free

I/S (I/S — Interessentskab — Partnership)

A partnership between two or more people. Similar to a sole trader but shared.

• Best for: Two or more founders who want a simple structure
• Liability: Unlimited for all partners — each partner is jointly liable for the full debt of the business
• Tax: Each partner pays personal income tax on their share of profits
• Minimum capital: None
• Setup cost: Free

ApS (Anpartsselskab — Limited Company)

Denmark’s most popular business structure. A private limited company with a separate legal identity.

• Best for: Most small to medium businesses. Separates personal and business finances.
• Liability: Limited to the company’s assets. Your personal wealth is protected.
• Tax: Corporate tax rate of 22%. Dividends taxed at 27%/42% when distributed.
• Minimum share capital: DKK 40,000
• Setup cost: DKK 1,600 registration fee (Virk.dk)

A/S (Aktieselskab — Public Limited Company)

A larger corporate entity, typically for established businesses or those seeking external investors.

• Best for: Companies planning to raise capital, go public, or operate at scale
• Liability: Limited to company assets
• Tax: Same as ApS — 22% corporate tax, 27%/42% dividend tax
• Minimum share capital: DKK 400,000
• Setup cost: DKK 1,600 registration fee (Virk.dk)

Registering Your Business

Step 1: Get MitID

MitID (formerly NemID) is required for all digital interactions with Danish authorities. If you don’t already have it, apply through your bank or at MitID.dk. You need this before you can register a business.

Step 2: Register on Virk.dk

Virk.dk is the Danish Business Authority’s one-stop shop for business registration. The process takes about 15 minutes.

What you need:

• MitID
• Your CPR number (personal identification number)
• Business name (check availability first)
• Description of business activities (use the Danish industry classification system — branchekode)
• Bank account details (for NemKonto)
• Founding documents if registering an ApS/A/S (articles of association, capital verification)

For ApS/A/S registration:

• Articles of association (vedtægter) must be signed by all founders
• A bank must verify that the share capital has been deposited
• The company is registered once the capital verification is uploaded to Virk.dk

Step 3: Receive Your CVR Number

The CVR number (Centrale Virksomhedsregister) is your company’s unique identification number. It is assigned automatically when you complete registration on Virk.dk. You will use it for everything — invoicing, tax filings, bank accounts, contracts.

Step 4: Set Up NemKonto

Your NemKonto is the bank account registered with the government for receiving tax refunds and paying taxes. Every business must have a NemKonto.

• It can be the same as your personal NemKonto (for sole traders)
• For ApS/A/S, you need a separate business bank account registered as the NemKonto
• Set it up through your bank and register it on Virk.dk or via SKAT

Step 5: Register for VAT (Moms)

You must register for VAT (moms) if your annual turnover exceeds DKK 50,000. Registration is voluntary below that threshold.

• Register on SKAT.dk or during Virk.dk registration
• You will receive a VAT number linked to your CVR number
• You must charge 25% moms on all taxable sales
• File VAT returns monthly, quarterly, or annually depending on turnover

Tax on Sole Traders (Enkeltmandsvirksomhed)

As a sole trader, your business profit is taxed as personal income. There is no separation between you and the business for tax purposes.

Tax rates on business profit:

• Labour market contribution (AM-bidrag): 8% (deducted before income tax)
• Municipal tax: ~25% (varies by municipality)
• State tax: 12.69% on income above DKK 61,000
• Top state tax: 15% on income above DKK 610,000
• Effective marginal rate: Up to approximately 52.5%

Preliminary tax (kildeskud):

Sole traders must pay preliminary tax quarterly. SKAT estimates your annual income based on your self-assessment, and you make four equal payments during the year. If you underestimate, you face a supplementary bill in May. If you overestimate, you get a refund.

Tip: Use SKAT’s preliminary income estimate tool to set realistic quarterly payments. Underpaying results in interest charges; overpaying means you are giving the government an interest-free loan.

Tax on ApS and A/S

Companies pay corporate tax on profits, and shareholders pay dividend tax on distributions.

Corporate tax rate: 22% on all net profits.

Dividend tax when profits are distributed to shareholders:

• First DKK 61,000 per shareholder (2026): 27%
• Amounts above DKK 61,000: 42%

Key advantage: You can retain profits inside the company at 22% tax. You only trigger the higher dividend tax when you actually take money out. This is the main reason many entrepreneurs switch from sole trader to ApS once profits grow.

Example: A company earns DKK 800,000 in profit. After 22% corporate tax (DKK 176,000), DKK 624,000 remains. If the shareholder takes it all as a dividend, they pay 27% on the first DKK 61,000 (DKK 16,470) and 42% on the remaining DKK 563,000 (DKK 236,460). Total dividend tax: DKK 252,930. But if they leave the profit in the company, they only paid DKK 176,000 in corporate tax — saving DKK 76,930 in tax that year.

Bookkeeping Requirements

All businesses in Denmark must keep accounts. This is not optional.

Cash Basis vs. Accrual Accounting

• Cash basis (kontantprincippet): Record income when received and expenses when paid. Simpler. Available to sole traders and small businesses.
• Accrual accounting (indkomstprincippet): Record income when earned and expenses when incurred. Required for larger companies. More accurate but more complex.

Standard Chart of Accounts

SKAT provides a standard chart of accounts (standardkontoplan) that most small businesses use. It simplifies tax reporting because your accounts align directly with the tax return fields.

Basic structure:

• Assets (1xxx): Cash, inventory, equipment, receivables
• Liabilities (2xxx): Loans, payables, accrued expenses
• Equity (3xxx): Owner’s equity, retained earnings
• Revenue (4xxx): Sales, other income
• Expenses (5xxx–6xxx): Cost of goods, salaries, rent, utilities, depreciation

Record-Keeping Rules

• Keep all receipts and invoices for at least 5 years after the end of the financial year
• Use a bookkeeping programme that stores data in Denmark (or within the EU/EEA)
• Common options: Dinero, e-conomic, Billy, Uniconta

Tax Return Deadlines

Late filing results in a fine of DKK 300 per missed entity, plus potential penalties for repeated non-compliance.

VAT (Moms) in Detail

When to Register

Mandatory registration: Turnover exceeds DKK 50,000 in a 12-month period. Voluntary registration is available below this threshold — useful if you sell to VAT-registered businesses and want to deduct input VAT.

How to Charge and Report

• Charge 25% moms on all domestic taxable sales
• EU sales to VAT-registered businesses are zero-rated (reverse charge)
• Exports outside the EU are zero-rated
• File VAT returns via SKAT — frequency depends on your turnover (monthly, quarterly, or annually)

Input VAT Deduction

You can deduct the moms you pay on business purchases against the moms you collect on sales. This means VAT largely passes through to the end consumer, and you only remit the net difference.

Hiring Employees

If you hire staff, you become an employer with additional obligations:

• Register as an employer on Virk.dk
• Report payroll via eIndkomst — monthly electronic reporting of salary, tax withholding, and AM-bidrag
• Withhold tax and AM-bidrag from employee wages and remit to SKAT
• Maintain a payroll register documenting all payments and deductions
• Pay employer contributions (Arbejdsmarkedsbidrag) on top of gross salary

Non-compliance with payroll reporting carries significant fines and penalties.

The Establishment Saving Account (Etableringskonto)

Denmark offers a tax-advantaged savings account for aspiring entrepreneurs. The etableringskonto lets you save up to DKK 100,000 per year tax-free, for up to 5 years, as long as the money is used for a future business investment.

Rules:

• Maximum balance: DKK 500,000
• Maximum annual contribution: DKK 100,000
• Interest earned is tax-free while in the account
• Funds must be used to establish or invest in a business within 5 years
• If unused after 5 years, the balance is taxed as personal income

Strategy: If you are planning to start a business in 2–3 years, begin contributing to an etableringskonto now. You save tax on the interest, and you build a capital buffer for your startup costs.

Worked Example: Sole Trader vs. ApS at DKK 500,000 Profit

Let’s compare the after-tax income for a sole trader and an ApS owner earning DKK 500,000 in annual profit, assuming the owner lives in Copenhagen (25.6% municipal tax rate) and takes all profit as personal income.

Sole Trader

Effective tax rate on profit: 35.2%

ApS (Taking All Profit as Dividend)

ApS (Retaining Profits)

If you leave the DKK 390,000 in the company and pay yourself a salary of DKK 0, you pay zero dividend tax this year. You can reinvest in the business, hire employees, or distribute dividends later when your personal tax situation changes.

The Takeaway

At DKK 500,000 profit, the sole trader keeps more money personally in the current year — DKK 323,866 vs. DKK 235,350 if taking all profit as dividend. But the ApS offers flexibility: you can retain profits at 22% and distribute them strategically over time, potentially saving tens of thousands of kroner in total tax. As profits grow beyond DKK 500,000, the ApS structure almost always wins because the 22% corporate rate is far lower than the 52.5% personal marginal rate.

Practical Tips for Denmark-Based Entrepreneurs

1. Start as a sole trader if you are testing an idea. No setup cost, minimal paperwork, easy to close if it doesn’t work out.

2. Convert to ApS when profits consistently exceed DKK 300,000–400,000. The corporate tax savings become significant at that level.

3. Get an accountant for your first year. Danish tax rules are specific and the penalties for mistakes are real. A good accountant costs DKK 10,000–20,000 per year and can save you far more.

4. Use Dinero or e-conomic for bookkeeping. Both are popular in Denmark, integrate with SKAT, and are affordable for small businesses.

5. Set aside 30–40% of sole trader profits for tax. Don’t spend money you will owe to SKAT.

6. Open a business bank account early. Even as a sole trader, keeping business and personal finances separate makes bookkeeping and tax filing much easier. Danske Bank, Lunar, and Nordea all offer business accounts.

7. Register for eIndkomst immediately if hiring. Payroll reporting deadlines are strict.

8. Don’t forget the etableringskonto. If you are 1–3 years from starting a business, it is free tax-efficient savings.

Key Resources

• Virk.dk — Business registration and CVR lookup
• SKAT.dk — Tax registration, VAT, preliminary tax, and tax returns
• MitID.dk — Digital ID setup
• Dinero.dk — Free bookkeeping software
• E-conomic.dk — Cloud accounting with SKAT integration
• Erhvervsstyrelsen.dk — Danish Business Authority guidance and regulations