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WORKING IN DENMARK

EXPLAINED: The steps for starting a business in Denmark

Whether it's a small start-up or a much bigger venture, there are certain steps to bear in mind when starting a business in Denmark whether or not you're already a resident.

Published: 15 July 2024 14:51 CEST
Two women discussing business papers
Starting a business in Denmark can involve some hurdles if you're not a Danish resident. Photo by Gabrielle Henderson on Unsplash.

The process for starting a business in Denmark depends on whether you’re already a resident in Denmark, or if your business is connected to an application for a residence permit, either from the EU or outside it.

Starting a business as a Danish resident

If you already have a residence and work permit in Denmark, it is relatively straight forward to set up your own business.

Firstly, you must register your business online at the official business website virk.dk at least eight days before starting any business assignments. This then gives you a CVR number.

The Danish Tax Authority (SKAT) automatically receives the information from Virk to calculate your tax. You should enter expected business profits or losses in your preliminary income assessment.

You then set up a NemKonto linked to your CVR number. A NemKonto is a bank account assigned for money transfers from the public sector to your business, for example VAT. You can use an existing private NemKonto as your business NemKonto if needed.

When you have registered your business, you can find your business registration certificate by logging on to E-tax for businesses (TastSelv Erhverv) and selecting ’Profil’ and then ’Registreringsbevis’ (Registration certificate). If there are any changes to the business, you must register them at virk.dk.

There are lots of free guides available through the tax agency Skat and The Danish Business Authority, as well as accounting firms like Dania.

READ ALSO: EXPLAINED: What is Denmark’s B-tax and who has to pay it?

Applying for a residence permit through a business as an EU/EEA/Swiss citizen

As an EU/EEA or Swiss citizen, you can apply for a residence permit based on either being Self-employed or having Sufficient funds.

To have a residence permit based on being self-employed, you need to run or co-run a business that’s already established and registered in Denmark.

As part of the application, you need to submit the following documents:

  • Registration of the business with the Danish Business Authority.
  • Annual accounts for the business.
  • Receipts or another form of documentation for paid VAT.
  • Bank statements for your business accounts.
  • Invoices your business has sent or received.
  • Documentation of inventory.
  • Lease or other indication of where the business is to be operated from.
If you don’t meet this criteria, you can opt for a residence permit based on sufficient funds.
The amount of money you need to have in your bank account, is assessed on personal circumstances like age and children.
 
Applying for a residence permit through a business as a non-EU citizen or Danish citizen abroad

If you want to get a residence permit based on being self-employed as a non-EU citizen or Danish citizen abroad, you need to apply for the permit called ‘Start-Up Denmark.‘ Only 75 foreign nationals a year can be granted a permit based on this scheme (1st January to 31st December).

The scheme can be used by both individuals and teams of up to three people who – using a shared business plan – want to start or continue to run a business together in Denmark or conduct business through a Danish branch of a foreign self-employment.

There are a number of requirements to fulfil:

  1. You must be the full or partial owner of the company. This is assessed, by how much of the company you own, whether there are other co-owners, and what tasks each of you have.
  2. You must place an active part in running the business and can’t just be a shareholder.
  3. You must provide documentation that you have sufficient funds to cover your first year in Denmark, including family members. 

The are amounts required in 2024 are:

  • 147,912 kroner without any family.
  • 295,824 kroner with a spouse accompanying you to Denmark.
  • 344,496 kroner with a spouse plus one or more children.
  • 196,584 kroner if one or more children, but not your spouse, are accompanying you to Denmark.

4. Your business idea must be approved.

Business plan assessment

Your business idea must be approved by a panel of experts appointed by the Danish Business Authority, before you can even start the application for a Start-Up residence permit.

This involves submitting a business plan, pitch deck and video pitch. There is advice and guidelines for this on the Start Up Denmark website.

The panel of experts will score each business plan based on four criteria:

  1. Innovation of the business model.
  2. Attractiveness of the business to the market.
  3. Scalability of the business model.
  4. The competencies and resources of the team.

Each judge grades these areas from 1 to 5. An average of at least 3.5 in each criteria passes approval. 

Usually, applications are evaluated within three weeks of submission and once approved, you can submit the application for the ‘Start-Up Denmark residence permit, which can cover the whole family.

If the business idea is not approved, there is the option to appeal or re-submit with improvements.

The permit is granted for up to two years, with the possibility of extending to three years. You must apply for an extension before the permit expires. If your passport expires before the permit does, you have to renew your passport and then apply for a permit extension up to three months ahead.

You must also apply for a new permit if you start a new business or are offered a salaried job. If you wish to take a sideline job, you have to obtain a separate permit. 

Tax

It’s a good idea to be familiar with “B-skat” or self-submitted tax when you’re self-employed in Denmark.

B-tax (B-skat in Danish) is the tax payable on so-called B-earnings (B-indkomst). If you receive earnings of this type, you are responsible for declaring them and paying tax, as well as Denmark’s labour market contribution AM-bidrag, on this income.

This distinguishes B-tax from other forms of income tax, which are deducted before the pay goes into your account – which is normally the case for employed people.

READ ALSO:

Articles in The Local are not meant to replace professional legal or tax advice. We recommend speaking to an appropriated professional in case of further questions.

Member comments

  1. Denmark business environment is best in the world. Company opening and operating process is very smooth ride.

    But opening a bank account is a concern.

    Companies must pay taxes through a bank account. But it is not easy open a Danish bank account. Foreign bank account is an option but not suitable for small business.

    Many small companies are going bankrupt or facing similar situations due to bank account.

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For members

WORKING IN DENMARK

Which Danish industries are hiring currently?

There is currently a demand for skilled labour in many sectors of the Danish labour market. Where are you most likely to find opportunities?

Published: 23 August 2024 13:42 CEST
Which Danish industries are hiring currently?

Denmark’s labour market continues to defy economic challenges in 2024, with employment reaching record levels.

Despite high inflation, rising interest rates, and economic uncertainty, the number of employed workers in the country has steadily grown throughout the year.

According to a recent report from Statistics Denmark (DST), total employment increased by approximately 1,600 people in June, bringing the total to a record-breaking 3,025,200.

This consistent growth is becoming the norm, and many industries are in need of labour, which means that the competition for workers is at a high.

A battle for skilled workers

Erik Bjørsted, the chief economist at trade union Dansk Metal, recently told newswire Ritzau that this fierce competition will persist, especially as the country faces a looming shortage of skilled workers.

With 176,000 skilled workers expected to retire by 2035 and stagnant interest in vocational education, Denmark’s labour market will continue to be a battleground for talent for some time to come.

In this context of strong demand and fierce competition, several industries are currently leading the way in hiring.

Several industries with labour shortages

The Danish job market is currently “very lucrative for job seekers,” Pernille Lund Thomsen, a recruitment consultant and Eures adviser at Work In Denmark, told The Local.

For international job seekers considering a move to Denmark, Thomsen emphasised that now is an ideal time to make the leap.

READ ALSO: What does Denmark’s new law on recording working hours mean for foreigners?

“If international jobseekers are considering coming to Denmark, now is definitely a great time to do so,” she said.

She noted that there is an exceptionally high demand for “engineers, healthcare professionals, IT specialists, and skilled labour.”

Thomsen also highlighted the Danish government’s significant investments in green energy and digitisation, sectors poised for substantial growth in the coming years.

READ ALSO: Why are Danish experts recommending closure of all job centres?

Hot job markets: IT, healthcare, engineering, life sciences…

“The Danish job market is robust and dynamic, with a strong emphasis on innovation, technology, and sustainability,” Søren Hjorth Lee, Nordic Market Director at the recruitment company Nigel Wright Group, told The Local.

Lee noted that the current labour market is characterised by high employment levels and a balanced work environment.

“Over the past 6-12 months, there has been significant movement and reorganisation within companies, although job vacancies due to expansion have been relatively low,” he said.

Despite these changes, several industries continue to see high demand for skilled professionals, according to Lee.

The technology and IT sector is particularly active.

“There is a strong need for data analysis, cybersecurity, and IT consulting roles,” he said, adding that the healthcare is also experiencing a shortage of workers, driven by Denmark’s “ageing population.”

“We see a need for healthcare professionals, including doctors, nurses, and medical researchers,” Lee said.

Engineering remains another area of strong demand, especially in construction and mechanical engineering.

“At the same time, Denmark’s leading role in renewable energy, particularly wind energy, continues to create opportunities in this sector,” the Nigel Wright Group expert said.

“Life sciences, led by major players like Novo Nordisk, are also expanding,” Lee added, noting that they require “skilled professionals across various functions and levels.”

READ ALSO: How to look for a job in Denmark as a foreign newcomer

Lastly, the Danish consumer industry is growing rapidly, particularly in retail and consumer goods.

“As companies adapt to changing consumer behaviours and technological advancements, there is a growing focus on e-commerce, digital marketing, and supply chain optimisation,” Lee told The Local.

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