Home Business Step-by-Step Guide on How to Open a Business in Denmark

Step-by-Step Guide on How to Open a Business in Denmark

How to open a business in Denmark

Denmark is a relatively small country in Europe with a population of 5.6 million but you can still open a profitable business there. It is apparently a social welfare state as it maintains a stable political, economic and regulatory climate for its citizens and businesses.

The country ranked #1 on the IMD World Competitiveness Ranking 2022 as a result of its highly competitive service-based economy. 

If you are thinking about doing business in Denmark, know that there are high employment stakes in the country and businesses enjoy a highly modern market driven by heavy trade of goods and services. The economy also delivers a great social security system.

In this article, you will discover all the steps required to open your own business in Denmark. But before we proceed, let’s know more about the Danes’ country.

List of Interesting Facts About Denmark

  • The World Bank names Denmark #1 in Europe and #4 in the world for ease of doing business.
  • Denmark is a free-market capitalist economy and a social welfare state.
  • Denmark offers one of the best entry points to the Europe market with highly motivated, cost-efficient and productive labor and workforce.
  • The country’s economy is based on cleantech, life sciences, food, design and innovation.
  • It is a relatively small country connected by buses, trains, ferries and internal flights.
  • Denmark is the frontrunner of Artificial Intelligence in Europe followed by Portugal and Finland.
  • The government describes Denmark as a country of cyclists as there are exactly 4.5 million bikes in Denmark.
  • The standard of living in Denmark is not cheap but with healthy average salaries.
  • The country ranks as the world’s second-most attractive business location after Singapore according to The Economist Intelligence Unit (EIU).
  • The capital of Denmark is Copenhagen, the largest attraction for expats moving to Denmark. Other notable cities include Aarhus, Odense and Aalborg.
  • The official currency for the Kingdom of Denmark is the Danish Krone (DKK). 

Guide on How to Open a Business in Denmark

Obtain a Work Permit Before You Can Open Your Business in Denmark

Except if you are a Nordic, Swiss, and EU/EEA citizen, you will have to obtain a work permit from the Danish Agency for Labour Retention and International Recruitment before you can start your business in Denmark. However, if you own a residence permit, you automatically have the right to work or study during your stay in Denmark.

Choose a Business Idea

Can it be made? Can it be sold? Can it generate a profit? These are three business idea suggestions for entrepreneurs according to the Business Development Centre Central, Denmark. If your answer is yes to these three questions, then your business idea should move on to the next phase of business registration.

Choose a Legal Structure for Your Business

The type of business you are going to be should match existing capital, the number of investors and Denmark’s tax liabilities. Aside from the Sole Proprietorship, the two common company structures are:

  • Private Limited Liability Company (ApS) or Anpartsselskab and
  • Public Limited Liability Company (A/S) or Aktieselskab

The minimum capital is DKK 40,000 for the ApS and DKK 400,000 for the A/S.

However, the APS structure or sole proprietorship seems to be of more relevance to expats in Denmark. But irrespective of the structure, all of them must do bookkeeping according to the Danish Business Act.


Choose Business Name

Business names should be unique and distinguishable. It should also not be misleading or include certain words. Before you set up a new business in Denmark, you have to choose a business name that will represent your identity.

Select the Best Location

Although Aarhus enjoys the highest startup survival rate in Denmark, picking a location to open your Denmark business should have a good score for potential growth, competition, business skill base in the area and accessibility. You can run a quick check on the best cities in Denmark to start a business before choosing a permanent location.

Register Your Business

The Danish Business Authority (DBA) is saddled with the task of business registrations in Denmark. They provide all relevant Danish registration information in English. It is also the main authority for digital licensing and registration in Denmark.

Obtain Necessary Tax IDs, Permits and Licenses

Once a business is registered with the DBA, the business also needs to be registered with the Danish tax authorities and Customs and Tax administration. Likewise, the business would obtain additional permits and licenses depending on the type of business. A separate registration would also be filed for companies that need to register for VAT purposes. 

Open a Business Bank Account in Denmark

Open a Business Bank Account in Denmark

In order to avoid unnecessary hurdles and keep an organised business in Denmark, you should follow the right procedures to open a bank account for ease of payments, employees’ salaries, business expenses and other incurred costs. 

Meanwhile, opening a business bank account in Denmark requires a level of patience. Therefore, a good understanding of the banking environment is crucial for doing business in Denmark. 

Start Your Business

After the successful completion of all paperwork and business certification, you can proceed to fund and hire employees (if required) for your business. The need to hire reliable hands is crucial to ensure productivity, sustainability and quality customer experience. You may want to hire temporary employees if that can help your business gain stability.

Denmark allows business owners to easily hire foreign staff or transfer existing employees in the case of a company relocation. The business environment is highly competitive, hence no stone should be left unturned in order to thrive in starting a business in Denmark.


10 Small Business Ideas to Start in Denmark

Denmark provides a healthy business environment in terms of technology, costs, safety, modern infrastructure and talent availability. Therefore, picking a business idea for a startup can be challenging for entrepreneurs in Europe.

However, you should go for a business idea according to your expertise, experience, and drive. The following are ten small business ideas you can start up in the Scandinavian country.

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Tega Daniel is an SEO content writer for EntrepreneurBusinessBlog.com


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