Dissolution of a business in Denmark

Closing a company is a detailed process that requires several steps. We provide assistance to ensure all formalities are completed in line with Danish regulations. Following the proper order of procedures is essential to maintain access to online systems and prevent future tax, customs, or other liabilities.

It's also important to note that if the business owner decides to reopen the company, they will retain the same CVR number as previously assigned.

Reasons for Closing a Company in Denmark

A company may be dissolved for various reasons, which can be grouped into different categories. The decision to cease operations is often made by the owner, but it can also happen without their involvement. Dissolving a limited liability company is a lengthy process, similar to its voluntary liquidation.

Reasons for Closing a Business in Denmark:

• Voluntary liquidation initiated by shareholders:
  This happens when the company is financially stable, with assets exceeding liabilities. The company must publicly declare its intention to liquidate, giving creditors at least three months to file any claims.
• Restructuring – A decision to restructure can help avoid bankruptcy proceedings. In these cases, the court appoints a restructuring officer who is responsible for managing the process.
• Compulsory liquidation by court order:

  In cases where the business is closed without the owner's consent, it is often due to a court order. Common reasons for this include:

  • Submitting the annual report after the deadline,
  • Resignation of the Managing Director,
  • Failing to conduct a mandatory audit due to the auditor's resignation and the inability to appoint a replacement.

When a company is dissolved by court order, the court appoints a liquidator to evaluate the company’s financial situation. If the company is insolvent, bankruptcy proceedings will begin. If the company is solvent, it will be liquidated.

• Bankruptcy Filing by the Company or Creditors – Before a company can declare bankruptcy, it must begin court proceedings. Both the company and its creditors have the right to file for bankruptcy. The main reason for declaring bankruptcy is the company’s inability to meet its financial obligations.
• Dissolution by Shareholders’ Resolution – When a company is closed through a resolution by its shareholders, there is no mandatory 3-month waiting period for creditors to submit claims. However, it’s important to understand that any neglect of obligations may lead to debts that shareholders will be responsible for paying. Therefore, it’s crucial to fulfill all formal requirements and clear any outstanding tax and financial liabilities of the business.

How to Close a Business in Denmark?

Closing a business is a critical process that requires thorough planning and careful execution. Regardless of the reason for the business’s closure, it involves completing various formalities and legal procedures to ensure compliance with Danish regulations. The process of closing a business in Denmark involves several administrative and legal steps, which are as follows:

• Verification of Liabilities
  Make sure that the company has no outstanding debts to customers, suppliers, employees, or public entities (such as tax authorities).
• Decision to Liquidate
  The decision to dissolve the business must be formally approved by the shareholders (in the case of a company) or the owner (in the case of a sole proprietorship).
• Notifying Relevant Authorities
  Notify the appropriate institutions about the business closure, including:
  • The Tax Authority (SKAT)
  • Registration with the Central Business Register (CVR)
• Notification to the Danish Business Authority (Erhvervsstyrelsen). Companies must report their liquidation to the Danish Business Authority (Erhvervsstyrelsen). This can be done online through the Erhvervsstyrelsen website.
• Liquidation Process
  For companies, the liquidation procedure involves:
  • Preparing a liquidation balance sheet
  • Conducting a liquidation audit (if necessary)
  • Distributing remaining assets after all liabilities have been settled
• Business Closure Notification
  Once the liquidation process is complete, the business closure must be reported to Erhvervsstyrelsen.
• Document Retention
  Keep all documents related to the company’s operations for the required period (usually 5 years) in compliance with Danish regulations.

Additional Steps

• Close the company’s bank accounts.
• Notify suppliers, clients, and business partners about the cessation of operations.
• Ensure that all tax obligations are properly settled and recorded.

How We Assist with the Company Closure Process in Denmark

Whether it's a company or a sole proprietorship, we handle all essential steps, including:

• Ensuring Continued Access to Company Email After Closure
  Once the business is closed, its NemID will be deactivated, which will result in the loss of access to Digital Post. However, messages can still be sent to the company’s digital mailbox after the business is shut down. Prior to closing, it is essential to configure access properly to maintain the ability to use the company’s email after liquidation.
• Verification of the Company’s Tax Account
  Before closing the business, it is crucial to log into the Tax Account to verify the status of reports and payments. This step ensures everything is in order. You can check if all required information has been submitted, which helps prevent overpayment of taxes like VAT or A-skat after the business is closed.
• Completing the Liquidation Form
  The next step is the official closure of the business and obtaining a liquidation certificate, which may be required in the future, for example, when dealing with banks or applying for unemployment benefits.
• Tax Settlement
  Make sure all reports for periods up to the business closure date are submitted on time, as delays may lead to fines of up to 800 DKK. A final report must be filed, even if the amount is 0 DKK. Before closing the business, all outstanding issues related to VAT, salaries, taxes, payroll, excise duties, and any other contributions to the Danish state must be resolved.
• Tax Declaration Adjustment
  After the business closure, it is necessary to adjust the profit reported on the tax return to ensure accurate calculation and payment of taxes.
• Submission of Oplysningsskema and Preparation of Skatteregnskab
  The profit and loss of the company must be calculated, and a tax return must be submitted for the period from January 1st to the closure date. The profit and loss statement should include items that were withdrawn from the business or sold to others, such as computers, inventory, furniture, vehicles, or machinery. Keep in mind that the result on the Oplysningsskema can only be reported in the year following the business closure, with the final deadline being July 1st. A penalty of 200 DKK per day (up to a maximum of 5 000 DKK) will be imposed for late submissions.