Registration of a Sole Proprietorship in Denmark

A sole proprietorship, or enkeltmandsvirksomhed, is the simplest and most popular legal structure for operating a business in Denmark. It’s an excellent choice for aspiring entrepreneurs who are beginning with minimal capital and unpredictable future income. If you require support with the registration process, we are ready to assist you.

Requirements for Registering a Sole Proprietorship in Denmark

Entrepreneurs relocating to Denmark can register their business with the Danish Business Authority (Erhvervsstyrelsen), operating under the Ministry of Economy. Before making this decision, it is important to thoroughly understand the requirements, deadlines, and necessary documents for different legal business structures in Denmark. Additionally, it's advisable to weigh the advantages and disadvantages to make an informed choice that best aligns with your expectations and capabilities.

A sole proprietorship is a business model where the owner assumes full responsibility for the company’s debts. This means that any liabilities, whether from business operations or taxes, are directly tied to the owner. In cases of financial trouble, the owner is personally accountable, including their personal assets like property or vehicles.

In a sole proprietorship, the founder has full authority over all business decisions. However, they can grant others the right to represent the company through a power of attorney. Running this type of business is easier since no share capital is required. Additionally, the Danish government provides assistance to self-employed individuals with the administrative processes involved in registering the business.

How to Register a Sole Proprietorship in Denmark?

Registering a sole proprietorship (Enkeltmandsvirksomhed) in Denmark is a simple process. The first step is to register the business with the Danish Business Authority (Erhvervsstyrelsen) through their website, erhvervsstyrelsen.dk. During registration, you'll need to provide the company name, which is typically the owner's first and last name, and use the personal CPR number for identification.

Steps to Set Up a Sole Proprietorship in Denmark

Here’s a summary of the steps required to establish a sole proprietorship in Denmark:

• Prepare Necessary Information
  • Collect the following details:
  • Business name
  • Business address
  • NACE code (to define the type of activity)
  • CPR number (personal identification number)
  If a physical address in Denmark isn't required, such as for online businesses, you can use a virtual office service to obtain a Danish business address.
• Register the Sole Proprietorship Online
  The registration is done via the Virk.dk portal. Fill out the registration form, and once approved, it will be sent to the relevant authorities.
• Obtain a CVR Number
  After submitting the registration form, you will receive a CVR number (Central Business Register number). This unique identifier is necessary for handling all business-related formalities.
• Register for VAT (if applicable)
  If your business is expected to generate an annual turnover over 50 000 DKK, you need to register for VAT. This can be done on the Virk.dk portal by completing and submitting the VAT registration form. It might be helpful to consult a VAT advisor who can guide you through the registration process, VAT accounting, and other related tasks.
• Open a Business Bank Account
  Opening a separate bank account for the business will make financial management and tax filing easier.
• Maintain Proper Accounting
  Ensure your business’s accounting is compliant with Danish regulations. If you're not familiar with the process, you can either handle it yourself or hire an accounting firm to assist.
• File Tax Declarations
  According to SKAT (the Danish Tax Authority) regulations, you must regularly submit tax returns and declarations.

Additionally, make sure to acquire any required licenses or permits, and consider securing appropriate insurance coverage for your business.

Why Choose to Start a Sole Proprietorship in Denmark?

A sole proprietorship in Denmark (Enkeltmandsvirksomhed) is easy to manage, making it perfect for new entrepreneurs with limited experience. Due to its minimal financial and administrative demands, this business structure is an appealing option for young entrepreneurs.

The cost of starting a sole proprietorship in Denmark is relatively low, at only 10 000 DKK. There is no requirement to provide initial share capital for such businesses.

Business taxes are filed through a single tax return, ensuring income is taxed only once. If the annual revenue of the business does not exceed 50 000 DKK, it does not need to register for VAT.

The owner can grant power of attorney to others to act on behalf of the business. Additionally, the Danish government provides support in managing the formalities related to business registration.