What company structure should you choose in Denmark?

What company structure should you choose in Denmark?

This blog explains which company structure you should choose when starting a business in Denmark in 2026.

Choosing the right company structure in Denmark is one of the most important decisions you will make as an entrepreneur.

The structure you choose affects your tax position, personal liability, startup costs, and future growth opportunities.

The four most common company structures in Denmark are:

Sole Proprietorship;

Limited Liability Company;

Branch Office;

Registration of duties/obligations as a Foreign Company.

When choosing between these company structures, you should consider your level of experience, how solid your business plan is, how much capital you will invest, your risk exposure, the type of products or services you offer, and the type of clients and contracts you expect to have.

In general, the more experience you have, the more money you invest, the higher the business risk, the more complex or expensive your products or services are, the larger your clients are, and the greater your contractual liability, the more it is recommended to start a Limited Liability Company.

If you are new to business, plan to invest a small amount of money, operate with limited risk, sell simpler and lower-priced products or services, work with smaller clients, and have limited contractual liability, a Sole Proprietorship will often be the best choice.

In Denmark, Limited Liability Companies are typically established as either an ApS or an A/S. The ApS is by far the most common option. It requires a minimum share capital of 20.000 DKK and has incorporation costs of typically 2.000 DKK to 10.000 DKK + VAT, depending on who assists with the incorporation.

Both residents and non-residents can be shareholders and directors in an ApS or an A/S.

For foreign companies entering the Danish market, incorporating a separate Limited Liability Company often makes sense if the investment is long-term.

For shorter-term activities, registering a Branch Office or simply registering specific duties or obligations – typically employer registration, VAT registration, and/or corporate income tax registration – is often the simplest and fastest solution.

Ultimately, the right choice depends entirely on your specific business situation.

Sole Proprietorship

A Sole Proprietorship is a business structure that is not incorporated.

To operate as a Sole Proprietor in Denmark, you must be a resident and hold both a CPR-number (Danish personal identification number) and a digital signature (MitID).

Registering a Sole Proprietorship in Denmark is fast, simple, and fully digital. It is equally easy to deregister again if your business idea does not succeed.

No share capital is required to start a Sole Proprietorship, and there are no registration fees if you register yourself online via VIRK.

If you prefer professional assistance, we can help you register a Sole Proprietorship for 1.000 DKK + VAT.

Read more about what information we need to help you start a Sole Proprietorship here

When choosing between a Sole Proprietorship and a Limited Liability Company, you should assess your experience, confidence in your business plan, financial risk, type of services provided, and the nature of your clients and contracts.

If you have limited capital and operate with low liability, a Sole Proprietorship is often the best option because it is inexpensive and very easy to start.

An important advantage of a Sole Proprietorship is that business losses can be offset against other personal income, reducing your overall personal tax liability.

A deficit occurs when your business expenses exceed your income.

While some businesses generate profit immediately, many experience losses during the first 1-3 years. With a Sole Proprietorship, these losses can be offset against income from employment, improving your cash flow compared to operating through a Limited Liability Company.

The following example illustrates this benefit:

Assume a personal income tax rate of 40%.

If your business generates a deficit of 100.000 DKK in its first year and you earn a salary of 200.000 DKK from a job, your taxable income would be reduced to 100.000 DKK.

This means you would pay 40.000 DKK in tax instead of 80.000 DKK, effectively using the business deficit to reduce your tax bill.

Read more about how Sole Proprietors pay tax here

Unlike Sole Proprietorships, Limited Liability Companies can usually only use losses to offset future company profits.

Therefore, if you expect significant startup losses and have limited liquidity, a Sole Proprietorship may be the better choice.

However, a major disadvantage is unlimited personal liability. As a Sole Proprietor, you are personally responsible for all business obligations, including debts, lawsuits, and contractual claims.

In the worst-case scenario, personal assets such as your home could be at risk.

For low-risk activities, such as freelance writing for private individuals, the risk is often manageable. However, as soon as you hire employees, work with large clients, or handle high-value contracts, the risk increases significantly.

If you mainly work for one client, be aware that this may be classified as employment rather than self-employment.

You can read more about this situation here

Limited Liability Company

When deciding between a Limited Liability Company and a Sole Proprietorship, the key question is liability.

Consider your worst-case scenario. If a client suffers a financial loss due to your work, can your liability be effectively limited through a contract that would hold up in court?

If not, a Limited Liability Company is often the safer choice, as your personal assets are protected and your risk is limited to the company.

To establish an ApS, you must contribute 20.000 DKK in share capital.

Losses in a Limited Liability Company are isolated within the company and cannot be offset against your personal income.
Read more about Corporate Income Tax here

If you receive a salary from your company, it must register as an employer, issue payslips, and withhold personal income tax. This can negatively impact cash flow during the startup phase.

We can help you incorporate a new ApS.

Here you can see the prices for incorporating a new ApS

Here you can read what information is needed to incorporate a new ApS

The Danish Tax Agency may review shareholders and founders before approving VAT or employer registration.

See which questions are typically asked here

Branch Office

A Branch Office is an extension of a foreign company and does not require share capital.

If the branch has a permanent establishment or employees with authority to bind the company, it normally becomes tax resident in Denmark.

The Branch Office receives a CVR-number and must comply with Danish accounting and tax regulations. The foreign parent company remains fully liable for all Danish activities.

The parent company’s annual report must be submitted to the Danish Business Authority, and a Danish tax return must be filed.

Registration of duties/obligations as a Foreign Company

If you are not ready to establish a Branch Office or incorporate a Danish company, registering specific duties as a Foreign Company may be the best entry point.

This is the simplest way to start operating in Denmark and typically includes:

Employer registration
;
VAT registration;

Corporate income tax registration.

Processing time is usually 2–4 weeks, and registration must be completed at least 8 days before starting activities.

We can assist with this registration for 3.000 DKK + VAT.

Additional requirements may include a fiscal representative, Danish address, or a person with signatory rights in Denmark.

Please contact us to clarify your situation.

(Last update of this blog: 5.1.2026)

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