In order to start hiring employees in Denmark, you might consider setting up a subsidiary. While subsidiary laws may seem easy to navigate, the time and investment commitment of setting up a subsidiary may not be the best option for your growing business. Read on to learn more about how to set up a Denmark subsidiary and alternative options for expanding your business.

How to establish a Denmark subsidiary

There are 2 main corporation options in Denmark — an Aktieselskab (A/S) or Anpartsselskab (ApS). A/S is similar to a public limited liability company, while ApS is the equivalent of a private limited liability company. Both are relatively quick to set up. However, most companies choose to set up an ApS.

Deciding between the 2 options depends on the size of your company and your expected activity level in Denmark. A company may choose A/S if it wants the subsidiary to be listed on the Copenhagen Stock Exchange. Setting up this type of company takes more time and resources.

Small and mid-sized companies usually choose ApS. These are typically subsidiaries for multinational companies.

For a Danish company to be valid, it needs to be registered in the Danish Commercial and Companies Agency. There are some necessary steps required to open a subsidiary, such as:

  • The articles of association need to be filed before the Danish Commercial and Company Agency, which will include details regarding the subscribed capital.
  • The determination of the contribution of each shareholder should be stated.
  • Companies must register in the Commercial Registry.
  • Investors must submit an application for registering the workers for the employment insurance.

It is also mandatory to open a bank account and set up a payroll account.

Denmark subsidiary laws

Denmark subsidiary laws differ based on which type of company you choose.

A/S companies must have minimum registered share capital of DKK 400,000. The investor does not have to pay the full registered share capital, but the paid-up capital must equal at least 25% of the registered share capital. Each investors’ liability is restricted to the value of the shares they purchase.

The law requires A/S companies to utilize a 2-tier supervisory system made up of a Board of Directors and an Executive Board. A minimum of three people must be on the Board of Directors. The same minimum applies to a Supervisory Board structure. Employee representatives may increase the board size, but not the minimum. Directors do not have to live in Denmark.

ApS companies must invest a minimum of DKK 20,000 as share capital, which must be fully paid in at formation. If you choose this Denmark subsidiary option, you will only need a single shareholder from any nationality. Plus, ApS companies can utilize a 1-or 2-tier system depending on their needs.

Both A/S and ApS companies must submit annual financial statements.

Benefits of establishing a Denmark subsidiary

One benefit is that it is easier to open a subsidiary in Denmark compared to other countries. Other advantages include:

  • Companies can incorporate online and start operations within a few hours.
  • Management does not have any residency requirements.
  • You can hold shareholder’s and board meetings electronically.
  • You won’t need any notarial deeds.
  • Language requirements are flexible.
  • You can distribute dividends on an interim basis.
  • Denmark company law is the same as current EU legislation.
  • There are favorable tax climates.

Other important considerations

During the Denmark subsidiary setup process, you will need a digital signature called a NemID. This signature allows business employees to register electronically. You’ll also need workers’ insurance as well as a bank account where you can deposit your investment capital.

Before registering your company on your own, it’s important to realize you will also need a significant amount of time and budget to travel back and forth to Denmark during the process. By working with G-P, you can avoid unneeded travel and expenses.

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