Danish company types: Your easy guide to starting a business in Denmark

Understanding the key Danish company types

Thinking of establishing your business in Denmark? Fantastic choice!

Denmark consistently ranks as one of the best countries in the world for doing business, thanks to its stable economy, digital-first approach, and innovative environment. However, one of the first and most crucial decisions you’ll face is choosing the right legal structure for your company. This choice impacts everything from your personal liability and tax obligations to administrative burdens and future growth potential.

Don't worry, you don't need to be a legal expert to understand your options. We've broken down the most common Danish company types into an easy-to-understand guide, helping you make an informed decision for your venture.

Let's dive into the specifics of each popular business structure:

1. The Private Limited Company (dk: Anpartsselskab - ApS)

• What it is: This is by far the most common company type in Denmark, especially for startups, small to medium-sized enterprises (SMEs), and foreign investors. It's a truly independent legal entity.
• Your Liability: Limited. This means your personal assets are protected; only the company's assets are at risk.
• Minimum Share Capital: DKK 20,000 (effective from 2025). This capital must be paid up at the time of registration.
• Key Features: Highly flexible management structure. It's relatively easy to attract external investors, and the company can hold assets, incur debts, and enter into contracts in its own name. Crucially for foreign entities, there is no requirement for owners or directors to be Danish residents.
• Ideal For: New businesses, growth-oriented startups, SMEs, and foreign entrepreneurs looking for liability protection and a clear separation between personal and business finances.

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2. The Public Limited Company (dk: Aktieselskab - A/S)

• What it is: A structure typically reserved for larger businesses, similar to a public limited company in other countries.
• Your Liability: Limited, just like an ApS, only the company's assets are at risk.
• Minimum Share Capital: DKK 400,000. This is significantly higher than for an ApS.
• Key Features: Requires a more formal governance structure, including a mandatory Executive Board and a Board of Directors (or Supervisory Board). An A/S can issue shares to the public and be listed on a stock exchange, offering more avenues for large-scale capital raising.
• Ideal For: Large enterprises, companies planning substantial capital raises, or those aiming for a future public listing.

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3. The Sole Proprietorship (dk: Enkeltmandsvirksomhed)

• What it is: The _simplest form of business ownership, run by a single individual.
• Your Liability: Unlimited. Your personal assets are directly tied to the business and can be used to cover its debts.
• Minimum Share Capital: None.
• Key Features: Easy and inexpensive to establish and manage. The business is not a separate legal entity from you; its profits are taxed as your personal income. Important: You must have a Danish CPR number and be a Danish resident to register a Sole Proprietorship.
• Ideal For: Freelancers, consultants, and very small businesses with low financial risk, primarily for individuals who are already residents in Denmark.

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4. The Partnership (dk: Interessentskab - I/S)

• What it is: A business owned and operated by two or more individuals or legal entities.
• Your Liability: Unlimited, and joint and several. This means each partner's personal assets are at risk, and each partner can be held responsible for the partnership's full debt, even if others default.
• Minimum Share Capital: None.
• Key Features: Relatively simple to establish, often based on a partnership agreement. Profits are taxed as personal income for each partner.
• Ideal For: Small businesses with multiple owners who are comfortable with shared, unlimited personal liability.

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5. The Limited Partnership Company (dk: Partnerselskab - P/S)

• What it is: A hybrid structure combining elements of a partnership and a limited company. It must have at least one partner with limited liability and one with unlimited liability.
• Your Liability: Hybrid. Some partners have limited liability (e.g., in proportion to their investment), while at least one general partner has unlimited liability.
• Minimum Share Capital: Often significant, as this structure is typically organized under the rules of an A/S.
• Key Features: A more complex structure. Often used for specific joint ventures, private equity funds, or investment vehicles where different types of investors require varying liability profiles.
• Ideal For: Specialized investment vehicles, large projects, or complex collaborations requiring specific liability arrangements among partners.

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6. The Branch Office of a Foreign Company (dk: Filial)

• What it is: Not a separate legal entity, but rather a direct extension of a foreign parent company.
• Your Liability: Unlimited, as the parent company remains fully liable for all obligations of the Danish branch.
• Minimum Share Capital: None required locally, as it operates on the parent company's capital.
• Key Features: Must operate under the parent company's name, typically followed by "filial" (branch). It is often required to file the parent company's annual report in Denmark. This structure is common for foreign companies, especially those from the EU/EEA or countries with which Denmark has specific agreements, seeking a direct operational presence without forming a new Danish entity.
• Ideal For: Foreign companies that wish to establish a direct, integral presence in Denmark, leveraging their existing brand and legal structure.

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7. The personally owned small business (dk: Personligt ejet mindre virksomhed - PMV)

• What it is: A very simplified structure for individuals running very small-scale business or hobby activities.
• Your Liability: Unlimited. Your personal assets are at risk.
• Minimum Share Capital: None.
• Key Features: Maximum annual turnover is DKK 50,000. Crucially, you cannot register for VAT with a PMV, and you cannot hire employees. The CVR registration needs to be renewed every 3 years. Like the Sole Proprietorship, it requires a Danish CPR number and residency.
• Ideal For: Hobby businesses, very small part-time ventures, or individuals with minimal turnover who do not need VAT registration and operate without employees.

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Key considerations when making your choice:

To help narrow down your options, ask yourself these questions:

1. How much liability are you willing to take? Do you want to protect your personal assets? Limited liability companies (ApS, A/S, P/S) offer this crucial separation.
2. What's your initial capital investment? Some company types require a minimum share capital upfront, which can be a significant barrier for some.
3. What is your ownership structure? Will you be the sole owner, or are you planning to have partners or attract external investors? Companies like the ApS and A/S are designed to accommodate multiple owners and investment.
4. Are you a Danish resident with a CPR number and MitID? For sole proprietorships and PMVs, this is a strict requirement. Foreigners often find the ApS to be a more accessible entry point.
5. What level of administrative burden are you comfortable with? More complex structures like ApS and A/S come with formal requirements for setup, ongoing accounting, and annual reporting, which typically means higher administrative costs.
6. How will your profits be taxed? Some structures are taxed as corporate entities (ApS, A/S, P/S), while others are taxed as part of your personal income (Sole Proprietorship, I/S, PMV).
7. What are your long-term growth ambitions? If you envision significant expansion, bringing in new investors, or eventually selling the business, a limited liability company (ApS or A/S) provides more flexibility.

Also read our blogpost about "Choosing the right Business Structure in Denmark" here.

Let NordicEstab be your guide

Choosing the right business structure is a foundational step, but it's just the beginning. From registering your CVR address and navigating digital post to ensuring full compliance with Danish tax, payroll, and pension regulations, the process can be complex, especially without local language skills.

At NordicEstab, we specialize in making this process seamless for foreign companies. We offer:

• CVR Address Registration
• Comprehensive Digital Post Handling (monitoring, opening, translating, forwarding)
• Compliance Coordination (VAT, payroll, pension, SKAT, ATP, public authorities)
• Local Representation (your trusted point of contact in Denmark)

Ready to launch your Danish venture with confidence? Contact Nordic Estab today for expert guidance and a tailored solution that ensures your smooth setup and ongoing compliance.

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