Recent reports place Denmark on top positions in various reports conducted on countries all over the world. These reports have a great influence on foreign investors who are keen on opening companies in Denmark. However, they have various options when it comes to starting a business in Denmark. Among these are registering a new company or buying a read-made company, usually known as a shelf company.
| Quick Facts | |
|---|---|
| Legal entities available for shelf company |
Private limited companies; Public limited companies. |
|
Time required for purchasing the company |
Less than a week, due diligence can also be included in most cases during this timeframe. |
|
Types of features it includes (corporate bank account, VAT number, etc) |
The buyer receives an already registered company; option to have a corporate bank account (additional costs can apply in this case). VAT registration is needed only after exceeding the threshold of DKK 50,000. |
| The advantages of a shelf company |
Fast ownership transfer; A duly registered company, with the needed incorporation documents; Can start trading immediately in most cases. |
| Appointing new directors (yes/no) |
Yes, possible after the change of ownership. |
| Capital increase allowed (yes/no) |
Yes |
| Certificate of no commercial activities |
Can be provided upon request. |
| Modify the objects of activity (yes/no) |
Yes, possible at the same time as altering the company's constitutive documents to reflect the ownership change. |
| Participants in the purchase procedure |
The buyer (natural or legal person) and the seller (natural or legal person). |
| The uses of a shelf company | Used in many different business fields; additional licensing is required depending on its future activities. |
| Documents necessary for the purchase |
Personal identification documents for the buyer and also for the company's directors and appointed representatives. |
| Taxes applied to a shelf company |
The Danish corporate income tax, social security contributions, value-added tax (past a certain threshold), payroll tax, and other taxes. |
| Changing the registered address (yes/no) |
Yes, possible at the same time as changing any other company details. |
| Aged shelf company available (yes/no) |
Yes. Other costs can apply. |
| The institution where corporate changes are registered | The Central Business Register (CVR) |
What is a Danish shelf company?
The main difference between a newly-registered company and a ready-made company is exactly this: the shelf company is already registered and awaiting to be bought. Shelf companies in Denmark are usually registered as private limited liability companies, but public companies can also be put at the disposal of clients. Ready-made companies come with tax and value added tax numbers, which is one of the most important advantages of this type of structures. Moreover, clients can choose to buy a shelf company in Denmark based on its age: there are companies which are kept “on a shelf” for those interested in acquiring a business with a certain history which will ease the connection with business partners in Denmark.
Advantages of buying a Danish shelf company
Both options have their advantages with the mention that purchasing a Danish shelf company has certain notable benefits:
- Longevity: the simple fact that the company was incorporated will allow it to be presented as a legal entity with longevity, that was formed a number of years before; compared to a newly formed company, this can have advantages;
- Credibility: a direct result of longevity can also be credibility towards clients and other business partners;
- Faster operations: investors who acquire a shelf company are generally able to start trading much faster, compared to having to register a new company;
- Attractiveness: all in all, the shelf company, a legal entity that has been registered in Denmark for a number of years, can attract more investors.
The main advantages are only briefly listed above. The shelf company can be used in any business field, provided that the new owners make sure that the legal entity obtains all of the needed licenses and permits before starting trading. In most cases, shelf companies in Denmark are listed for sale without having been dedicated to a certain industry. This means that the new owners will need to apply for and obtain the additional licenses from the relevant authorities. For example, the City of Copenhagen issues a number of licenses for different types of activities, such as those for restaurants of cafes.
Our lawyers in Denmark can inform you about the main benefits of buying a ready-made company in this country. If you wish to know more about the rules for company incorporation or purchase in Denmark, in addition to the information provided herein, please reach out to our Danish team of attorneys specializing in business and commercial law.
What are the steps for acquiring a shelf company in Denmark?
Compared to a new company, the shelf company is already set up for starting its activities in Denmark. However, it is best to verify a ready-made company before purchasing it. This is the due diligence verification that is common for companies that have already been registered. While the companies offered for sale as shelf companies in Denmark are generally incorporated and left without trading activities, an expert verification is recommended in order to property verify that the company indeed has no trading history or, if it does have a brief record of activities, that is does not present any investment risk by having bad credit, debts or other issues. Any financial documents (if any) and signed agreements, if there have been any, along with the company’s registration papers are checked during this process.
Our law firm in Denmark can assist with the company due diligence process.
The acquisition of a Danish ready-made company is completed through a sale-purchase agreement followed a shareholders’ meeting through which the new owner is voted and appointed. Then, the buyer will need to appoint a new management team and an auditor.
Steps to follow when buying an existing company in Denmark
These changes must be filed with the Danish Companies Register. After this procedure is completed, the company can require certain licenses or permits before starting operating, as previously mentioned. These can be applied for as part of the post-acquisition steps, especially if the new company owners wish to change the company name or other particulars. Some of the changes that can be brought to an existing company include the following:
- Name: the new owners may wish to change the company’s name, however, in this case they will need to check if the newly proposed name is available for use in Denmark;
- Registered address: the registered address is changed upon purchase, however, it will need to remain in a Danish city of choice, most commonly in Copenhagen; using a virtual office is also possible;
- Secondary address: the registered address can be the same as the office address, however, in most cases, they will not be the same; the actual office location from which the company runs its activities can be a secondary location; investors may add additional headquarters, as needed;
- Articles of Association: these are changed in a compulsory manner to reflect the names of the new company owners, however, apart from this change, the new owners may also wish to amend other particulars, such as the duration of the company, should this be the case; specialized assistance can be provided for the purpose of re-writing the company’s constitutive documents by our team of lawyers in Denmark.
What are the main requirements for companies in Denmark?
Once the company ownership transfer is complete, the new company owners will be the ones who will be liable for the company’s activities, debts and the relationship with its creditors, clients and business partners in Denmark. This also means that they will need to observe the local rules for corporate taxation, as the company was and remains registered in the country.
Below, our tax lawyers in Denmark list the most important taxes for companies:
- 22% corporate income tax rate;
- 27% general withholding rate for dividends paid to a resident company; a 5% reclaim rate applies, which means that the effective percentage can be 22%;
- 25% standard value-added tax rate, with a 0% rate for certain types of goods and services;
- approximately DKK 12,000 to DKK 15,000 per year per employee, the employer’s liability for social security contributions.
As far as the accounting and reporting rules are concerned, Danish companies are expected to:
- Observe the tax year which cannot exceed 12 months;
- File the tax returns in electronic format within 6 months of the end of the fiscal year.
- Make the advance payments on tax, usually between March and November;
- Prepare the annual financial statements by observing the IFRS/Danish GAAP.
Our accountants in Denmark can provide complete bookkeeping and accounting solutions once the transfer of ownership is complete. The shelf company will need to observe the accounting principles, a main requirement being the one to prepare and file annual financial statements. In addition to these, our team can also provide payroll services, tax filing and payment as per the requirements, and other solutions.
Legal aspects of shelf companies in Denmark
Before buying a shelf company in Denmark, there are legal aspects to consider in order to make the purchase risk-free. Issues like hidden debts, unpaid taxes or other legal aspects may appear after the purchase if the research of the company is not done correctly. Take into consideration two main aspects:
- Tax liabilities: could be represented by unpaid taxes or VAT from previous operations of the company. In order to protect from tax fraud or money laundering, authorities like Danish Business Authority (Erhvervsstyrelsen) or Danish Tax Agency (Skattestyrelsen) may conduct monitoring operations of the shelf company in Denmark. After purchasing the Danish shelf company, the director becomes responsible of previous irregularities;
- Due diligence in Denmark: this process represents additional checks of the company’s past operations in order to buy it with less risks involved. Usually, the due diligence checks are made upon legal obligations, contracts and tax compliance issues. All the information regarding the shelf company in Denmark must be registered within the Danish Business Authority.
Get support from our specialized accountants in Denmark to take the necessary steps in documentation requirements and tax compliance for your Danish company.
Shelf company vs. holding company in Denmark
The main difference between a holding company and a shelf company in Denmark consists of their function and purposes. Generally, a Danish shelf company is not involved active business operations. The shelf company has activities like: facilitating mergers, accessing tax advantages or maintaining the owner’s anonymity. On the other hand, a holding company in Denmark is created for owning and controlling other companies or assets. This type of company does not produce goods or services, in general, but has activities like: strategic oversight, liability protection and management of subsidiaries.
Our specialized law firm in Denmark can assist in reviewing the structure and suggesting the guidelines for using a Danish shelf company within your corporation.
Data on companies in Denmark
The data below highlights key industry sectors and Denmark’s position within the European market, based on the latest statistics:
- Total companies in Denmark: 554,328, contributing 2.23% of EU business sales;
- The finance, insurance, real estate industry owns 216,057 companies, representing 39.0% of the total Danish companies;
- The services industry has 211,920 companies in Denmark, with a 38.2% of the total registered businesses;
- The retail trade industry has 32,745 companies registered in Denmark (5.9% of the total).
For information on the requirements and prices related to buying a shelf company, please contact us. We can also assist investors in registering a new company in Denmark.