Expanding your business in Denmark: what you need to know

Expanding your business in Denmark: what you need to know – Denmark offers direct access to the European Union market, making it an ideal place to do business. The proof? Some 30,000 new businesses are created every year! So why not start your own?

With one of the lowest inflation rates in the European Union and one of the highest GDPs in the world, Denmark is a destination with a favorable business climate. The country has a population of 5.8 million, and enjoys the greatest social mobility in the world, as well as a very high level of income equality. Foreign companies also benefit from Denmark’s liberal approach to business, and find it easy to set up their own business. The northern European country has signed double taxation agreements with over 80 countries. Find out more about the country’s entrepreneurial characteristics and our useful tips for developing your company in Denmark.

Although Denmark is one of the easiest countries in the world in which to set up a business, you’re going to need help and advice to facilitate the development of your project. SKALIS can help you achieve your goals.

Expanding your business in Denmark

Growth sectors for entrepreneurs in Denmark

Thanks to its relatively high GDP, Denmark is a country with a multitude of growth sectors. Sales, oil production and shipping are all high-potential sectors, as are IT and communications technology, pharmaceuticals, renewable energies and research and development. Other high-potential sectors, such as green building, may also be of interest to entrepreneurs.

How to set up a business in Denmark

If you’re a European resident, you won’t need a visa to set up a business in Denmark. All you need is your European residence permit, which gives you the right to set up your business anywhere in the European Union. However, if you wish to expatriate for more than three months, you will need to complete a number of formalities. As the administrative procedures for setting up a company in Denmark are highly simplified, most of them can be completed online:

● To start with, you need a CPR number, which will serve as your resident card. This can be obtained on the Internet if you are a resident of Copenhagen, or from your local town hall. This number identifies you and is essential for setting up a business.
● Next, you need to collect your NemID. This is a Danish digital device enabling you to identify and authenticate yourself on all the websites of the digital services of the administration, banks and certain private companies. This process can also be carried out online, or at the relevant organizations such as the Citizen Service Center or your bank.

Corporate taxation in Denmark

The Danish corporate tax rate is 25%. VAT is also 25%. In addition, expatriates can benefit from a special tax regime for three years, with a tax rate of around 33%, far more advantageous than that of Danes. Note that a local representative resident in Denmark is required to set up a company, especially if you are not resident in Denmark.

Employment contracts in Denmark

In this small country of less than 6,000 inhabitants, written employment contracts as we know them in France are not compulsory. However, the best practice is to draw up a solid employment contract in Danish, setting out the terms and conditions of remuneration, benefits and termination of employment.
The law stipulates that employees are entitled to a written contract once they have started work. Employees who work an average of at least eight hours a week, and whose periods of employment are expected to last at least one month, must be informed in writing of all material conditions of employment. A letter of offer and an employment contract in Denmark must always state the salary and any other compensation in Danish kroner rather than foreign currency.
Collective agreements with trade unions and workers’ representatives are very common in many sectors, and form an important part of Danish labor law. The majority of the Danish workforce is covered by a collective agreement. These agreements regulate terms and conditions of employment, such as working hours, minimum wages and notice periods.

Hiring in Denmark

The official language of Denmark is Danish, but the vast majority of the population speaks English. An advantage if you don’t speak the local language and want to hire Danish staff, for example. Moreover, the Danish workforce is highly skilled and educated. Recruitment can be carried out in liaison with state employment offices or through the services of various commercial employment agencies. Unemployment is low.

Before hiring in Denmark, you should be aware that salary levels are high compared with the rest of the European Union. However, they remain in line with those elsewhere in the Nordic region. Overtime pay is governed by collective agreements. Some collective agreements allow employees to choose between payment and compensatory rest.

Work-life balance makes Denmark a great place for employees

The Danish way of working is high-focused effort during working hours – including a brief 30-minute lunch with colleagues – and then a late-afternoon shift to family and personal time.

This work-life balance makes for happier employees and strong families. A national network of quality subsidised child-care facilities gives Danish women the opportunity to compete on equal footing with Danish men.