The advice below is for general guidance only. You should check all information before acting on it. Recent examples include a new requirement to ensure that the CVR number is on all official business vehicles and the abolition of the iværksætterselskab, IVS, as a business form in 2019.
Would it be a good idea to get a mentor to help me in my plans?Yes, your main focus should be on the core business. Everything else to do with tax, licensing and so on you can get help with. It is a good idea anyway to get yourself a trusted accountant who will know many of the answers to the questions in this FAQ. You may also find mentors for free for example from Egen Virksomhed Nu, from the local Business Club or the local government business service. More information Most people who start a business do not know much about the legal and financial side. It is a good idea to connect yourself with someone that you trust who can help you with all these aspects. You can do this for free by having a mentor who will help you at the beginning. For example, http://egenvirksomhed.nu You should also consider paying an accountant to take care of all your administrative and financial work. You would pay 10.000 – 15.000 DKK per year to be able to forget about book-keeping, VAT (MOMs), paying and reporting salaries, annual accounts and making tax payments. Even on a low annual turnover of 250.000 DKK this might be money well spent if it helps you to avoid 800 DKK fines for late reporting.
What will be the costs to set up the business and run it for the first few months?
It is important to work out realistically how much it will cost you to set up your business. You should find out set-up costs and also how much it will cost to run the business in the first few months, not forgetting to pay yourself a salary. Knowing this information will help you when you set up a business bank account. Even if you do not need a commercial loan, you will still need to set up a dedicated business bank account that the tax authorities can use to give you tax refunds or from which you will pay tax. In Denmark, you must not use your private bank account to run a business.
If you try to run a business from your private bank account, then the bank will likely shut down your account and you will not be allowed to use that bank again.
You should be ready to talk about your expected costs and revenue when you go to open a business bank account.
What happens to the integration payment when I start a business?
When you start a business, you will lose your integration payment (integrationsydelse soon to be renamed selvforsørgelses- og hjemrejseydelse) so you must be certain that you will make at least as much income in your new business as you would have got from the integration payment. Also remember that your income may reduce the money that others in your household receive, for example, rent support.
What are general business taxes to pay?
In a sole trader business then you pay personal income tax on any profit your business makes.
In any other business that is a legally separate entity, such as ApS, then you pay company tax of 22% on the profits.
All companies are responsible for collecting Value Added tax on the sale of their products and transferring the net amount to the tax authorities.
All companies are responsible for paying income tax and other charges on pay such as contribution to the state pension on the salaries of their employees.
Depending on which business you are in, there may be other taxes and charges to pay such as on packaging, alcohol, chocolate and fuel.
If you import goods from outside the EU then you may need to pay import duties depending on the product. Eg cars
How do you set up or register a business?
All businesses in Denmark are registered online through Virk.dk
To register any type of business you need to go to Virk.dk and follow the instructions. Once you have completed the process you will receive a registration document in the post within a few days.
What are the legal requirements?
Anyone who is legally resident in Denmark can set up a business. You should have your own personal CPR number and when you register your business, it will have its own separate number called a CVR.
It is easy and quick to set up a business in Denmark. You should be careful that you understand your responsibilities when you have set up a business. For example, you must report VAT (MOMs) even if it is to say that you have not sold or bought anything with VAT in the last 3 months. If you do not report, then you will get fined about 800 DKK. This is just one example. This is why it is a good idea to pay for an accountant who will take care of all this for you.
What type of business (business format) can you set up in this country and what are the differences?
You can set up as a sole trader, a partnership, a private limited company or a public limited company.
A sole trader (enkeltmandsvirksomhed) means that the finances of the business are also your private finances (though you should keep the business accounts separate). If the business makes a loss, then you as the owner and a private person are not protected. This means that everything that you own as a private person, can be used to cover losses in the business and that includes your house if you own one.
The conditions are the same in a partnership (interessantskab) except that in this case you are working with one or more partners and have signed a partnership agreement that covers for example how much each partner own of the business. Your company name will end with the letters I/S.
In a private limited company, this means that you as a private person and the company are seen as completely separate entities according to the law. So, if your company makes a loss, then people and organisations which are owed money by your company cannot make a claim on your private assets to recover that money. Your company name will end with the letters ApS to warn anyone doing business with you that they can only recover assets from the company. You are required to put in at least 50,000 Danish crowns to start this type of business.
Note that a special type of start-up company format called iværksætterselskab, IVS, has been abolished and that it is no longer possible to set up a limited company in this way. IVS was a cheap way of setting up a limited company requiring only one Danish crown to set up.
You can find more information about the different business types in English here: https://www.startupsvar.dk/registration-of-business
Can I start right away?
To set up a sole trader business through virk.dk allows you to start business the same day.
To set up a partnership will be just as quick as long as you and your partner have an agreed partnership agreement that you can upload when you register.
To set up a private limited company will take about 5 days while you register it on virk.dk and draw up the rules governing the business, the Articles of Association (probably in collaboration with an accountant or solicitor). To set up a public limited company is much more complicated and costly and is probably not relevant at this point.
What kind of bureaucracy do I have to be aware of?
Most official business in Denmark is carried out digitally. You will be assigned a unique business number, the CVR to use in all official communication. You will have to pay VAT (MOMs). There are rules about documenting receipts, issuing invoices, bookkeeping, accounts and documenting salaries. You will need business insurance and there may be special requirements depending on the industry sector that your business is in eg regarding food, fuel, chemicals and so on.
Digital: Almost all official requirements in Denmark take place online. This means that once you have your CVR number, you will need to decide which bank account will be your official bank account and you will need to get a special company NemID to enable you to access tax and other official websites to report your business activities.
CVR number: If you expect to turnover less than 50.000 DKK per year then you may not need to register the business. In every other case you should register the business to get a CVR number. It would be impossible to carry out all the other administrative requirements without a CVR number.
MOMs: You will need to declare all VAT (MOMs) received and paid every 3 months. Even if there is nothing to report, you need to report a zero result or you will get fined.
Salaries: You have to declare how much salary you have paid to employees (including yourself). As with VAT, if you have set up a salary payment and there is a month without any salary being paid, you still have to report a zero.
Accounts: You have to report your accounts once a year as personal income for a sole trader or partnership, or to the business ministry for a limited company.
Invoices & receipts: You should make sure that you have documentation, either paper or electronic, for all payments and receipts in your business.
Bookkeeping: You should make sure that you have a well-organised system for keeping track of the payments and receipts in your business.
Business insurance: You need to have relevant business insurance so that if someone is hurt either physically or financially because of something you do as part of the business, then they can get compensation.
Other requirements: There may be additional requirements if you are serving food regarding hygiene, or if you are using a vehicle as part of the business. For example, business vehicles must carry the CVR number of the business on the outside of the vehicle and there are strict rules about not using the vehicle for private reasons.
Help: It is a good idea to get an expert to help with some of the above requirements. For example, an accountant could do all your bookkeeping, VAT returns and filing your annual accounts as well as taking care of your salary payments and tax and pension returns for about 10.000 – 15.000 DKK per year.
There are also rules about claiming business expenses if you run the business from your home and about identifying the business on its website by making sure that the CVR number is on the home page of the website.
You can find out more here: ….
What cultural differences should I be aware of?
What have you noticed is different about Denmark compared to your home country? This could affect how your business runs and whether it succeeds.
Compared to many other countries in Denmark there is:
A high degree of trust
A high level of equality for example between men and women
Great informality between people, for example between bosses and their employees
An expectation that every adult will support themselves financially.
Rules are enforced. For example, if you do not report your VAT receipts then you will be fined until you make an entry even if you have zero VAT to report.
But Danes are brought up to be allowed to do whatever is reasonable and does not inconvenience others.
There is great flexibility in Denmark and Danes do not have as much of a long-term perspective as other cultures. So, for example they may not think about their pensions until very late in life. You can use this tool to compare your country with Denmark. Not all countries are covered so you may need to choose a similar country to your own.
How do I increase the reputation of my refugee-owned business?
You should follow standard marketing advice about increasing your reputation.
Whether to emphasise your refugee origins depends on the business. If you are selling mainly to other refugees then you will need to use ways to reach that group probably using your existing networks.
If your business is aimed at the general public then you may need to find out more about the ways of reaching people in your local area.
Where do you plan to get your financial resources to start the business?
You should first work out how much money you need to start the business and to keep it running for the first 3 to 6 months – not forgetting a salary for yourself!
Then you can consider the following sources of finance:
- Your own savings
- Borrowing from family and friends
- Borrowing from a bank
- Business angels
There are no sharia loans available in Denmark.
You can read more here: https://www.startupsvar.dk/financing-start-ups
Where should my business be located?
If you run your business from home then you will have to keep to the rules about home businesses. It may be that you cannot claim all expenses for your business such as heating and telephone.
If you need special premises such as a shop or hairdressing salon then you will have to think about a good location where you will get customers and also how much it will cost. Usually if you rent a business location you have to pay 3 months in advance.
You can find business premises to run from websites such as this one: https://www.lokaleportalen.dk/ which you can choose to see in English and other languages.
Sometimes they will be advertised in the local newspapers or you will see a sign ‘Til leje’ on the location itself.
What is a mobile business?
A mobile business is one where you do not need special premises but instead go to your customers either in person, if you are a mobile hairdresser or cleaner, or online if you have a webshop selling goods or services such as translation.
See for example this barber who comes to your home.
What type of refugee business exists in your local community?
It is a good idea to take a look in your local area to see which businesses have been successfully set up by refugees or other foreigners. In Denmark you will find many pizza restaurants are run by migrants to Denmark, also specialist food shops and hairdressers. Maybe your town already has enough pizzarias but these existing businesses could give you ideas for your own business.
Which local organisations can help free of charge? E.g. Business clubs, business advisory organisations, etc?
The most important thing you can do to start a successful business is to get help. If you have a mentor or an accountant, they will be able to carry out the trickiest aspects of starting a business and help you avoid the administrative and legal traps. They will also be able to advise you on how to make the business a success.
Local business clubs may be willing to help.
The local kommune probably has a business advisory service that offers help and advice for free.
The banks offer resources and help, some of it free.
You could also join or set up the 9 Conversations programme in your local area that will help you find the most important information and connections to start your business.
This website https://www.9conversations.no
Egen Virksomhed Nu (Your own Business now) http://egenvirksomhed.nu/
English version of Startup Svar (StartUp answers) https://www.startupsvar.dk/indexuk.asp
How important is it to know the local language?
You can achieve a lot in Denmark with English but it is much better to be able to work in Danish. Your customers may be mainly from your home country eg if you run a food shop importing products from your home region but you will still have to communicate with the Danish authorities either in English or in Danish.
You can learn Danish at Lær Dansk https://laerdansk.dk/en
You can also get help with Danish from the following free online courses.
Dansk Her og Nu https://danskherognu.dk/
You could try to get a Danish friend to speak with you in Danish by contacting Røde Kors, Dansk Flygtningshjælp or Venligborgerne
What is the Business Model Canvas (BMC)?
The Business Model Canvas or BMC is a way of telling the story of your business in a handy A4 sized diagram. The diagram shows 9 sectors that anyone starting a business should be able to describe. That is why we called the project 9 Conversations. The word model is used because you should be able to explain how each sector of the picture relates to the others.
Find out more about what the Business Model Canvas is in this video (German and Italian subtitles are available by clicking on the cog icon in the bottom right hand side).
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