Two choices dominate

Most people starting a business in Denmark choose between two structures: a sole trader (enkeltmandsvirksomhed) or a private limited company (anpartsselskab, ApS). The choice significantly affects your personal liability, your tax situation, and how much administration you take on.

Neither is inherently better — it depends on your situation.

Sole trader — simple and free

A sole trader is the simplest structure. Register on Virk.dk with your MitID, answer a few questions, and you typically receive your CVR number within two weeks. It costs nothing.

Advantages: Free and quick to set up (15–30 minutes); no capital requirement; no annual report to file with the Business Authority; profits go directly to you; you can use the business tax scheme (virksomhedsskatteordning) to retain profits in the business at a preliminary 22% tax rate.

Disadvantages: Unlimited personal liability — your home, car, and savings are all at risk if the business incurs debt. Profits taxed as personal income — up to approximately 56% at higher incomes. Hard to bring in investors or sell the business.

PMV (personligt ejet mindre virksomhed): A simplified sole trader form for the very smallest activities — turnover capped at 50,000 DKK, no employees, no VAT registration.

ApS — limited liability, more administration

An ApS is a separate legal entity. It owns its own assets and is liable for its own debts. As owner, you are generally only liable up to your invested capital — your personal assets are protected.

Advantages: Limited liability — your personal finances are protected. Corporate tax of 22% on profits (rather than up to 56% as personal income). Easier to bring in investors or co-owners. More credible to certain clients and partners.

Disadvantages: Minimum capital of 40,000 DKK. Registration fee of 670 DKK. Annual report required (and in some cases an auditor). More complex administration: you must pay yourself a salary, follow dividend rules, and maintain proper bookkeeping.

Important: Money in the company is not yours personally. You pay yourself a salary (taxed as personal income) or dividends (under specific rules). You cannot simply withdraw money from an ApS the way you can from a sole trader.

When to choose what?

Choose a sole trader if you're starting as a freelancer or consultant with low financial risk, testing an idea with minimal admin burden, or working alone without plans to scale significantly.

Choose an ApS if you're investing in equipment or inventory that creates debt risk, want to protect your personal finances, expect high turnover and want to benefit from 22% corporate tax, or anticipate bringing in investors or co-owners.

You can always start as a sole trader and convert to an ApS later — many successful businesses take exactly this path.

Registration costs

| | Sole trader | ApS | |---|---|---| | Registration fee | Free | 670 DKK | | Minimum capital | None | 40,000 DKK | | CVR number | Yes | Yes | | Processing time | Up to 2 weeks | Typically 1–2 days |