Closure of Danish business

Deciding to close a business is a big step and takes careful planning to get right. Whatever the reason behind the decision, there are plenty of formalities and legal steps to make sure everything’s by the book. We're here to help guide you through each step, making sure you stay on track with all the rules and requirements in Denmark.

Liquidation of a company in Denmark: reasons and procedures

There are many reasons why a business might close, and they usually fall into a few main categories. Sometimes, the owner decides to close up shop; other times, it happens without their direct say.

In Denmark, common reasons for closing a business include bankruptcy (initiated by the company or a creditor), voluntary closure (shareholders' decision), liquidation by shareholders’ declaration, restructuring, or court-ordered liquidation.

Before declaring bankruptcy, the company needs to go through legal proceedings, which can be filed by either the company itself or a creditor. Bankruptcy often comes down to liquidity issues.

A company can liquidate on its own as long as it’s solvent—that is, its assets are worth more than its debts. The decision to liquidate must be announced publicly, giving creditors at least three months to file any claims. Dissolving a limited liability company, just like voluntary liquidation, can take a while. However, when the closure is based on shareholders’ declaration, there’s no need to wait three months for creditors to step forward.

Restructuring can be a way to avoid bankruptcy proceedings, with a court-appointed restructurer to oversee the process.

If a business is closed without the owner's involvement, it’s usually because of a court order. Common reasons for this include resignation of the Managing Director, delayed submission of the annual report, or lack of a mandatory audit following an auditor’s resignation.

When a court orders a company’s dissolution, it appoints a liquidator to assess the financial situation. If the company turns out to be insolvent, bankruptcy proceedings will start. But if it’s still liquid, it’ll simply be closed down.

Not fulfilling obligations means shareholders will be left to cover any debts, so it's essential to handle all paperwork and pay all taxes and obligations on time.

If the entrepreneur decides to reopen the business later, they’ll still have the same CVR number.

Procedure for closing a company in Denmark

Closing a company in Denmark comes with a checklist of administrative and legal steps.

1. It starts with formally deciding to close up—partners make the call for a company, or the owner does for a sole proprietorship.
   
   
2. It’s important to confirm that there are no loose ends with customers, suppliers, employees, or authorities.
   
   
3. You’ll need to let the relevant authorities know about the closure, such as:
   - The Tax Authority (SKAT),
   - The Central Commercial Register (CVR).
   
   
4. For companies, the liquidation process usually means:
   - putting together a liquidation balance sheet,
   - doing a liquidation audit (if needed),
   - distributing whatever’s left after covering liabilities.
   
   
5. You’ll also report the liquidation to the Danish Enterprise Authority (Erhvervsstyrelsen), which can be done online.
   
   
6. Danish regulations require keeping company records for a while—typically five years.
   
   
7. Finally, close out any bank accounts tied to the company, and let suppliers, customers, and business partners know that business is over. And, of course, double-check that all taxes are paid.
   
   

Our help with closing a company in Denmark

The complexity of the process of closing a company is due to the many stages that must be passed through. It is crucial to follow this procedure in the right order. This will allow you to maintain access to online systems and help you avoid future burdens related to taxes, duties or other fees.

For both a company and a sole proprietorship, we will ensure that all key steps are completed. Key steps include:

1. Filling out the closing form.
   Formally closing the business and obtaining a certificate of closure, which may be useful in the future, such as with a bank or unemployment insurance fund.
   
   
2. Both the payment of taxes and ensuring the timely filing of reports for all periods up to the date of the company's closure are extremely important. Delay in filing them can carry a penalty of up to DKK 800. It is important to file the final report, even if the amount for the period is DKK 0. VAT, payroll, taxes, payrolls, excise taxes and other tributes and benefits to the Danish state must be settled before closing the business.
   
   
3. Verification of the company's tax account is essential before closing the business. You should log on to Skattekonto to check the status of reports and payments. This is where you can verify that everything is in order. This will help ensure that all required filings have been made, which will help avoid excessive payments of taxes, such as VAT or A-skat, once the business is closed.
   
   
4. Making tax payments is crucial before closing your business. It is important to make sure that reports for all periods up to the date of liquidation have been filed on time, as a delay can carry a penalty of up to DKK 800. It is also necessary to file a final report, even if the value for the period is DKK 0. Settlement of VAT, payroll, taxes, payrolls, excise taxes and other tributes and benefits to the Danish state is necessary before winding up the company.
   
   
5. Preparing the oplysningskema and the skatteregnskab are key steps that need to be completed before closing the company. It is necessary to calculate the company's profit and loss and prepare a tax return for the period from January 1 to the closing date. The profit or loss balance sheet should include items that are taken out of the company or sold to others, such as computers, inventory, furniture, cars or machinery. It is worth remembering that the result on the oplysningskema can be declared only in the year following the closing of the business, and the deadline is July 1. Exceeding the deadline carries a penalty of 200 kr for each day of delay, with a maximum penalty of up to 5,000 kr.
   
   
6. Maintaining access to the company's Digital Post after the company closes is important. When a company is liquidated, NemID is deactivated, which means losing access to Digital Post. Nevertheless, messages can still be sent to the company's Digital Post even after the business is closed. That's why it's a good idea to properly set up access before closing your business, so that you can use your company's digital post after the end of business.
   
   
7. Adjustment of the advance declaration is necessary after the closure of the business. In order to pay the correct tax on an ongoing basis, you should adjust the profit in your tax return.