Foreign businesses wishing to enter the Danish market have many options; from a low commitment digital presence to full incorporation of a Danish company. Denmark is an attractive market with stable conditions and high spending consumers, but also a market with detailed regulations and high consumer expectations. Below is an overview of the most common establishment models, from the least to the most comprehensive.
1) Danish webshop: pure digital presence
The least committing way to test the Danish market is to set up a webshop and target marketing towards Danish customers.
As long as the business has no physical presence in Denmark, this does not trigger registration with the Danish Business Authority or Danish tax liability. However, the business must still comply with Danish legislation such as the Consumer Contracts Act, the Sale of Goods Act, the E commerce Act, the Marketing Practices Act, and Danish data protection rules.
VAT rules are often the biggest practical challenge, as sales to Danish private customers may quickly trigger the obligation to use the One Stop Shop (“OSS”) scheme or register for Danish VAT. Many foreign businesses are also surprised by Danish consumers’ high expectations regarding delivery, returns, and customer service.
2) E commerce via dropshipping: market access without own infrastructure
A closely related model is selling to Danish customers through platforms such as Amazon, Zalando or Shopify.
Legally, the same rules apply as for your own website, but practically it is often easier to handle logistics, payments and returns through the platform’s systems.
The challenge is that Danish customers expect fast delivery and easy returns, and platforms often require Danish VAT registration or OSS-registration.
Consumer rights etc. still follow Danish law, and warranty rules are strictly enforced.
3) Agent, commissionaire or distributor: local access without own operations
(A) Agent: acts on behalf of the business
An agent represents the foreign business directly and acts on its behalf.
Agency agreements are regulated by the Danish Commercial Agents Act, which grants the agent strong rights, including compensation upon termination. Some parts of the Act can be derogated from in the agreement.
The agent may negotiate or conclude agreements that bind the foreign business directly.
The foreign business fulfils the agreement directly towards the Danish customer. This authority to bind the business often triggers Danish tax liability. A foreign business becomes taxable in Denmark if the agent has or in practice exercises authority to conclude binding agreements.
Even without formal authority, the foreign business may become taxable if the agent effectively acts as the company’s extended arm in Denmark.
Therefore, the agency model carries a significant likelihood of Danish tax liability.
(B) Commissionaire: acts in own name but on behalf of the business A commissionaire acts in its own name but on behalf of the foreign business. The arrangement is regulated by the Danish Commission Act and is a hybrid between agent and distributor.
The Danish customer contracts with the commissionaire, after which the foreign business fulfils the agreement towards the commissionaire. The underlying foreign business is therefore “hidden” from the Danish end customer.
The risk of Danish tax liability is not insignificant. If the commissionaire effectively has authority to bind the foreign business, is closely integrated into its sales organisation, or if the business has physical presence at the commissionaire’s premises, Danish tax liability may arise.
(C) Distributor: acts in own name and for own account
A distributor purchases products from the foreign business and resells them in its own name and for its own account.
The distributor is an independent operator, and distribution does not normally trigger Danish tax liability for the foreign business.
4) Posting of employees: temporary work with Danish requirements
Posting of workers is common in construction, installation and consultancy.
The Posting of Workers Act requires, among other things, that employees receive Danish minimum terms, and the business must register in the RUT register and, where relevant, obtain Danish authorization. Social security typically requires an A1 certificate.
If posted employees work regularly in Denmark, stay for extended periods, or perform activities that constitute a significant part of the foreign business’s core operations, their presence may trigger Danish tax liability.
In practice, RUT registration is one of the most overlooked obligations. Occupational health and safety requirements are detailed and require preparation.
5) Joint venture or strategic partnership: shared control and local anchoring
A joint venture can be an effective market entry, especially in industries with high entry barriers such as medtech, fintech or industrial services.
Denmark has no specific joint venture legislation, so a detailed contractual framework is required covering governance, authority, dispute resolution, capital contributions, IP rights, allocation of revenue & costs, and exit mechanisms.
In practice, the biggest challenge is ensuring a stable cooperation between Danish and foreign businesses, as cultural differences in management style and decision making can create friction.
6) Franchise: market access through concept licensing
Franchising is relevant for retail, services and hospitality. Denmark has no specific franchise act, so — as with joint ventures — a detailed franchise agreement is required.
The franchisor must ensure that the franchisee follows the concept while respecting Danish rules on business autonomy.
In practice, franchising requires a strong contractual framework, a robust control system and ongoing support. Poor performance by one franchisee can damage the entire brand.
7) Branch / permanent establishment: physical presence without a separate company When the foreign business operates through a fixed physical presence in Denmark, a permanent establishment arises, and the business must register a branch with the Danish Business Authority.
The branch must have a Danish address where authorities can contact it. A branch manager must be appointed with authority to enter into agreements on behalf of the foreign company.
A branch is not a separate legal entity but part of the foreign parent company, which is directly liable for the branch’s obligations.
The foreign business becomes taxable in Denmark on income attributable to the branch. The branch must keep accounts, prepare financial statements and report Danish taxable income and VAT.
In practice, a branch requires almost the same administration as a Danish company, but without the benefit of limited liability.
It is also possible to register a Danish branch without Danish tax liability. Danish tax liability depends on whether the foreign business’s activities in Denmark constitute a permanent establishment.
8) Incorporation of an ApS or A/S: full Danish company establishment
The most comprehensive form is incorporating a Danish limited liability company. An ApS requires DKK 20,000 in share capital, while an A/S requires DKK 400,000. An ApS generally offers the same advantages as an A/S, although an ApS is prohibited from offering its shares to the public.
Share capital is an equity reserve that cannot be distributed to owners but may be invested in other assets. The key requirement is that equity must always at least be equal the share capital. If more than half the share capital is lost, management has a duty to act.
The company is incorporated with a foundation document, articles of association, shareholder register, registered director and a bank account with documented paid in capital. The company must have a Danish address where authorities can contact it. The registered director may reside abroad, however this may have tax implications in the director’s home country.
The company is taxed at 22% under the Danish Corporation Tax Act and must file annual financial statements under the Danish Financial Statements Act. Smaller companies meeting thresholds for balance sheet, net turnover and average number of employees may opt out of audit.
In practice, operations are the biggest challenge, as a Danish company requires ongoing bookkeeping, VAT reporting, filing of financial & tax statements, payroll administration and contact with authorities.
Ready to enter the Danish market? I handle the entire setup. From first digital presence to full Danish establishment.
Contact me when you’re ready for the next step.
lebechlaw@pm.me / +45 22 42 87 83
The least committing way to test the Danish market is to set up a webshop and target marketing towards Danish customers.
As long as the business has no physical presence in Denmark, this does not trigger registration with the Danish Business Authority or Danish tax liability. However, the business must still comply with Danish legislation such as the Consumer Contracts Act, the Sale of Goods Act, the E commerce Act, the Marketing Practices Act, and Danish data protection rules.
VAT rules are often the biggest practical challenge, as sales to Danish private customers may quickly trigger the obligation to use the One Stop Shop (“OSS”) scheme or register for Danish VAT. Many foreign businesses are also surprised by Danish consumers’ high expectations regarding delivery, returns, and customer service.
2) E commerce via dropshipping: market access without own infrastructure
A closely related model is selling to Danish customers through platforms such as Amazon, Zalando or Shopify.
Legally, the same rules apply as for your own website, but practically it is often easier to handle logistics, payments and returns through the platform’s systems.
The challenge is that Danish customers expect fast delivery and easy returns, and platforms often require Danish VAT registration or OSS-registration.
Consumer rights etc. still follow Danish law, and warranty rules are strictly enforced.
3) Agent, commissionaire or distributor: local access without own operations
(A) Agent: acts on behalf of the business
An agent represents the foreign business directly and acts on its behalf.
Agency agreements are regulated by the Danish Commercial Agents Act, which grants the agent strong rights, including compensation upon termination. Some parts of the Act can be derogated from in the agreement.
The agent may negotiate or conclude agreements that bind the foreign business directly.
The foreign business fulfils the agreement directly towards the Danish customer. This authority to bind the business often triggers Danish tax liability. A foreign business becomes taxable in Denmark if the agent has or in practice exercises authority to conclude binding agreements.
Even without formal authority, the foreign business may become taxable if the agent effectively acts as the company’s extended arm in Denmark.
Therefore, the agency model carries a significant likelihood of Danish tax liability.
(B) Commissionaire: acts in own name but on behalf of the business A commissionaire acts in its own name but on behalf of the foreign business. The arrangement is regulated by the Danish Commission Act and is a hybrid between agent and distributor.
The Danish customer contracts with the commissionaire, after which the foreign business fulfils the agreement towards the commissionaire. The underlying foreign business is therefore “hidden” from the Danish end customer.
The risk of Danish tax liability is not insignificant. If the commissionaire effectively has authority to bind the foreign business, is closely integrated into its sales organisation, or if the business has physical presence at the commissionaire’s premises, Danish tax liability may arise.
(C) Distributor: acts in own name and for own account
A distributor purchases products from the foreign business and resells them in its own name and for its own account.
The distributor is an independent operator, and distribution does not normally trigger Danish tax liability for the foreign business.
4) Posting of employees: temporary work with Danish requirements
Posting of workers is common in construction, installation and consultancy.
The Posting of Workers Act requires, among other things, that employees receive Danish minimum terms, and the business must register in the RUT register and, where relevant, obtain Danish authorization. Social security typically requires an A1 certificate.
If posted employees work regularly in Denmark, stay for extended periods, or perform activities that constitute a significant part of the foreign business’s core operations, their presence may trigger Danish tax liability.
In practice, RUT registration is one of the most overlooked obligations. Occupational health and safety requirements are detailed and require preparation.
5) Joint venture or strategic partnership: shared control and local anchoring
A joint venture can be an effective market entry, especially in industries with high entry barriers such as medtech, fintech or industrial services.
Denmark has no specific joint venture legislation, so a detailed contractual framework is required covering governance, authority, dispute resolution, capital contributions, IP rights, allocation of revenue & costs, and exit mechanisms.
In practice, the biggest challenge is ensuring a stable cooperation between Danish and foreign businesses, as cultural differences in management style and decision making can create friction.
6) Franchise: market access through concept licensing
Franchising is relevant for retail, services and hospitality. Denmark has no specific franchise act, so — as with joint ventures — a detailed franchise agreement is required.
The franchisor must ensure that the franchisee follows the concept while respecting Danish rules on business autonomy.
In practice, franchising requires a strong contractual framework, a robust control system and ongoing support. Poor performance by one franchisee can damage the entire brand.
7) Branch / permanent establishment: physical presence without a separate company When the foreign business operates through a fixed physical presence in Denmark, a permanent establishment arises, and the business must register a branch with the Danish Business Authority.
The branch must have a Danish address where authorities can contact it. A branch manager must be appointed with authority to enter into agreements on behalf of the foreign company.
A branch is not a separate legal entity but part of the foreign parent company, which is directly liable for the branch’s obligations.
The foreign business becomes taxable in Denmark on income attributable to the branch. The branch must keep accounts, prepare financial statements and report Danish taxable income and VAT.
In practice, a branch requires almost the same administration as a Danish company, but without the benefit of limited liability.
It is also possible to register a Danish branch without Danish tax liability. Danish tax liability depends on whether the foreign business’s activities in Denmark constitute a permanent establishment.
8) Incorporation of an ApS or A/S: full Danish company establishment
The most comprehensive form is incorporating a Danish limited liability company. An ApS requires DKK 20,000 in share capital, while an A/S requires DKK 400,000. An ApS generally offers the same advantages as an A/S, although an ApS is prohibited from offering its shares to the public.
Share capital is an equity reserve that cannot be distributed to owners but may be invested in other assets. The key requirement is that equity must always at least be equal the share capital. If more than half the share capital is lost, management has a duty to act.
The company is incorporated with a foundation document, articles of association, shareholder register, registered director and a bank account with documented paid in capital. The company must have a Danish address where authorities can contact it. The registered director may reside abroad, however this may have tax implications in the director’s home country.
The company is taxed at 22% under the Danish Corporation Tax Act and must file annual financial statements under the Danish Financial Statements Act. Smaller companies meeting thresholds for balance sheet, net turnover and average number of employees may opt out of audit.
In practice, operations are the biggest challenge, as a Danish company requires ongoing bookkeeping, VAT reporting, filing of financial & tax statements, payroll administration and contact with authorities.
Ready to enter the Danish market? I handle the entire setup. From first digital presence to full Danish establishment.
Contact me when you’re ready for the next step.
lebechlaw@pm.me / +45 22 42 87 83
