Denmark Branch Office

A branch is one way for a company to set up a business in Denmark. Opening a branch has many drawbacks, mainly that the foreign parent carries full liability for the branches operations and that lengthy and complicated dealings with the tax authorities may be needed regarding the branches tax obligations.

The disadvantages of a branch office are:

  • The parent company is fully liable for the liabilities of the branch
  • The branches representatives may be held jointly and severally liable for tax debts
  • The financial statements of the parent must be lodged at the Companies Registry
  • The branches obligations are the same as the parent, including filing VAT returns, employees returns and corporation tax returns, so there are few savings in administering a branch
  • Banks and clients may prefer dealing with a Denmark company rather than a foreign branch
  • A branch is rarely ideal for substantial projects because the parent company runs the entire risk
  • Upon registration of a branch, evidence has to be provided of the legal existence of the parent
  • Any public act by the branch, is likely to need ratification by the board of the foreign parent. A company that signs contracts in front of a notary on a regular basis, should incorporate for administrative ease

The advantages are:

  • Less obligations to present accounts than with corporations

Features of a branch office in Denmark

A branch is usually an adequate vehicle for low cost projects. However, it is not the ideal choice for substantial projects because the parent company and branch offices activities are not differentiated, the parent company is fully liable for the branches liabilities.

From a tax point of view, branches are permanent establishments of non-resident companies and a Denmark branch is not a separate legal company from its parent.

The branch must have the same name as the parent company.

A branch of a non-resident company must appoint a resident individual or a company to represent it in its dealings with the tax authorities. The representatives may be held jointly and severally liable for the tax debts of the permanent establishments of non-resident entities, which they represent.

To register a branch, evidence has to be provided of the existence of the parent, certified copies of the Articles or Statues, the names of the directors, the share capital, the registered office, and the names of the representatives who will act for you.

Various documents will need to be translated, the documents include:

  • Parent’s registration certificate
  • Company’s articles of association
  • Names of the company’s directors and secretary

Foreign company requirements

Only business from countries where Danish businesses may open a branch can open a branch in Denmark. This includes all companies from an EU or EAA country, the USA and Australia; businesses domiciled in all other countries must submit a reciprocity statement.

Branch Managers

A branch manager must be able to legally commit to the branch and is personally responsible for the statutory obligations that apply to the branch under Danish law., e.g. complying with the Danish Companies Act and the Private Limited Companies Act. They must also submit the foreign parent company’s annual report, file tax returns, pay PAYE and comply with customs laws etc.

The branch and the branch manager are subject to the rules of the Danish Company Accounts Act regarding deadlines and fees designed to regulate behaviour.

Regular duties of branches to the Danish Commerce and Companies Agency

Submitting the parent company’s annual report or exemption statement.

Reporting any changes to circumstances previously notified, including changes to the statutes of the parent company.(The notification must include documentation as per the original notification).

The Danish Commerce and Companies Agency must be notified within 2 weeks if the foreign parent company becomes bankrupt or is placed under administration etc.

After your branch is registered

All stationery, order forms and similar documents used by your branch are required to show:

  • The place of registration of the parent
  • The number with which it is registered
  • The legal classification of the company
  • The address of its registered office
  • The place of registration of the branch, and its registration number

Also the following particulars must be shown at the branch office:

  • The company name
  • The name of the country in which the company is incorporated
  • The parent of the branch has limited liability
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