Branch of Foreign Limited Liability Companies

A foreign company can conduct business in Denmark by either establishing a subsidiary or by carrying out business directly through a local branch. And any foreign public limited liability company (A/S), private limited liability company (ApS), or limited partnership company (P/S) (or any company with a similar legal form) has immediate access to establish a branch in Denmark.

Let’s walk you through the establishment and management of local branches in Denmark.

Subsidiaries and branches in Denmark.

It is important to know that branches in Denmark are regulated by the Danish Companies Act and that a branch cannot start doing business until registration or notification to The Danish Business Authority has taken place. If this registration is not approved by the Danish Business Authority, then the branch cannot carry out business in Denmark.

When to register a branch in Denmark.

Not all business activities come with an obligation to establish a branch in Denmark. The Danish Business Authority lists the following activities as not being covered by the obligation to establish a branch:

  Purely taking orders where invoicing etc. takes place in and from the home country.
  Stand-alone works or other stand-alone business of limited duration in relation to a specific contracting party.
  Acquisition of Danish products through a resident intermediary.
  Work of a purely administrative nature, such as market preparation.

However, it should be noted that this will always be assessed on a case-by-case basis. So, the foreign company has the liability of assessing whether a branch must be established according to the rules.

The overall presumption from The Danish Business Authority is that a branch must be established, if:

  The activity is of a certain scope.
  The activity is run from premises in Denmark.
  Invoicing happens from a Danish address.
  Any complaints can be directed to a Danish address.

Branches in Denmark

How to name a branch in Denmark.

The Danish Companies Act sets out the requirements for how to name a branch in Denmark. And here, the name must include:

  The word ‘filial (af)’, meaning branch (of) – note that only the Danish word is allowed.
  The name of the parent company.
  The nationality or country of origin of the parent company in Danish.

The name must not include the Danish equivalent of the company type. This is to avoid confusion about whether it is a Danish company or a branch. Furthermore, it is not allowed to use names that are already in use for an existing Danish company.

So, an example of a branch name in Denmark could be: Company Denmark, filial af Company  AB, Sverige.

Management of the Danish branch.

First, the branch is required to be run by one or more branch managers who are employed by the parent company. A branch manager has the power to bind the branch in full. In other words, a branch manager must have unlimited Power of Attorney from the parent company to act on behalf of the branch, and by that commit the parent company.

In the Danish Companies Act, there are no limitations to the branch manager’s role in the parent company. This means that the branch manager can also hold an executive position or be authorized to sign on behalf of the parent company simultaneously to being the manager. The branch manager does not have to be living in Denmark.

Obligations of the branch.

The branch manager is responsible for fulfilling the obligations of the branch – of course in accordance with Danish law. So, when establishing a branch in Denmark the branch and the branch manager will need to get familiar with the Danish Companies Act to stay compliant. Furthermore, a branch in Denmark is required to do the following:

File the annual report of the parent company.
File tax returns.
Pay withholding tax.
Comply with custom regulations.

Besides complying with the Danish Companies Act, the branch and the branch manager will also be subject to the rules in the Danish Financial Statements Act. This means that filing the annual report of the parent company must be done in compliance with the Danish filing deadlines and requirements.

The deadline for filing the annual report in Denmark is 6 months after the end of your financial year. So, even if the parent company has a longer filing deadline in its origin country, the approved annual report of the parent company must be filed within 6 months in Denmark. Otherwise, the branch manager will be fined in accordance with the Financial Statement Act and the branch will risk being deleted, meaning that its activities cannot continue.

Want to know more?

We hope that you are now a little more informed about the circumstances related to opening a branch in Denmark.

Do not hesitate to reach out, if you want more information about managing the different company types in Denmark.

At mighty admins, we can assist you with:

Company formations and A-Z compliance assistance.

Creating annual wheels for you, so you never miss a filing or payment deadline.

Domiciliation and registered address at up to 25% discount compared to other providers.

Registered Branch Manager.

… And much more!

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