How to Register a Sole Proprietorship (Enkeltmandsvirksomhed) in Denmark

Denmark embraces entrepreneurship, and setting up a sole proprietorship—called an enkeltmandsvirksomhed—is a straightforward path for independent contractors. You can start quickly, maintain full control, and benefit from minimal bureaucracy. The main trade‑off? You assume full personal liability for your business. The biggest benefits are simplicity, speed, and low upfront costs.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult official sources or professional advisors before proceeding.

What is a sole proprietorship in Denmark?

In Denmark, a sole proprietorship (enkeltmandsvirksomhed) means there is no legal distinction between the business and you, the owner. You retain all profits and bear all risks. It’s governed by the Danish Commercial Code and commonly used by freelancers, consultants, and small-scale entrepreneurs.

How does a sole proprietorship work in Denmark?

Sole proprietorship vs private limited company (ApS) in Denmark

Choosing between a sole proprietorship and an ApS (private limited company) depends on your business needs. Here's how they compare:

Step-by-step guide: how to register as a sole proprietor in Denmark

Step 1: Check your residence status

You must be at least 18 and have legal residence (EU/EEA citizens typically qualify; non-EU citizens need a residence permit).

Step 2: Obtain NemID (Digital Identity)

To register online, you need MitID (a secure digital signature) and a CPR number (personal ID). You can get MitID through banks, citizen service centers, or online if you have a Danish ID or driving license.

Step 3: Choose your business name

Pick a unique name not already in use or too similar to existing businesses. Avoid regulated terms like “bank” or “insurance.”

Step 4: Register via Virk.dk

Log in to the Danish Business Authority’s portal (Virk.dk), fill out your details, and submit your application. You’ll receive a CVR number, which is used for invoicing, taxes, and interacting with authorities.

Step 5: VAT registration (if applicable)

If you expect to earn over DKK 50,000 within 12 months, you must register for VAT (25%). Registration is done through SKAT, the Danish Tax Authority, during the Virk.dk process.

Step 6: Open a business bank account

Although not mandatory, it’s recommended to keep your personal and business finances separate. Use your CVR number and registration documents to open an account.

Step 7: Maintain accounting and compliance

You don’t publish annual statements, but you must keep detailed records of invoices and expenses in line with the Danish Bookkeeping Act.

Taxes are filed annually—business profits are reported on your personal tax return. If VAT registered, file VAT returns quarterly or per SKAT’s schedule.

Financial and tax obligations for sole proprietors in Denmark

• Income tax: Profits are taxed as personal income. You first pay an 8% labour market contribution, after which Denmark’s progressive state and municipal taxes apply. Returns are filed annually with SKAT.
• VAT (Moms): If turnover exceeds DKK 50,000 in 12 months, you must register for VAT at 25%. VAT returns are usually filed quarterly, and voluntary registration is possible if you want to deduct input VAT.
• Social contributions: Sole proprietors don’t contribute to social schemes for themselves beyond regular taxes. If you employ staff, you must register as an employer and pay contributions such as ATP (pension) and holiday pay.
• Bookkeeping: You must comply with the Danish Bookkeeping Act—keeping all invoices, receipts, and expense records for at least five years. These records are needed for your tax return and potential audits.
• Annual tax return: Business profits are reported as part of your personal income tax return. Deductible expenses, such as office costs or equipment, can reduce your taxable income.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
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• Spend your earnings in USD with the Deel Card
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• Enjoy contractor perks from 150+ partners

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FAQs

What is the minimum capital required to start an enkeltmandsvirksomhed in Denmark?
There is no minimum capital requirement. Unlike a private limited company (ApS), you don’t need to deposit share capital. Registration is free through Virk.dk.

Do enkeltmandsvirksomheder need to register for VAT?
Yes, if your turnover exceeds DKK 50,000 in a 12-month period. The VAT rate is 25%, Denmark’s standard rate (Skat.dk).

How much are the standard monthly or annual contributions?
There are no fixed contributions for running a sole proprietorship. Your obligations are income tax, labour market contributions (8%), and VAT if applicable. Tax is paid annually, with instalments depending on your assessed income.

Can an enkeltmandsvirksomhed hire employees?
Yes. If you employ staff, you must register as an employer with SKAT and pay payroll taxes, social contributions, and withhold income tax (PAYE).

How long does it take to register as an enkeltmandsvirksomhed in Denmark?
Usually just a few days. If you already have NemID (MitID) and a CPR number, you can register through Virk.dk and get your CVR number almost immediately.

Can foreign nationals register as an enkeltmandsvirksomhed in Denmark?
Yes, if you have the right to reside and work in Denmark. EU/EEA citizens can register freely, while non-EU citizens need a valid residence and work permit (Udenrigsministeriet).

Do enkeltmandsvirksomheder need a separate business bank account?
Not legally required, but strongly recommended. A separate account simplifies bookkeeping and tax filing, and many banks request a CVR number to open one.

What happens if I stop working as an enkeltmandsvirksomhed?
You can de-register your business and VAT through Virk.dk. You must also settle any outstanding taxes and file a final return with SKAT.

Are there any government incentives or reduced rates for new enkeltmandsvirksomheder?
There are no special tax breaks, but being registered gives you access to government programs, tenders, and financing options. Some municipalities also offer small business advisory services.

Can I use Deel as an enkeltmandsvirksomhed to get paid by international clients?
Yes. Deel lets you receive payments globally in multiple currencies, with low fees and transparent exchange rates.

Does Deel generate compliant invoices for enkeltmandsvirksomheder?
Yes. Deel automatically creates invoices that comply with Danish legal and tax standards, including VAT where applicable.

Can Deel help me with taxes as a sole proprietor in Denmark?
Yes. Deel provides downloadable payment records and tax reports that make it easier to file returns with SKAT, though it does not replace an accountant.

Does Deel offer contracts for freelancers and enkeltmandsvirksomheder?
Yes. Deel includes Danish-compliant contract templates so you can safely work with local or international clients.

Can I access benefits through Deel as an enkeltmandsvirksomhed?
Yes. Deel offers optional perks like health insurance, retirement plans, and other benefits often reserved for employees, giving freelancers more security.