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DOING
BUSINESS
IN DENMARK
Doing business in Denmark 2007 1-13 Copyright Attorney Eli Heckscher
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DOING BUSINESS IN DENMARK
ADVOKATKONTORET ELI HECKSCHER
STENLØSE, DENMARK
FOREWORD
The purpose of this brochure is to provide basic information to readers about laws, customs, local
business, conditions and practices in Denmark. The brochure does not aim to exhaustively cover
all the legal aspects of Danish business practice. It is intended to shed light on rules and
regulations and important information necessary to know in advance of planning and negotiating a
business venture in Denmark. When dealing with specific problems, it will often be necessary to
refer in detail to laws, regulations and decisions applicable under Danish law.
We have made a choice based on our experience of some of the questions a businessman would
ask him-/herself before coming to Denmark in order to plan and carry out the installation of a
business enterprise: either the negotiation of a commercial form of representation and an agency
contract or the setting up of a new business structure by creating a legal entity which will lease
premises and employ personnel.
Included is information relevant to commercial litigation, labour litigation and taxation.
This brochure may be read during the flight to Copenhagen, thus allowing the businessman on
route to Copenhagen to meet his legal advisers to save time by having oriented his commercial
market approach with his Danish pr in advance.
The brochure limits itself to a legal analysis and any further information of an economic or
commercial nature or an analysis of other sectors of activity should be obtained elsewhere such as
at the Embassies or the “ Invest in Denmark” whose role is to provide the documentation
necessary for foreign investors. Their excellent documentation, is provided in English and several
other languages at www.investindk.com
Stenløse February 2007
Eli Heckscher
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DOING BUSINESS IN DENMARK
1. Introduction ...................................................................................................................... 4
1.1 General
1.2 Legal Framework
2. Establishing a Business Entity ...................................................................................... 4
2.1 Private Limited Company (Anpartsselskab)
2.1.1 Formation Procedures
2.1.2 Corporate Governance
2.1.2.1 The General Meeting of Shareholders
2.1.2.2 The Board of Directors
2.1.2.3 Managing Director
2.1.3 Company Assets
2.1.4 Accounting
2.1.5 Taxation
2.2 Branch
2.3 Trading Partnerships
3. Labour Market .................................................................................................................. 7
3.1 Introduction
3.2 Labour Law
3.2.1 Collective Labour Law
3.2.2 Conditions of Employment
4. Taxation ............................................................................................................................ 9
4.1 Introduction
4.2 Income from Employment
4.3 Income from Capital
4.3.1 Taxes and Fees
4.4 Income from Business Activities
4.5 Value Added Tax
4.5.1 Tax Liability
4.5.2 Tax Rates
4.5.3 Formal Regulations
4.6 Excise Duties
4.6.1 Tax on Fuel
4.6.2 Tax on Electric Power
4.6.3 EU Harmonisation Within Certain Areas
4.7 Social Security Contributions
4.8 Real Estate Taxation
5. The Legal Profession....................................................................................................... 12
5.1 General
5.2 Professional Conduct
5.3 Litigation
5.4 Responsibility
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1. INTRODUCTION
1.1 GENERAL
There are several advantages in doing business in Denmark. Establishing in Denmark provides
access to the EU’s Single Market, a strategic position in the Baltic Sea Region, state-of-the art
technology and a competitive cost structure. Executives in Denmark particularly appreciate the low
corporate taxation, a strong industrial tradition, the competence of the work force and Denmark’s
advanced infrastructure, not least in the area of information and communications technology.
Thanks to strong productivity growth, increased competition and currency adjustments, Denmark
today offers one of the most competitive costs-structure in the EU.
The Danish workforce’s high level of education and competence are the factors most often cited by
foreign companies when asked about the advantages of the Danish business environment. Against
this background, it may be surprising to find that the cost of labour for Danish skilled personnel is
highly competitive.
1.2 LEGAL FRAMEWORK
The Danish legal system is based on written law, promulgated by acts of Parliament. The
Parliament enacts laws on the basis of governmental bills (lovforslag) that are prepared and
submitted to the Parliament. These governmental bills are an authoritative source to be used when
applying and interpreting the legislation in question. Another source of law to be used when
applying Danish law are court rulings, which forms precedents for the application of the legislation
in question.
There are three levels of public courts in Denmark: the district court (Byret), the court of appeal
(Landsret) and the supreme court (Højesteret).
In recent years many areas of Danish law have been harmonized with applicable EC law.
2. ESTABLISHING A BUSINESS ENTITY
There are four basic legal forms for business ventures in Denmark: Self employed
(enkeltmandsvirksomhed), Public (limited) Company (Aktieselskab), Private Limited Company
(Anpartsselskab) and Branch of a Foreign Company (filial). The prospective businessman is free to
operate in the legal form of his choice. The choice of entity for conducting business in Denmark
should of course be made with a view to the commercial objective in question.
2.1 PRIVATE LIMITED COMPANY (ANPARTSSELSKAB)
2.1.1 FORMATION PROCEDURES
The competent authority in this area is the Danish Commerce and Companies Agency (Erhvervs-
og selskabsstyrelsen). The authority is charged with registering all types of companies. It maintains
a complete national registry of e.g.; annual reports, legal decisions, liquidations and other business
information. All information is available to the public.
The Private Limited Company (Anpartsselskab) (abbreviated ApS) is regulated mainly by the
Companies Act (Anpartsselskabsloven). A Private Limited Company (Anpartsselskab) may be
formed by one or more individuals or legal entities. The law imposes certain requirements on the
founders. The government may authorise other persons, legal or otherwise, as incorporators.
The incorporators must draw up an “instrument of incorporation” which must contain the time
period for notice of the first general meeting of shareholders, the constituent meeting, and a
proposal for “articles of incorporation” of the company. The “articles of incorporation” must contain
the “object(s)” of the company, setting out the nature of the company’s business operations. The
“articles” must also contain information on the name, location, share capital and members of the
board of the company.
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A Private Limited Company (Anpartsselskab) must have a share capital of 125.000 DKK (or equal
amount in €) and a Public (limited) Company (Aktieselskab) must have 500.000 DKK (or equal
amount in €). The main distinction between the different forms is that a private company cannot
turn to the general public for subscription to, or acquiring shares in the company. The share capital
may be provided for either with cash or property. Shareholder liability is restricted to the capital
invested. The company has to be formed by a decision on the first general meeting of shareholders
(the constituent meeting). All the shares must be subscribed to during the constituent meeting and
share capital paid in full, a decision may be made to incorporate the company without the need for
notice in advance of the constituent meeting. When the company has been formed, members of
the board and accountants have to be appointed.
In order to be registered the company the registrar of a company must submit either, depending on
the chosen form of payment, a statement that the required share capital has been deposited into a
special bank account on behalf of the company, or a certificate from a qualified auditor stating that
the share capital has been paid for with ”tangible assets”.
2 Company limited by shares.
3 Other terms are by-laws, articles of association or statutes.
The company acquires legal capacity on the date of registration. The founders will be jointly and
severally liable for any obligations that result as a consequence of measures taken on behalf of the
company before the company has acquired legal personality through registration.
Attorney Eli Heckscher will be happy to assist clients with the formation of limited liability
companies. Attorney Eli Heckscher who has the capacity as registrar will ensure that all legal
requirements are met and that the necessary documents are filed with the authorities. A company
in Denmark can be registered in less than 1 hour if the papers are drawn up before online
registration of a company. The fastest way in the world to register a company at present time.
2.1.2 CORPORATE GOVERNANCE
2.1.2.1 The General Meeting of Shareholders
Danish law provides for a hierarchical system with the general meeting of the shareholders at the
top. Since the shareholders own the company, it is ultimately vested in them to make the most
important decisions on behalf of the company. A general meeting of the shareholder must be held
once a year. The general meeting appoints the board of directors, decides on approval of statutory
and consolidated accounts, decides on provisions regarding retained earnings or deficit, decides
whether to discharge the board of directors and the managing director from responsibility for the
period covered by the approved accounts. The shareholders must also decide on other matters
that, according to law or the articles of incorporation, are incumbent upon the general meeting.
These matters include: amendments to the articles of incorporation, issues of new shares,
decisions on mergers and reduction of share capital. Finally, the general meeting can also address
issues of its choice and give directions to the board or the managing director.
2.1.2.2 The Board of Directors
ApS may have a board of directors. If no board of directors is required according to the statutes of
the company, one manager domiciled anywhere is sufficient. Members of the board are normally
appointed by the general meeting but other methods may be provided for in the articles of
incorporation. If the board has more than one member, decisions are made by majority, with the
chairman holding a casting vote.
The board of Directors is the main administrative body of the company. The management of the
day-to-day business of the company is handled by either the board of directors or the managing
director. The board has the power to represent the company vis-à-vis a third party. This power is
not without limit. There are legal limitations on which decisions the board can make. The board
cannot, for example, make decisions that are, by law, incumbent upon the general meeting. The
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board is responsible for the management of the company. The board has a fiduciary responsibility
toward the company in matters regarding management of the company and may be held liable
towards the company for any intentionally or negligently caused losses.
2.1.2.3 Managing Director
In a Private Limited Company (Anpartsselskab), the board must appoint a managing director. In a
private company, the board may appoint a director. The managing director is according to the
Companies Act charged with managing the daily business of the company in accordance with the
directions of the board. The legal authority of the managing director is, according to the Act, to
undertake measures in the day-to-day management of the company which, considering the scope
and the nature of the company’s operations, are of an ordinary nature. The authority of the director
can be extended by the board, provided this is in accordance with the articles of incorporation. The
authority of the managing director can also be extended through provision(s) in the articles of
incorporation. The director is by law allowed to represent the company vis-à-vis third parties in
matters that fall within his legal authority and the acts of the director will be binding upon the
company provided that they fall within the director’s legal authority. A director who, in carrying out
the business of the company, causes the company harm, either by intention or negligence, may be
held liable for damages.
It is of course of fundamental importance that the acts of the different ‘organs’ of the company are
legally valid, both in respect of the relationship between the different ‘organs’ and towards third
parties. Attorney Eli Heckscher will therefore be happy to provide assistance on questions
regarding the governance of companies.
2.1.3 COMPANY ASSETS
Since the shareholders only are liable to the extent of the capital invested, the Companies Act
contains rules for the protection of creditors. One basic rule is that the share capital must be kept
intact. Dividends may not be paid in excess of retained, taxed, profit as shown by the approved
statutory accounts. Decisions on dividends are made by the general meeting of shareholders, on
proposition by the board. The general meeting may not decide on amounts exceeding what the
board has proposed. The Act also contains prohibitions for the company to lend money to a person
who has, or intends to obtain, an interest in the company, i.e. to shareholders, members of the
board and managing director. This prohibition is subject to some exceptions. A company can lend
money to a subsidiary or to a debtor of the above mentioned categories, who conducts business
operations and the loan is motivated by sound business reasons and is intended to be used
exclusively for the borrower’s business. The share capital can be reduced under certain
circumstances. It the amount of share capital falls beneath a certain level, the company will be
faced with mandatory liquidation.
Attorney Eli Heckscher can provide advice and guidelines regarding the handling of the company’s
assets to ensure that the various legal requirements are met.
2.1.4 ACCOUNTING
A Private Limited Company (Anpartsselskab) must, according to the Act, have at least one
chartered or, depending on company size, authorised/certified auditor. An auditor is appointed by
the general meeting of shareholders. The auditor must have an independent position in relation to
the company.
2.1.5 TAXATION
A Private Limited Company (Anpartsselskab) is liable for income tax on all retained earnings. The
tax rate is currently 28% but it is expected to be lowered to 20% in the near future . Dividends paid
to the shareholders are regarded as income retained by the shareholder and will be taxed
accordingly if the shareholder is personally taxable in Denmark.
2.2 BRANCH
A foreign company may establish a branch in Denmark. A branch has neither share capital nor a
board of directors. It is not regarded as an independent legal entity but rather as a part of the
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foreign company that owns the branch. A foreign company may only have one branch in Denmark.
The branch is subject to Danish law and rulings by Danish authorities.
The managing director is responsible for the Branch and the foreign corporation must issue, to the
manager, all proxies and authorizations necessary for the operation of the branch, and for the
manager to represent the company.
The branch must maintain its own accounts, separate from the rest of the company. The accounts
must be audited by a chartered or authorized/certified accountant. The managing director is
responsible for filing copies of the annual accounts, for both the branch and the foreign company,
with the DCCA (Erhvervs- og Selskabsstyrelsen). The annual accounts of the foreign company
need only be filed if they are considered public documents in the company’s country of origin.
A branch will be taxable for profits made in Denmark. There is no withholding tax on profits sent to
the foreign company.
Attorney Eli Heckscher will of course be happy to provide guidance and advice regarding the
establishment of branches.
3. LABOUR MARKET
3.1 INTRODUCTION
The Danish labour market has a number of features that sets it apart from the rest of Europe.
These features include a highly skilled workforce. Further, the cost of skilled labour is competitive.
Other features include a highly developed communication infra structure and a labour market that
is stable and where conflicts are few and far between. The Danish labour force is well organised.
Approximately 70 % of the blue-collar workers are organised in unions. Employers in Denmark are
also well organised.
3.2 LABOUR LAW
Danish labour law encompasses a large number of work related issues. This brochure will primarily
deal with the central areas, what has been called collective labour law and the rules concerning
rights and obligations of the employee(s).
3.2.1 COLLECTIVE LABOUR LAW
The relation between employers and employees are to a large extent regulated through so called
‘collective contracts or agreements’ (overenskomster). These agreements are negotiated between
the respective organisations of the parties on the labour market, i.e. the unions and the employers’
organisations. The agreements protect the right of the employees to organise. Further, the
employer is obliged to negotiate with the union(s) on a number of issues, e.g. before making
decisions that materially affect the working conditions of the employees.
When concluded, the collective agreement(s) will lay down general rules, norms, for the individual
contract of employment. The agreement can cover issues such as wages, planning of work hours
and dispute settlement procedures in case of a conflict between employer and employees. The
employer is under no legal obligation to actually conclude a collective agreement with the union(s).
However, the union(s) are, if no agreement is reached or if the employer refuses to negotiate, free
to utilise conflict measures, such as strike action etc. to try to bring about the conclusion of an
agreement. The unions may also use conflict measures to try to enforce a claim of one of its
members against an employer. A company can always choose to “fight it out” with the unions. This
may prove to be extremely costly though. Unions are allowed by law to undertake “support
measures” to assist other unions in conflict with an employer.
On the other hand, the parties will, if a collective agreement is reached, be obliged not to engage in
conflict, or to resort to conflict measures. This so-called ‘peace obligation’ only covers matters
regulated by the agreement in question. The parties are still free to ‘fight’ over issues not dealt with
in the agreement. This ‘peace obligation’ also extends to other organisations. If an agreement has
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been reached between two parties, other organisations are precluded from interfering on behalf of
any party. A party in breach of the ‘peace obligation’ will be liable for any and all damages that
result from the breach.
Once concluded, the legal effect of an agreement is usually that an employer will be in breach of
the agreement if he or she contracts an employee on worse conditions than what is stipulated in
the agreement. It is usually allowed to contract employees on better terms, but not always, all
depending on the agreement in question.
It should be noted that Collective Agreements are most common within the basic industries and
governmental- and municipal administration. Employees that have benefited from higher education
(university) are to a lesser extent union members and the unions of university graduates rarely
form collective agreements outside the area of governmental administration.
3.2.2 CONDITIONS OF EMPLOYMENT
The wage of an employee is to a large extent regulated by the collective agreements. There is
usually room for deviations though. It should be noted however that there has been movement
towards individual wages within many areas of the industry. Employees with higher education who
work in the private sector usually negotiate their conditions of employment individually. An
individually negotiated contract, without reference to a collective agreement, does not mean,
however, that the employer can disregard the requirements set by law. The employer is always
obliged to provide for sick pay. The employees have a legal right to a certain amount of paid
vacation each year (5 weeks). Further vacation depends on the individual agrrement with the
employer. Employees also have a right to maternal/paternal leave in connection with childbirth.
Finally, an employer must have a valid reason for terminating a contract of employment. Basically,
an employer can terminate a contract of employment for personal reasons, i.e. personal reasons
on the part of the employee or for economic reasons (lack of appropriate work for the
employee(s)). These grounds for terminating a contract of employment are set by law. A contract
of employment cannot be terminated on grounds of age, health, sex or other infirmity (personal
reasons) unless the employee cannot fulfil his or her assignment and it is not possible to reassign
the employee. An immediate dismissal is only allowed in case of ‘gross dereliction of duty’ on the
part of the employee. An employer in breach of this rule will be liable for damages, including
punitive damages depending on time of employment of the employee in question.
A contract may only be terminated for economic reasons, i.e. reasons not relating to the person of
the employee, if there is a lack of appropriate work and where reassignment cannot reasonably be
expected. If a contract is to be validly terminated for economic reasons, the employer has to follow
the rule “last in, first out”, which means that the person last hired has to be the first one dismissed.
The employer cannot pick and choose whom to dismiss. The employer also has to observe a
period of notice of 2-6 months, depending on the employees’ seniority. It is now possible for small
companies to deviate from the ‘last in, first out’ rule. A small number of employees can be
exempted from the rule.
In addition to the above, there are regulations on discrimination (between genders and races),
vacation, working environment, working hours and equal pay. The law in these areas generally
lays down requirements that the employer has to fulfil. It is not possible here to comprehensively
describe all the obligations that rest upon the employer. The employer is obliged, though, to ensure
that the law is observed.
Attorney Eli Heckscher can provide its clients with particulars on the on the different obligations laid
down by law.
4. TAXATION
4.1 INTRODUCTION
In Denmark we use global taxation. In other words if you are residing in Denmark (as a tax payer)
all income is taxable no matter where it comes from.
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Taxable income in Denmark falls into one of the following three income categories:
· Income from employment
· Income from capital
· Income from (professional) business operations
The different types of income are subject to different tax rules and tax rates.
4.2 INCOME FROM EMPLOYMENT
Typical forms of income that fall within the employment category are:
· Salaries, pensions, periodic payments and other similar cash payments · All types of benefits,
e.g. meals, free use of a company car and free travel · Compensation for expenses, daily
allowances, travels allowances etc.
There are other forms of income that can be classified as income from employment. These include
certain transactions between partners in a close company and the company itself.
Deductions within the income from employment category are quite limited. In principle a deduction
is permitted for costs necessary to acquire the income in question. However, there must be a very
strong link between the costs and the income. Education is not deductible.
The deductions granted apply mainly to:
· Travel to and from work
· Business travel using a private car
· Increased living expenses in conjunction with business travel.
4.3 INCOME FROM CAPITAL
Generally speaking all income that falls into this income category is taxed at a certain rate
regardless of the size of the income.
Examples of income are:
- Dividends
- Interest
- Gains on the sale of shares, bonds, real estate, personal belongings and similar assets
- Income from letting an apartment or private house where this does not constitute
- business income.
4.3.1 TAXES AND FEES
A capital deficit is not always deductible in full. If there is a total capital deficit a deduction cannot
be set off against other forms of income. Instead, a tax deduction is granted against the other taxes
payable.
4.4 INCOME FROM BUSINESS ACTIVITIES
The rules governing taxation of business activities are generally the same for both limited
companies and business activities carried on by individuals. Basically, all income from business
activities is taxable. Income from capital falls under business activities if the capital in question has
been invested in the business.
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The tax rates for individuals who carry on business activities are the same as for income from
employment. Companies limited by shares, however, pay only 28 per cent (present rate) of their
taxable income in tax.
Taxable income is normally calculated according to ‘generally accepted accounting principles’ and
is therefore linked strongly to the company's accounts. The calculation of taxable income is
founded on the basic principles of business economics with minor adjustments for pure taxation
reasons. Deductible expenses include everything required to maintain and develop business
operations. Stocks are valued at the lower of the acquisition value and the net realisable value,
based on the first-in, first-out (FIFO) principle.
In the case of buildings, depreciation according to plan is permitted at a certain rate of the
acquisition cost depending on how the building is used.
Employers’ social contributions are deductible when calculating the taxable income from business
operations. For further details, reference can be made to the section dealing specifically with these
charges.
Profit equalisation is possible in the majority of business operations through what are called tax
allocation reserves. The amount allocated must be reversed for taxation within five years of the
year of allocation.
Losses may be carried forward from year to year (a 5 year limit). However, in the case of
purchased loss-making companies there are certain restrictions on loss deductions. Limited
companies are permitted to have an alternative financial year that ends on the last day of April,
June, August or December. Dispensation can be granted for a financial year that deviates from
this.
4.5 VALUE ADDED TAX
Value added tax, VAT, is a state sales tax. VAT is levied at all stages in the production and
distribution chain on the value added at each stage and is then reported to the state. Hence the
name value added tax. The tax can also be said to be a multi-stage tax as it covers several stages
and is distinguished by the fact that the most recent stage normally carries the right to make a
deduction or entitlement to repayment of tax already paid. It is thus the difference between VAT on
sales (output VAT) and VAT on purchases made (input VAT), which is reported to the state. Only
persons who are not obliged to file a VAT return and persons who are not entitled to repayment
(thus) pay the tax.
The sale of certain goods and services is free of tax. Those who supply such goods and services
do not report output tax and nor are they entitled to make a deduction for input tax. However, there
is a right to repayment of input tax on certain goods and services. In the case of goods and
services that are exported there is also the right to repayment of input tax.
4.5.1 TAX LIABILITY
Tax liability arises when the taxable sales of goods or services that form part of professional
business activities are performed. VAT must also be paid on the value of acquisitions from other
business entities in other EU countries liable for VAT (intra-community acquisitions) and on imports
(goods and services imported into Denmark from locations outside the EU). VAT is not levied on
exports (goods and services exported from Denmark to locations outside the EU).
The Tax Authorities and the Customs Authorities exercise taxation functions relating to VAT. Now
that Denmark is a member of the EU, border procedures governing trade between EU countries
have ceased. VAT on goods acquired within the EU is handled instead through domestic taxation
arrangements in each country. For Denmark this means that the Tax Authority (SKAT) is the
authority that deals with taxation on purchases of goods from other EU countries. The Tax
Authorities deal with taxation of sales within the country and EU acquisitions and the customs
authorities deal with taxation of imports from non-EU countries.
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Today all sales of goods and services are in principle liable for tax. Certain areas are exempted
from tax, e.g:
Health care, dental care and social welfare
Certain forms of education and training, e.g. compulsory junior/secondary education, high
school education and further education
Banking and financing services
Insurance services
Transfer and sale of various real estate rights.
4.5.2 TAX RATES
VAT is levied as a certain percentage of the taxation base. The taxation base is the price of the
goods or service, excluding VAT. The general tax rate is 25%, which is exacted on the turnover of
all goods and services.
4.5.3 FORMAL REGULATIONS
All persons/entities liable for tax are obliged, regardless of the size of the tax base, to apply for
registration and to declare and pay VAT. This means that all persons/entities liable for tax must
furnish the Tax Authority (SKAT) with information relating to outgoing and incoming VAT.
VAT is declared either by an entity liable for tax furnishing details in the special VAT return in the
tax return.
The term tax base under this heading refers to the tax base excluding intra-community acquisitions
and imports.
Entities liable for tax that sell goods to VAT-registered purchasers in other EU countries must file a
period list every quarter, a so-called quarterly statement, with details of the purchaser's VAT
registration number and the value of sales.
4.6 EXCISE DUTIES
Special consumer taxes, excise duties, are levied on selected goods and services. Typical excise
duties include taxes on energy, spirits, wine, beer and tobacco. Of the sixteen different excise
duties, the following can be mentioned in particular.
4.6.1 TAX ON FUEL
Fuels, e.g. petrol, oil, coal and LPG, are subject to an energy tax and a carbon dioxide tax.
4.6.2 TAX ON ELECTRIC POWER
Industrial manufacturing processes are not subject to tax on electricity.
4.6.3 EU HARMONISATION WITHIN CERTAIN AREAS
Separate rules apply within the EU to mineral oils, alcohol and tobacco. Special administration
rules applicable to the above categories of goods have been introduced within the EU. These
regulations have been incorporated into Danish legislation. Companies can also be registered as
the receiver of goods (registered traders) and pay tax on a monthly basis. In the case of imports
from a third country to a non-registered party, the tax is paid to the Customs Authorities (SKAT).
When the goods are sent from one country to another within the EU they must be accompanied by
a detailed description of the contents. This is signed for by the recipient, who thereby assumes tax
responsibility for the goods. This process replaces border controls between EU member states. In
the case of exports from the EU an authorised customs office completes the document. The Tax
Authority in each country has access to this register and can respond to enquiries about whether a
stated registration number matches a person registered for tax.
4.7 SOCIAL SECURITY CONTRIBUTIONS
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Social security contributions are debited as employer's contributions or personal contributions. The
employer's contributions are paid by the employer and calculated on the total salary, other
remuneration and any taxable benefits for work done which the employer pays to employees.
Personal contributions are paid mainly by persons who carry on business activities. The charges
are paid in conjunction with the payment of preliminary tax. In the case of self-employed persons
reconciliation takes place in conjunction with the tax assessment of business activities.
4.8 REAL ESTATE TAXATION
The State real estate tax is levied on single-family houses, residential dwellings on agricultural
land, rented residential buildings and industrial buildings. The real estate tax is calculated on the
taxable value.
Real estate tax assessment is designed in such a way that each building has a tax value
equivalent to approximately 75 per cent of the market value. The tax value is used to calculate real
estate tax, inheritance tax, gift tax and wealth tax. Real estate tax assessment takes place through
general and special real estate tax assessment as well as recalculation. General real estate tax
assessment takes place every second year as part of a pre-set plan. Special real estate tax
assessment can take place every year for those real estate categories not subject to a general real
estate tax assessment. This takes place if a property has undergone material changes since the
previous tax assessment.
5. THE LEGAL PROFESSION
5.1 GENERAL
There is no monopoly in Denmark concerning legal consultancy and representation of clients.
Furthermore, Danish law only recognizes one kind of lawyer who advises on legal matters and also
represents clients in court. It is common for lawyers to practice within a particular field of law. A
certain expertise in that area is thereby achieved.
The legal education takes place at two different universities in Denmark. Normally, a law degree
takes 5 years to complete, and upon graduation the student receives a bachelor of laws, BLL (juris
kandidat examen). The universities officially translate the Danish degree to a master of laws, LLM.
This ‘translation’ is, however, not universally recognized abroad.
In order to be admitted to the Danish Bar Association it is necessary to have completed a minimum
of 3 years of practical training. Two years of this can be spent as a junior judge or as an assistant
with different state authorities. During this three-year period there is an obligatory exam.
5.2 PROFESSIONAL CONDUCT
The Danish Code of Procedure contains a code of ethics for lawyers. The Bar Association also has
Rules of Conduct. The disciplinary committee of the Bar Association supervises that that lawyers’
practice in accordance with the standards. According to these standards, lawyers are allowed to
advertise their services, including in the new medias. Clients are also often transferred to the law
firm by accounting firms. The Bar Association has also adopted the Code of Conduct for Lawyers
in the European Community.
5.3 LITIGATION
Litigation costs mainly results from the amount of work performed by the lawyer. It is difficult to
determine costs in advance. As an indication, proceedings in the court of first instance can cost
approximately DKK 30.000-50.000.
Arbitration in Denmark is quite common and the number of cases is predicted an increase.
5.4 RESPONSIBILITY
Lawyers have insurance policies with the Bar Association and therefore provide liability guarantees
up to 2 million DKK per lawyer. All legal services fall under this guarantee. The liability guarantee
Doing business in Denmark 2007 1-13 Copyright Attorney Eli Heckscher
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also applies when the law firm is a public limited company. Other professionals who are active in
the field of legal consultancy cannot provide this service.
For further information, please contact:
Attorney Eli Heckscher
Rådhustorvet 53-59,
DK- 3660 Stenløse
Tel: +45 7027 8888
Fax: +45 7027 8882
E-mail: EH@EUROLAW-DK.dk
Doing business in Denmark 2007 1-13 Copyright Attorney Eli Heckscher
