UK company with Danish brahnc
UK company with Danish branch
The EU has made it easier for the self-employed in Denmark. Companies from other EU countries can operate freely in Denmark, but the Danish authorities do stipulate that they must open a branch so that corporate tax can be paid in Denmark. It is possible to register a branch for VAT and for A-tax (payable at source) etc., just like other types of Danish companies.
In order to use this type of company in Denmark, SKAT (the central tax administration authority in Denmark) requires a branch to be registered. A branch is defined as a permanent establishment and assigned its own CVR or National Business Register number.
The branch is not an independent company but a so-called independent object of taxation. That is to say that you must pay tax in Denmark on the invoices you issue from that branch. If the branch is not an independent company it means that you are working in Denmark under UK legislation. *
That gives you a number of obvious advantages:
- No auditing requirements – you can sign yourself
- No capital necessary – start-up from €1,320
- CVR and VAT registration in 5 weeks
- Better creditor protection – conceal ownership
|
- Overseas account for the parent company
- No risk of bankruptcy – no corporate capital
- Option of salaried employment for the owner
- Low UK corporate taxation for parent company
|
More about the branch in Denmark – the formalities
You must be registered in Denmark with a branch at a Danish address in order to be given a CVR or Centralized National Business Register number. The branch must have management. The branch manager must have full legal capacity under the Danish rules on legal competence. The branch manager can perfectly well be entitled to sign for the company and/or be a director of the parent company at the same time. There is no stipulation that the branch manager must be resident in this country (Denmark). See more on the Danish Commerce and Companies Agency’s homepage
Please note that the branch manager should not have public debt to the tune of more than DKK 50,000 if it is wished to register the branch for VAT purposes, and that the branch manager must have a Danish personal ID (CPR) number if it is wished to register the branch for
A-tax (i.e. tax deducted from income at source).
The name of the branch will be (your wish) branch of (the company name we find for you) Ltd England. E.g. it may be the
Olsen’s Floor Service branch of Nordic ABC Ltd England. The provisions governing names of plc’s are otherwise set out in Section 2 of the Act. Branches are subject to Section 2 as well as Section 68(2) of the Act
Introduction
The UK plc solution is now a recognized corporate form. At www.cvr.dk you will be able to find several thousand registered branches using a simple search, and for the small-sized company there is no getting away from the arguments.
A UK company is typically formed with capital of £1,000. This is ”subscribed" capital, and merely indicates how many shares there are and at what value. The company can also be formed with £10,000 or whatever amount you consider to be of interest.
The capital need not be paid up
We have great success with this corporate form, and many people actually choose to wind up their plc’s in order to continue on in this kind of structure, as they can then draw out their paid-in capital from the plc taxfree. They then continue operating with this corporate form, only they are now DKK 125,000 better off. This corporate form does not require capital of DKK 125,000, but you do get a CVR no.
Comparison
|
plc |
UK + branch |
Capital requirement |
125,000.00 |
£1 |
Concealed ownership |
Not possible * |
Yes |
Nominal manager |
- |
Yes |
Auditing requirement |
Yes ** |
No |
Can be VAT registered |
Yes |
Yes *** |
Corporate taxation |
28%**** |
28% |
* Corporations, joint-stock companies, plc’s etc. are obliged to submit, together with their tax returns, information about name, address and the CPR (civil registration/commercial register (CVR/SE)) no. of shareholders who during the assessment year have owned at least 25% of the capital or had control of more than 50% of the total voting power.
** Younger and smaller plc’s are eligible for exemption from auditing if so adopted at their AGM.
*** Yes and without security worth DKK 125,000 - see more here
**** After corporate taxation, dividend can be paid out in plc’s (transferring profit to owner) to private individuals (with a Danish CPR number) in return for dividend taxation of 28%. In real terms, therefore, your rate of taxation on an ApS is 28% corporate tax + 28% dividend taxation.
Who owns the UK company?
- Since not being able to trace the rightful owner of the company is often a criterion, I would propose the following: that the company be owned by a "nominal" proprietor who, as it were, owns the shares on your behalf. You will receive a "declaration of trust" to the effect that you are the original owner ("beneficiary"). This is widely used in England. If you look up in the UK register of companies, therefore, it will not show that the UK company (and hence the Danish branch) is owned by yourself. For more details about nominal owners, see right-hand column.
- Of course, you can also enter into ownership yourself.
Costs
There are several ways of setting up a company in Denmark, but the most common one is cash-formation of an anpartsselskab or plc. In order to cash-form a Danish plc, you must pay the following:
- Company capital of DKK 125,000.00
- Registration fee to a lawyer of at least DKK 5,000
- Cost of an auditor to confirm that the company capital is at least DKK 5,000
- VAT registration at least DKK 3,000
So it is not out of the ordinary for the actual registration alone to cost DKK 13,000 and to involve having to furnish capital of 125,000.00. In a smaller plc, the annual auditing cost will normally be in the region of DKK 15,000 to 20,000. For Danish branches of foreign companies there is no requirement stipulating that you have to have an auditor attached!
Conclusion
Anyone wishing to start a plc in Denmark has to provide a minimum of DKK 138,000.00 initial capital, as well as an annual bill from an auditor for at least DKK 15,000.00—that’s before you’ve even sold a single euro’s worth!
Receive electronic payments to your company with Easy Invoice
Your company comes complete with ScandiCard’s electronic billing system, Easy Invoice, enabling you to send invoices out from your foreign "parent company" and receive payments directly on your VISA Electron Debit Card
The agreement is made between the parent company and ScandiCard Solutions INC, and your Danish branch is therefore NOT affected by the sale for tax purposes. Your clients can pay via a bank or by credit card. Read more about Easy Invoice here
Bronze package
The bronze package is the simplest model, which assumes that you yourself will appear as the owner and can supply an address in the UK. We start up the branch and supply the CVR no
| Formation of company incl. registration of branch |
1320 € |
| Total |
1320 € |
Subsequent annual costs:
None |
Silver package
The silver package offers you full cover, so to speak. You have a ready-made package solution in which you yourself do not appear as owner and do not need to supply an address.
| Formation of company incl. registration of branch |
1320 € |
| 1st year’s legal address (address in England) |
267 € |
| Nominal services (owner, manager, secretary) |
467 € |
| Total |
2054 € |
| Subsequent annual costs: |
| Address in England |
267 € |
| Nominal services |
467 € |
| Total |
734 € |
Gold package
With the gold package you are fully covered, so to speak, and the British authorities have no insight into your affairs. You have a ready-made package solution in which you yourself do not appear as owner and do not need to supply an address. In addition, you have a bank attached.
| Formation of company incl. registration of branch |
1320 € |
| 1st year’s legal address (address in England) |
267 € |
| Nominal services |
467 € |
| Documents for bank |
333 € |
| Bank account in the EU |
400 € |
| Total |
2787 € |
| Subsequent annual costs: |
| Address in England |
267 € |
| Nominal services |
467 € |
| Total |
734 € |
Features common to all packages
Whichever solution you go for, you will always get the following:
- Setting-up of a plc in the UK
- Company certificate from the UK commerce and companies agency, Companies House
- Articles of association for the UK parent company with provisions regulating the power to bind the company and object
- Fee to Companies House for formation
- Apostille from the Notary Public in London
- Authorized translation of apostille
- Entry in conjunction with registration of branch
- General power of attorney for branch manager
- Registration with the Danish Commerce and Companies Agency and subsequent CVR no.
Must I have a foreign bank account?
If you wish to take advantage of the rules allowing profits from the Danish branch to be transferred to the parent company once Danish corporate tax has been paid, you will need a bank account abroad. This is also good to have if you wish to use the UK company to invoice e.g. any foreign clients you have. We can supply a bank account—see the gold package above.
What about a Danish bank account?
The branch is registered in Denmark with a CVR number and A-tax registration (supplied). This is sufficient documentation to open a Danish bank account in any Danish bank. We can help you with an IBAN account in Danish kroner at one of our partner banks in the EU for a surcharge, if desired.
VAT registration of the company
From 5 July 2006, inclusive, an auditor’s declaration no longer need be included at the time of VAT registration for this corporate form, and you can therefore VAT-register the company without depositing any security. See more here
Resumé
This solution offers you 100% anonymity, but you will appear as the "branch manager" of the Danish branch. Your clients will trade with a Danish company with a Danish CVR no. The company will be able to be formed within five weeks of ordering.
There is no material difference between the rules governing the running of an ApS or a Ltd—cooperation within the EU gives citizens and companies a number of freedoms, e.g. free sale of goods without customs, freedom of movement for services, goods, capital and people, and finally the free right of establishment. It is the free right of establishment that gives companies the right to establish themselves wherever they wish and makes this corporate structure possible. Branches can be registered in all EU and EEA countries (Norway, Sweden and the USA). We offer help with UK accounts and tax returns through our partners, who are certified accountants in the UK and Denmark.
Is this legal?
This question can be answered with a clear Yes.
The ”foreign company branch” corporate form is regulated by the Hague Convention of 1961, to which the EU countries are committed.
According to the European Court of Justice’s judgement of 9 March 1999, case C-212/97, setting up a company in the UK, without having any business operations in the UK, and with operations in the home country only, is entirely legal, although it is quite clearly stated that this is avoidance of the rules in the home country regarding payment of a minimum legal company capital of DKK 125,000.00
The issue in this judgement was that the Danish company of Centros Ltd set up a company in England and Wales with share capital of £100.00, without establishing any business operation in England and Wales.
The Danish Commerce and Companies Agency felt (naturally enough) that this was a circumvention of the rules in Denmark, which require a minimum of DKK 125,000.00 as company capital.
The case was brought before the Danish Supreme Court, which presented the matter for the ruling of the Court of Justice, which arrived at the conclusion that:
"It is contrary to Articles 52 and 58 of the Treaty for a Member State to refuse to register a branch of a company formed in accordance with the law of another Member State in which it has its registered office but in which it conducts no business where the branch is intended to enable the company in question to carry on its entire business in the State in which that branch is to be created, while avoiding the need to form a company there, thus evading application of the rules governing the formation of companies which, in that State, are more restrictive as regards the paying up of a minimum share capital...”