Closing a Business in Denmark: Complete Guide to Deregistration

Closing a business in Denmark involves more than just stopping operations. Whether you run a sole trader or a limited company, there are legal, tax, and administrative steps you must complete. Failing to follow the correct process can result in ongoing tax obligations, penalties, and personal liability. This guide covers every step for each business type.

Sole Trader (Enkeltmandsvirksomhed)

Closing a sole trader is relatively straightforward, but you still need to complete several administrative steps.

Deregister via Virk.dk

Log in to Virk.dk with MitID and deregister your CVR number. The deregistration is immediate once processed. You must deregister even if you have no outstanding obligations — otherwise, SKAT may continue to assess you for VAT and tax.

File Final Tax Return

You must file a final tax return (skattemæssig indberetning) for the period from the start of your last tax year to the date of closure. Include all income and expenses up to that date. If you close mid-year, you will need to apportion income and expenses accordingly.

Settle Final VAT (Moms)

File your final VAT return covering the period up to the date of deregistration. You can deduct input VAT on any final business expenses incurred before closure. After filing, SKAT will calculate any outstanding VAT owed or refund due.

Pay Outstanding Tax

Settle any outstanding tax obligations including:

• Income tax on final profits
• AM-bidrag (labour market contribution) at 8%
• Any outstanding VAT
• Any penalties or interest

Keep Records for 5 Years

Even after closure, you must retain all accounts, invoices, bank statements, and supporting documents for 5 years from the end of the accounting period. SKAT can audit your records during this period.

ApS or A/S (Limited Company)

Dissolving a limited company is a more complex process involving shareholder decisions, creditor protection, and formal deregistration.

Shareholders Must Vote to Dissolve

Hold a general meeting (generalforsamling) where shareholders vote to dissolve the company. For an ApS, a simple majority is sufficient. For an A/S, the articles of association may require a larger majority. Document the resolution in the meeting minutes.

Apply for Dissolution via Virk.dk

Submit the dissolution application through Virk.dk with MitID. You will need the shareholder resolution, details of the board members, and information about the company’s financial position.

Appoint a Liquidator

If the company’s assets exceed DKK 300,000, you must appoint a liquidator (liquidator). The liquidator manages the winding-up process, ensures creditors are paid, and distributes remaining assets. For smaller companies, the board of directors can typically manage the process without a formal liquidator.

File Final Annual Report

Prepare and file a final annual report covering the period from the start of the last financial year to the date of dissolution. This report must show the company’s financial position at the date of dissolution and include a statement of assets and liabilities.

Pay All Creditors

Before distributing anything to shareholders, you must pay all creditors in full. This includes:

• Trade creditors and suppliers
• Tax authorities (corporate tax, VAT, employee taxes)
• Banks and lenders
• Employees (final wages, holiday pay, pension contributions)
• Any other outstanding obligations

If the company cannot pay all creditors, you may need to file for bankruptcy (konkurs).

Distribute Remaining Equity to Shareholders

After all creditors have been paid, any remaining assets can be distributed to shareholders. The distribution is based on share ownership. Shareholders will be taxed on dividends received — 27% on the first DKK 79,400 (2026) and 42% above that threshold.

Deregister from CVR

Complete the deregistration on Virk.dk. The company will be removed from the CVR register and will no longer have filing obligations.

Timeline for Closure

The time required to close a business depends on the structure and size.

The creditor period for limited companies is typically 3 months from the publication of the dissolution notice. During this period, creditors can submit claims.

Tax Implications

Sole Trader

The final profit is taxed as personal income at your marginal rate (up to 52.5% including AM-bidrag). File the final tax return via TastSelv or your accountant.

ApS/A/S

The company pays 22% corporate tax on its final profit. After tax, the remaining equity can be distributed to shareholders. Shareholders pay dividend tax (27%/42%) on distributions.

Loss-Making Closure

If the company makes a loss in its final period, this loss can be used to offset any profit earned earlier in the same tax year. For limited companies, losses can also be carried forward or back under certain conditions.

VAT Obligations

Regardless of business type, you must:

1. File a final VAT return covering the period up to the date of deregistration
2. Deduct input VAT on any legitimate business expenses incurred before closure
3. Deregister for VAT as part of the CVR deregistration process

After deregistration, you cannot charge VAT on any subsequent sales. If you continue to make sales after deregistration, you will need to account for VAT on those sales separately.

Employee Obligations

If you have employees, you must:

• Give notice — notice periods depend on length of employment, typically 1–6 months under Danish employment law (ansættelsesloven)
• Pay final salary including any accrued but unused holiday pay (feriepenge)
• Pay outstanding pension contributions if applicable
• Report via eIndkomst — submit final payroll reports to SKAT
• Provide employment reference — employees are entitled to a written reference

Failure to meet employee obligations can result in personal liability for directors and board members.

Debt and Insolvency

You must pay all creditors before distributing assets to shareholders. If the company cannot meet its obligations:

• Insolvent liquidation — if liabilities exceed assets, the company may need to file for bankruptcy
• Director liability — if directors continue to operate an insolvent company and incur further debt, they may be personally liable
• Creditor claims — creditors can file claims during the creditor period and may challenge distributions made before all debts are settled

Record Keeping

After closure, you must retain:

• All accounts and accounting records — for 5 years (sole trader) or 5 years (limited company)
• Invoices and receipts — both incoming and outgoing
• Bank statements — for all business accounts
• Tax returns and correspondence with SKAT
• Board minutes and shareholder resolutions
• Employment records — for any former employees

Store these records securely, whether in physical or digital form. SKAT can audit your records for up to 5 years after the end of the accounting period.

Common Mistakes to Avoid

• Not filing final returns — you must file a final tax return and final VAT return, even if you have no income or output VAT
• Forgetting VAT deregistration — failing to deregister means SKAT may continue to assess you for VAT obligations
• Not keeping records — destroying records before the 5-year retention period is a legal breach
• Distributing to shareholders before paying creditors — this can result in personal liability for directors
• Ignoring employee notice periods — terminating employees without proper notice can lead to compensation claims
• Missing the creditor publication — limited companies must publish the dissolution notice to notify creditors

Summary

Closing a business in Denmark requires careful attention to tax, VAT, employee, and creditor obligations. Sole traders have a simpler process but must still file final returns and keep records. Limited companies face a more complex dissolution process with mandatory creditor periods and potential liquidator requirements. Plan ahead, engage an accountant early, and follow each step methodically to avoid penalties and personal liability.