Business in Denmark
Overview of the Economy
1. Denmark relies heavily on the performance of
its manufacturing industries and industrial exports, non-agricultural
commodities accounting for 70% of the country’s global exports in the
calendar year 2000. A variety of machinery & instruments, metal
products, shipbuilding, furniture, pharmaceuticals/bio-medical products
and environmental technologies constitute the Danish economic sectors of
specialization. This is a fairly new development, as industrial
development occurred later than in most other European countries and did
not accelerate until the sixties, Denmark having remained primarily
agricultural until World War II. Agricultural and fishery sectors
account for only 22% of the country’s aggregate exports, although
62.5% of Denmark’s total area remain under cultivation and the Danish
agricultural, food-processing and dairy sectors rank among some of the
most modern and technologically advanced in the world.
2. Until the discovery made in the seventies
of substantial oil & natural gas resources in the Danish part of the
North Sea, Denmark had no natural resources of any significance. Having
achieved self-sufficiency in oil & natural gas requirements in 1992,
Denmark is today an actual net
exporter of energy, limited volumes being exported to UK, Holland,
Sweden, and Finland. These products thus accounted for 8% of Denmark’s
total exports in the year 2000, during which year Denmark’s oil
production exceeded 21 million m3 (a 22% increase over 1999), while
Danish production of natural gas totalled nearly 8 mi. m3.
3. As a whole, Danish economy may be
characterized as reasonably stable and healthy, although some of the
private sectors such as Denmark’s IT-industries and hotel industries
have recently been severely affected and have registered a rather
alarming insolvency rate. For the last ten years, however, Denmark has
recorded an unbroken series of handsome Balance of Payments surplus
owing to an acceleration of exports. The country’s Gross Domestic
Product added up to Danish Kroner (DKK) 1,312 billion (US $ 157 billion)
in 2000, its GDP growth rate increasing from 2.1% in 1999 to 2.9% in
2000. The calendar year 2001 is expected to witness a Danish GDP growth
rate not exceeding 1.3%, while it is expected to recover to the level of
2.2% in 2002. As far as the Government finances are concerned, Denmark
has registered budgetary surplus ever since 1997. In addition, Danish
inflation rates have been among the lowest in Europe as a result of
restrained fiscal policies, consumer prices increasing by 2.9% in 2000
over 1999 and by just 1.9-2.2% in November/December 2001 over the
corresponding months of 2000. Unemployment has declined to a record-low
level of less than 5% in recent years compared to a EU-level exceeding
Membership of International Organizations
4. Denmark is a member of several international
organizations that include: AfDB, AsDB, Australia Group, BIS, CBSS, CCC,
CE, CERN, EAPC, EBRD, ECE, EIB, ESA, EU, FAO, G- 9, IADB, IAEA, IBRD,
ICAO, ICC, ICFTU, ICRM, IDA, IEA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO,
Inmarsat, Intelsat, Interpol, IOC, IOM, ISO, ITU, MONUC, NATO, NC, NEA,
NIB, Nordic Council, NSG, OAS (observer), OECD, OPCW, OSCE, PCA, UN,
UNCTAD, UNESCO, UNHCR, UNIDO, UNIKOM, UNMEE, UNMIBH, UNMIK, UNMOGIP,
UNMOP, UNMOT, UNOMIG, UNTAET, UNTSO, UPU, WEU (observer), WHO, WIPO, WMO
and the WTO. Denmark is furthermore a member of the European Monetary
System (EMS) established within the EU.
5. Like Sweden and the UK, Denmark is NOT
a party to the newly introduced Euro
currency, the Danish population having declined Euro membership at a
referendum held in September 2000 by a majority of 53% of all votes
cast, in spite of a ‘Yes vote’ having been recommended by nearly all
prominent political parties represented in the Danish Parliament.
A new referendum is likely to take place in 2004.
Foreign Investment Factors - Investment Climate
is no discrimination between domestic and foreign investors.
offers free access to the EU market.
is extensive foreign investment.
policy supports free enterprise and free trade.
and labour attitudes toward foreign investment are neutral.
workforce is highly motivated and well trained.
6. Denmark has
always been a strong supporter of free enterprise and trade. From an
investor’s point of view, the country’s main attractions would be
its stable and prosperous society with a low crime rate and hardly any
ethnic or religious conflicts, its long-standing, historically
conditioned traditions of heavy engagements in international trading,
its well-educated, to a wide extent English and German-speaking
population and work force, a generally positive attitude towards private
sector industry and professions, a highly efficient infrastructure and
transport system and the fact that rule of law is being administered
consistently, without excessive bureaucracy, and virtually no
establishing a business in Denmark, the procedure is the same for
residents as for foreign investors. Very few
corporations are held by the state, except for such public-sector
entities as postal services and railways.
The Danish government encourages foreign investment.
ownership of Danish enterprises is quite common and generally accepted.
There are no special regulations or legal measures to control or prevent
foreign ownership. No permission is required to invest in
virtually any field of commerce and industry. Foreign enterprises
established in Denmark fall under no discriminatory provisions.
9. Foreign enterprises
have the same rights and obligations as Danish enterprises. There are
easy terms for the repatriation of profits and capital. However, there
are no government guarantees against inconvertibility.
The government's incentive policy is to encourage investment in specific
regions, activities and, in some cases, industry sectors, rather than to
provide general incentives. Regional support is granted mainly in
regions with high unemployment. Activity support is given mainly to
export industries and industries investing in technological development.
Because there is a general belief that businesses should work on sound
economic bases, most of the incentives are given in the form of
financial assistance, such as favourable loans and government
11. There are almost no direct subsidies available to individual
enterprises in Denmark, although for reasons of regional and demographic
development, certain financial grants are made to enterprises operating
in designated areas. Certain areas of Denmark,
e.g., the northern and southern parts of Jutland, the islands south of
Zealand and the island of Bornholm, have been designated development
Incentives in the form of inexpensive land or development of new
industrial areas can also be obtained from negotiation with local
authorities. Many local communities may assist a company in establishing
a business, e.g., by selling land at favourable terms and prices or
procuring employees locally.
13. Grants are mostly received by small & medium-sized
manufacturing units and by the tourist sector. Loans at favourable terms
can also be obtained from the Growth Fund (‘Vaekstfonden’) if earmarked for research into the development of
new or improved products, production methods, services, and business
concepts. It may also be recalled that the Danish membership of the EU
renders certain grants and subsidized loans from EU agencies possible.
Furthermore, projects of common Nordic interest can be financed through
the Nordic Investment Bank (NBI) that also finances joint projects in
developing countries. So does the Industrialization Fund for Developing
Countries (IFU), a highly active organization (also represented in New
Delhi), that may take the credit for having established a substantial
portfolio of Indo-Danish JVs.
14. When setting up
a business in Denmark, finance can be raised through banks as a line of
credit or an overdraft, as a term loan, a foreign exchange loan, or as a
combination of all these. Interest is at a variable rate and is, for
instance, calculated on the basis of the use of the overdraft facility.
15. Financing through the Copenhagen Stock
Exchange or by means of venture capital is in practice only possible for
existing companies with an established record and a substantial market
value or, alternatively, for companies under formation with a
well-established business concept and the ability to provide detailed
commercial and financial information about its future prospects.
Restrictions on foreign investment and investors
are virtually no exchange controls.
and earnings may be freely repatriated.
must report information on foreign bank accounts.
industries are open to private enterprise.
foreign ownership is usually permitted.
control regulations come under the jurisdiction of the Ministry of
Industry. The power to administer the regulations is delegated to the
Danish National Bank. Transactions in foreign currency may be effected
only through banks and brokers authorized to deal in foreign exchange.
Exchange controls are regulated by the Executive Order on Foreign
Exchange Regulations issued by the Ministry of Industry. In practice,
all transactions between residents and non-residents are allowed. The
aim of the foreign exchange regulations is primarily to ensure proper
reporting of foreign currency transactions and the flow of funds to and
18. In general, no foreign exchange
imposed by the Danish authorities. A foreign investor can repatriate
capital, loans and income with
no restrictions. Limitations may exist
when the potential investor's country of residence does not offer Danish
citizens equal possibilities to invest there. Equity and/or debt may
finance operations in Denmark.
trade policy strongly supports free trade and non-interference. No
policy measures are in force to protect local industry against foreign
competitors. Denmark is a member of the EU, and, accordingly, Danish
businesses have free access to almost the entire Western European
market. The Nordic area also offers trade opportunities and is reached
easily from Denmark. Danish authorities are concerned with environmental
matters; therefore, certain regulations are in force.
Formation/Establishment Procedure/Choice of Entity
20. Investors are free
to choose their preferred form of business entity. Following are the
principal forms of business structures:
Public Limited Company
Private Limited Company
(‘Anpartsselskab’ or ‘ApS’)
Branches (of Foreign
Limited Companies) and Representation
General Partnership (‘Interessentskab’
Limited Partnership (‘Kommanditselskab’
21. A Public Limited Company (A/S) must have a
minimum share capital at a nominal value of at least Danish Kroner (DKK)
500,000. However, the required capital may be obtained by forms other
than cash such as fixed assets, patents, goodwill, know how, etc. Share
capital requirements must be fulfilled within 12 months after
22. The liability
of each shareholder is limited to the amount of shares subscribed or,
alternatively, the purchase price of the shares acquired. Foreign
individuals or foreign companies are allowed to own a Danish company
The management of an A/S consists of a Board of Directors (minimum of 3
persons) and the Managing Director(s) (minimum of 1 person). The Board
of Directors is elected by the shareholders at the annual general
meeting. Generally speaking, the Managing Director and at least half of
the Board of Directors must be domiciled in Denmark or at least within
the EU or in Norway, Iceland or Liechtenstein.
24. A Public Limited
Company must be registered with the Danish Commerce & Companies
Agencies (‘Erhvervs &
Selskabsstyrelsen’). No fees for this registration are to be paid,
but a foreign party would have to pay for local professional advice and
assistance. Furthermore, various details of the company in question must
be filed with the Danish Commerce & Companies Agency. These details
include the denomination of company’s share capital, the names and
addresses of the Managing Director and of the Board of Director’s
members, the shareholders possessing a voting power of 5% or more, the
articles of association and the annual accounts.
25. The accounts of
Public Limited Companies (as also the Private Limited Companies) must be
audited by a state-authorized public accountant or by a registered
public accountant and approved by the share-holders and filed with the
Danish Commerce & Company Agency no later than 6 months after the
end of the financial year. The Danish Federation of State-Authorized
Public Accountants (FSR) is a member of the International Federation of
26. A limited company, both public and private,
can also be purchased “off the shelf”. Such companies are already
registered, but have had no prior business activities. Indeed, several
Danish law firms own registered companies, which have not yet carried
out any business. The acquisition of this type of ‘shelf-company’
allows investors to start up business activities almost at once.
27. A minimum share
capital of DKK 125,000 is required for the formation of a Private
Limited Company (‘ApS’). It needs have only one founder.
Although the Private Limited Company is intended to appeal to one
or just a few persons combining to set up a company, no maximum has been
fixed for the number of members allowed. A Board of Directors is not
statutory in an ApS, unless the share capital exceeds DKr 500,000.
28. The identity of the
shareholders with a voting power of 10% or more must be filed with the
Danish Commerce & Companies Agency. If 40% or more of the share
capital are lost, the share capital must be re-established or the DCCA
may demand a compulsory winding-up of the company. Otherwise, Private
Limited Companies are, in broad terms, governed by the same laws as
Public Limited Companies are.
29. Any individual is free to establish a
business in Denmark with the purpose of engaging in a profession or
business of his own as a sole proprietor. Registration with the tax
authorities must be done, if the sole proprietor is engaged in an
enterprise employing staff or performing a trade or any other activity
subject to VAT.
30. A foreign limited/joint stock company
lawfully registered in its home country may perform business activities
in Denmark through a registered branch office. The establishment of such
a branch office must be notified to the Danish Commerce & Companies
Agency, and it must be stated that the foreign company is registered in
accordance with the laws of its home country.
31. If the equity of the
foreign company is less than DKr 125,000, a guarantee must be provided
for taxes and VAT.
32. One or several branch managers, who can sign
for the branch and grant powers of attorney must manage the branch.
Branch managers must be residents of Denmark, citizens of a EU-country,
or in case the foreign parent company is domiciled in a EU-country,
residents of that EU country.
33. A branch situated in Denmark obviously acts
under Danish law. The name of a branch must reveal its nationality and
its status as a branch of a foreign limited company. Each year the
annual accounts of the parent company must be filed with the DCCA, where
the accounts are made publicly available.
through a representation office is an option, provided activities are
limited to be of an “auxiliary and preparatory character”. Such
activities must not include any kind of sales activities or powers to
enter into binding contracts on sales on behalf of a non-resident
35. Activities comprised
by the definition of a representation office might be information
gathering on behalf of a foreign company or activities such as
maintenance of a showroom. Still, in case a showroom is maintained, no
individual in the representation office can have the authority to enter
36. In respect of the General Partnership
(‘I/S’), general partners are jointly and severally liable for the
obligations of the partnership. Nevertheless, an investor can minimize
the risk involved by participating in such a partnership by the
intermediary of a limited company.
37. A partnership
agreement is usually prepared to govern the relationship between
partners, as no Partnership Act exists in Denmark.
38. A Limited
Partnership (‘K/S’) consists of one or more general partners and one
or more limited partners. Any of the general or limited partners may be
individuals or legal entities, foreign or domestic.
39. The names of the
limited partners may not appear in the firm’s name. When the sole or
all general partners are entities with limited liability, a Limited
Partnership must register with the Danish Commerce & Companies
In general terms, Denmark's policy favours the reduction and abolition
of trade barriers; however, most of its sovereignty in this respect has
been ceded to the EU. In
general, there are no "technical trade barriers" for exporters
to Denmark to overcome.
41. Free-trade zones do not
exist in Denmark.
43. Taxable income
including capital gains is subject to a corporate income tax of 32% in
Denmark. The tax rate is identical for public limited companies, private
limited companies, and branches.
44. A company is
resident in Denmark for tax purposes, if it is incorporated in Denmark
and has its statutory seat in Denmark. Furthermore, a company
incorporated outside of Denmark is considered resident for tax purposes
in Denmark, if its effective management takes place from Danish
territory. A company resident in Denmark is subject to company tax on
its worldwide profits including capital gains.
45. Foreign companies
can be subject to limited tax liability either through a branch or a
permanent establishment or through withholding taxes on certain types of
Danish source income. Non-resident companies conducting business through
a permanent establishment (e.g. a branch) are subject to taxation on all
income attributable to or received from the establishment. Moreover,
non-resident companies are subject to tax on income from real property
located in Denmark. Certain types of payments to non-residents are also
subject to Danish withholding tax, which may be reduced in accordance
with an applicable tax treaty.
46. Dividends from
Danish subsidiaries can be distributed without withholding tax, provided
that the parent company has owned 25% or more of the Danish subsidiary
during an uninterrupted period of at least one year and that the
dividends in question are received during this period of time. Prior to
the payment of dividend, it must be certified by the Danish subsidiary
that its parent company fulfils these conditions.
47. According to Danish
law, withholding tax must be paid on all royalties received for the use
of or the right to use patents, trademarks, designs or models, plans,
secret formulas or processes, information concerning industrial,
commercial, or scientific processes, and - if so deemed - on payments
for access to know-how. According to the Avoidance
of Double Taxation Agreement (DTAA) between India and Denmark, the
tax rate imposed on royalty payments between these two countries is 20%.
Still, royalty payments for the use of any copyright to literary or
artistic work are not subject to Danish withholding tax.
48. Interest payments
made to non-residents are not generally subject to withholding tax
49. Tax losses may in
most cases be carried forward for 5 years and offset against future
taxable income. Carry-back of tax losses is not possible. Certain
restrictions exist on the sale of a company with tax losses -
restrictions intended to prevent interest income and other passive
financial income to be offset by tax losses carried forward.
50. Research and
development costs are normally fully tax-deductible. So are the costs of
computer software in the year of acquisition. Costs related to the
acquiring of know-how and patents can be deducted 100% for tax purposes
51. Company tax returns
must be filed annually, not later than 6 months after the end of the
accounting year. A final tax assessment is normally issued in month of
October. Company tax is payable on account in two equal installments,
i.e. in March and in November, failing which a non-deductible interest
of 0.6% per month will be charged on overdue installments. The
automatically collected on account tax is calculated on the basis of 50%
of the average of the last three years’ income tax.
52. In spite of the
numerous regulations, it may be emphasized that in an international
context, Denmark is normally regarded as an excellent country for a
potential investor to found a subsidiary in. Since the beginning of
1999, Denmark has actually become a very attractive location for
European holding companies. This is due to a variety of factors such as
the highly favourable conditions for R & D expenses, the absence of
withholding tax levied on interest payments from Denmark, the large
network of double taxation avoidance treaties established by Denmark, a
company’s unique possibilities of joint taxation with its 100%-owned
Danish or foreign subsidiaries (allowing losses suffered in some
companies to be offset against profits in others), the fact that
dividends can be received tax-free in Denmark and paid out tax-free from
Denmark, the absence of capital contribution tax in Denmark, and the
possibility of obtaining advance binding rulings.
53. Denmark imposes value-added tax on imports and
taxable deliveries of goods and services at a rate of 25%.
55. Refund of Danish VAT is available to foreign
companies not registered for VAT in Denmark. A foreign company doing
business in Denmark may, however, be required to register for Danish VAT
purposes through a resident VAT agent.
Taxation of Individuals
56. Danish tax
legislation distinguishes between full tax liability for resident
individuals and limited tax liability for non-resident individuals.
Citizenship does not affect tax liability.
57. Residents are
taxable on their worldwide income and capital gains. They are also
liable to pay gift tax. Non-residents are taxed only on the basis of
their income and capital gains deriving from sources in Denmark.
58. There are no
wealth taxes in force in Denmark.
60. Special legislation
applies to high-salaried foreign employees/ experts working temporarily
in Denmark. Certain conditions need to be met (e.g. the monthly salary
including fringe benefits must be at least DKK 50,900 (2001), and the
concerned employee must work for a Danish employer subject to full
Danish taxation or for a Danish branch or permanent establishment of a
foreign company with legal residence in Denmark.
61. Provided these conditions are fulfilled, the
employee in question may then choose to be taxed at a flat rate of 25%
of their gross income rather than subject themselves to the common rules
of individual taxation. However, the foreign employee must pay a 9%
labour market contribution of his gross income (before the 25% will be
deducted from the remaining 91%). Thus the aggregate tax percentage
imposed on his gross income will add up to 31.75%.
62. The 25% flat rate
taxation system can be enjoyed for an aggregate period of 36 months
within a 10-year period. For
any period of time exceeding those 36 months, the foreign employee will
be subject to normal Danish taxation. If the stay in Denmark exceeds 84
months, the employee will even be subject to normal Danish taxation from
the day of arrival and will be charged penalty interest at a monthly
rate of 0.6%. Very recently, however, the Danish Minister of Taxation
representing the newly elected Liberal-Conservative Government has
indicated his willingness to abandon this ‘84 months rule’ with the
purpose of attracting much needed, highly educated manpower to
Denmark’s IT and bio-medico industries, an initiative welcomed by the
Confederation of Danish Industries.
Under any circumstances, employees who meet the OECD definitions
of scientists can already stay in Denmark when the 84 months have
expired without having to pay normal taxes for the first 3 years.
63. The working
population in Denmark is about 2.8 million of which about 1.3 million
are women. The level of education is high and in general Denmark is
considered to have a skilled and reliable work force.
64. The majority of
workers and many salaried employees are members of trade unions, and the
collective agreements are important supplements to the legislation
concerning employment matters. Collective agreements deal with wages as
well as working conditions and other matters.
65. Danish wages appear
to be relatively high compared to those prevailing in other European
countries, which some consider a threat to Danish competitiveness. It
must be recalled, however, that unlike most of their European
counterparts, Danish employers have no compulsory labour costs such as
welfare pensions and other contributions to pay.
66. The Danish labour market is characterized by
a clearly defined organizational structure based on collective
agreements, which have contract status and a comprehensive mediation
system meant to settle disputes with minimum delay. Only in extreme
cases the Government will intervene in a labour market conflict. Major
industrial conflicts as well as unofficial strikes or disputes are
consequently very rare due to a high level of trade union membership
(76% of workforce).
67. The central statutes
in the area are the Salaried Employees Act and the Work Environment Act.
Together with other statutes and regulations they provide for
considerable protection of the employee. The extensive regulation does
not cover wages and hours, which are agreed collectively by the unions
and the employers' organizations or individually in employment
agreements. In many areas the general Work Week is 37 hours for both
wage earners and salaried employees.
68. All employees are
entitled to 5 weeks vacation every year. Salaried employees are paid
their ordinary salary during vacation period and a supplement of 1% of
their total annual salary. Wage earners receive a payment equal to 12.5%
of their annual wages as holiday compensation. All employees are paid in
full for public holidays.
69. According to the
Salaried Employees Act such employees are generally entitled to full pay
during sickness while wage earners as a general rule receive a fixed
payment for each day they are sick. The size of the fixed payment is
decided by law but depends to a certain degree on the ordinary salary of
70. Women are entitled
to 4 weeks leave prior to the expected date of delivery and to 24 weeks
maternity leave. The father is entitled to up to 10 weeks leave by which
the 24 weeks of the mother must then be reduced. However, the father is
entitled to 2 weeks leave in connection with the birth of the child
without any reduction of the maternity leave. Statutory regulations
provide for payment during the leave.
71. Except in case of
material breach of their duties salaried employees may only be
terminated with a notice which varies between 1 and 6 months, depending
on the duration of their employment. Thus, the maximum statutory notice
period of 6 months set down in the Salaried Employee Act is reached
after 9 years of employment. For wage earners the collective agreements
usually set down much shorter notice periods. The employer may pay an
amount which equals the ordinary salary for the notice period instead of
giving the required notice of termination. An unfair dismissal of an
employee may lead to substantial compensation to the employee.
72. A special statutory
set of rules must be followed when more extensive dismissals are
contemplated. Negotiations and certain notifications are required before
the dismissals can take effect.
73. A set of regulations
provide for a safe and sound work environment and the control thereof.
Employers are under an obligation to insure themselves against
responsibility for injuries suffered by employees at the place of work.
74. All local regulations generally apply fully
to foreign individuals employed in Denmark. No regulation requires a
certain amount of Danish employees. On the contrary, discrimination on
the basis of nationality is unlawful. However, nationals of countries
outside the EU and Scandinavia must from a Danish consulate obtain a
residence and work permit prior to entering the country and taking up
employment. Permits may be issued if the applicant possesses skills,
which are not available locally. The immigration policy is not
particularly restrictive or liberal.
75. Nationals of the EU do not need a work
permit, but they must register with the Directorate for Immigration
Udl‘ndinge") within 3 months of their arrival in Denmark. A
residence permit must be applied for and will be issued to EU citizens
if the foreign individual is either employed or fulfils certain other
Market & Banking
76. Bonds, shares and
derivates - futures and options - are traded through the Copenhagen
Stock Exchange, a fully modern, high-tech exchange, that pioneered
computerized trading internationally and was the first exchange to
introduce electronic bonds and shares administered by the Danish
Securities Centre, where all transactions and documentation of ownership
are kept on record.
77. The most prominent
sector within Danish financial services is, indeed, the Danish bond
market, which is rated the seventh largest globally and the fourth
largest in Europe. The volume and liquidity of this bond market have
attracted a growing volume of other issues from other countries and made
Copenhagen an important centre for bond trading.
78. The efficiency of
the Danish banking sector is also reflected in highly sophisticated
money transmission systems and in a nation-wide electronic payment card
system called ‘Dankort’.
79. Due to various mergers, the number of banks
operating in Denmark has recently fallen. Today the two majors ‘Danske
Bank’ and ‘Nordea’ (formerly ‘Unibank’) control a 63% share of
the market. However, around 90 other banks still continue to flourish -
many of them based entirely on local or regional business. In an effort
to minimize costs and counter intensive competition, the aggregate
number of domestic branches operated by Danish banks have gradually been
reduced to approximately 2,100; larger Danish banks, on the other hand,
maintain offices in London, New York, Singapore and Tokyo.
80. Danish banks’ interest rates are presently
at their lowest levels for decades, and prospects of obtaining
business-related loans should currently be excellent.
Exporting to Denmark
Delivery - Quality - Quantity - Terms of Payment
81. It must first of all be recalled that Denmark
constitutes a small market of just 5.3 million inhabitants,
corresponding to the population of the single German city of Hamburg or less
than half the population of a major Indian metropolis. This should
be kept in mind when exporters stipulate minimum quantities for orders,
just as sample and trial orders should be accepted in smaller
quantities. On the other hand, certain major importers may insist on
knowing the exporter’s exact production capacity and his quantities
available for exports.
82. It is of mandatory
importance that the actual delivery time matches the one that the
exporter and importer initially agreed upon. Right from the beginning of
a new cooperation, it is, therefore, quite necessary that a supplier
states a realistic delivery time. Tolerance
towards delays in delivery is very limited in Denmark.
83. In fact, some Danish
retail chains/end users may choose to spend funds on advance publishing
of imported goods for further sale in nation-wide distributed catalogues
and magazines believing they can safely assume that the merchandise in
question will be received well in time as assured. Non-receipt of such
goods will consequently lead to huge embarrassment and probably cause
future orders to be cancelled.
84. In this connection,
it may moreover be pointed out that an increasing number of Danish
retail chains and department stores do their own direct purchasing. The
product expertise of their specialists should not be underestimated.
This trend is particularly evident within the food sector. The
old-fashioned type of stock-keeping wholesaler is rapidly dying out on
the Danish market, and while an Association
of Commercial Agents in Denmark still exists (physically located on
the premises of the Danish Chamber of Commerce), pure agents, too, are
becoming much fewer in number (with the exemption of industrial raw
materials and capital goods trading, which is most often handled by
non-stock-keeping sales agents).
85. Danish importers
will normally accept a request for an irrevocable Letter of Credit (L/C)
in respect of the first shipment but will subsequently attempt to avail
of a less costly and less bureaucratic method of payment such as cash
against documents (CAD), bank transfers on receipt of goods, or a credit
term of 30-90 days. Such a wish may be complied with, once the
genuineness and reliability of a given importer has been established.
There is little harm in discreetly enquiring about the identity of the
concerned importer’s bankers.
86. Large-scale Danish
banks such as Danske Bank, Nordea, and Jyske Bank have global networks
of correspondent banks, with whom they interact with the purpose of
exchanging credit information and issue bank guarantees or letters of
87. Danish bankruptcy legislation is considered
fairly liberal and within certain commodity trading sectors the phoenix syndrome is not an entirely unknown phenomenon. Normally, a
Danish company or an importer facing severe financial difficulties will
suspend its payments for a limited period of time in order to avoid that
an actual petition in bankruptcy is filed. It will then attempt to
persuade all its creditors to accept a composition scheme offering a
certain percentage (e.g. 30%, 40%) of the amounts due to them. In many
cases, an exporter may be wise to accept such an arrangement, since
costly and lengthy bankruptcy proceedings and lawyers’ bills may leave
the importer with fewer assets and values to share out eventually. Add
to this that according to Danish legislation, a “simple” trade
creditor’s demands on a bankruptcy estate are secondary/subordinated
to employees’ wage claims, outstanding customs duties, claims lodged
by Danish tax authorities, etc. Once a suspension of payments or the
threat of bankruptcy has become known, it is, under any circumstances,
of vital importance that the exporter seeks immediate, legal assistance
in Denmark in order to file a claim with the administrators of the
Identifying & Creating Contact with Potential Buyers
88. Unless a product is unique or in extreme
shortage, it should not be forgotten that the average Danish importer
may pick and choose from among almost countless uninvited offers from
qualified suppliers. Furthermore, products offered by a newcomer to the
market will often have to replace articles presently purchased from
regular, competent suppliers (perhaps of same nationality), which does
not make the challenge any easier.
89. In order to attract any attention at all, an
offer should, therefore, contain a thorough product description along
with price lists and confirmed delivery schedules substantiated by
brochures, photographs, and most of all samples, without which the
importer will hardly take the approach seriously. Rather needless to
say, the exporter’s exhaustive contact co-ordinates should also be
indicated along with possible ISO or other quality standard
certifications. Uninvited, hastily
and shabbily prepared e-mail or fax offers will be counter-productive
and filed vertically by the importer.
90. Rather than
participating in isolated buyer-seller meets, attending
major trade fairs held on Danish territory would be an excellent method
of establishing contact to future trading partners and is an
activity highly recommended by the Danish Chamber of Commerce. Before
participating as an exhibitor, it is often advisable to participate as a
visitor. A well-prepared and properly executed visit to Danish trade
fairs may in itself constitute a very cost-effective
91. A visiting exporter
may even encounter potential customers at such fairs, reason being that
in Denmark exhibitors at trade fairs are frequently importers - to some
extent wholesalers, while retailers form the target group. A visiting
exporter would, therefore, have ample opportunity of approaching
suitable exhibiting Danish importers with his company profile.
92. As far as some product categories are
concerned, it must be recollected, however, that no really relevant
trade fairs are organized in Denmark, the important events within those
sectors taking place in countries such as France, Germany, or Italy.
However, these foreign fairs are often visited by prominent Danish
importers, thereby providing an opportunity to establish contacts with
93. The Danish Import Promotion Office (DIPO) functioning under the auspices
of the Danish Chamber of Commerce (while financed by the Danish Foreign
Ministry’s ‘DANIDA’ agency) is engaged in promoting imports from
the developing countries. Nevertheless,
the Import Promotion Office has recently been instructed to focus solely
on Least Developed Countries (‘LDCs’) and has ceased to regard India
as a ‘programme cooperation country’. Therefore, DIPO cannot
be expected to handle and reply to detailed trade enquiries received
from individual Indian exporters anymore. Market
surveys prepared by the Import Promotion Office are, on the other
hand, available to Indian exporters free of charge and can be downloaded
from the website
So far, three such surveys have been issued for Ready-Made Garments,
Fruit & Vegetables and Handicrafts. A few other market surveys are
expected to be published later in the year.
94. A EU Directive
specifies the materials allowed in plastic and cardboard packaging that
come into contact with food products. The use of PVC in packaging
materials for food products is not prohibited by the above-mentioned
directive, but several large-scale Danish retail stores insist that the
packaging is free of PVC.
95. Marking and labelling requirements applying
to products sold in Denmark are numerous and vary from item to item.
Requirements are influenced by both Danish and EU laws and regulations.
A few general rules are hereby listed below:
products must be labelled in Danish or in a language differing only
slightly in spelling (Norwegian or, to some extent, Swedish).
and measures must be indicated in the metric system.
number of products must be clearly marked with the country of origin
and must be CE-marked.
must describe the contents accurately.
96. The responsibility for compliance with Danish
labelling and marking regulations rests with the importer. However,
future business may be harmed, if delays in customs clearance and
additional expenses are caused by an exporter’s disregard of the
97. Nowadays, a substantial number of products must
be CE-marked (CE = Communautees
Europeennes/European Community) prior to sale in Denmark or, for
that matter, in the rest of the EU. The list of these products include
toys, building materials, medical supplies, gas cookers, household
refrigerators and freezers, low voltage electrical equipment, tele-terminal
& satellite station equipment, elevators, leisure boats, etc.
98. CE-marking is a statement made by the
manufacturer of a finished product or by his authorized representative
in the EU confirming that the concerned product meets essential requirements for that product as
stipulated in relevant EU Directives, most importantly in regard to
safety, health, and environmental aspects. It
is not a quality mark.
99. Various other Directives specify the
information that must be given in order to obtain the right to use the
CE mark. In certain cases
procedures demand different degrees of external control such as
comprehensive Directive popularly referred to as the “positive list”
has been adopted with the purpose of offering guidelines for allowed
contents of additives in food products
to be sold within the EU including Denmark.
101. Certain products
such as fresh or dried fruits, nuts, etc. are automatically submitted to
testing when entering the first EU-country.
102. Normally, a Danish
importer will request a foreign exporter to provide relevant
certifications to the effect that imported products live up to standard
concerning residual of pesticides and different contaminants.
103. The highly popular
and respected ISO 9000-series certification code system has,
surprisingly not been adopted by many reputed Danish companies, although
ISO certification is widely regarded in Denmark as a reliable quality
Ethical Code of Conduct - Child Labour
104. In recent years, issues like child labour and
the consequences of industrial pollution in developing countries have
been heavily debated in the Danish media. There is a strong tendency
indicating that local consumers want Danish importers and manufacturers
to guarantee that products hailing or partly hailing from developing
countries have been made without the use of child labour. Multinationals
have suffered considerable losses on the Danish market and found their
turnovers decreasing, when the Danish press revealed that child labour
had been involved in the production of their merchandise.
105. So far, it has not
been possible to create an actual “ethical code of conduct” or an
“ethical marking” system. Still, consumers’ demands have caused
many individual, prominent Danish companies to insist that their
suppliers from developing countries must sign a statement assuring that
production is carried out without the use or involvement of child labour.
Duties & Procedures, other Duties
106. Denmark’s customs
procedures, its classification and valuation of imported goods are
governed by EU rules. The EU has formed a Customs Union and adopted a
common policy towards all non-EU countries.
107. Goods originating
outside the EU are subject to customs duties. For industrial goods,
these duties normally range from 5% to 14%.
108. In Denmark,
specific national duties are also levied on what is considered luxury
goods by the customs authorities and are charged to the importer. These
special duties may vary from DKK 5 for 1 kilogram of tea up to DKK 229
per kilogram chewing tobacco.
109. Import licences are generally not required
- except for alcoholic beverages, weapons and arms, certain drugs &
chemicals, certain foodstuffs, and products comprised by EU quotas
(textiles, for instance).
110. Reduced rates, or no duties at all, apply
to certain goods originating from countries or areas, with which the EU
has signed special agreements.
111. In order to achieve
preferential customs treatment when importing into Denmark/EU, the
article in question needs to originate in a country situated within one
of the geographic areas that are signatories to preferential agreements
with the EU. The rules of origin vary according to the individual
agreements, but one way of qualifying for origin in a preferential area
is to have the exportable articles fully produced and all materials
pertaining to the articles grown or processed in a country with
preferential status. A second way to qualify is to have the articles
‘sufficiently’ processed in a preferential country, meaning that
materials imported from third countries should be further processed in a
preferential country in accordance with a special set of rules. Simple
treatment of materials from third countries will normally not be enough
to obtain status of origin.
112. Certificates of
origin must be completed by the exporter and be certified by relevant
authorities in the country of dispatch. Special certificates are used
when importing hand-made textiles (certificate of manufacture), just as
a handicraft certificate is required for importation of a variety of
other hand-made goods.
113. A company responsible for importation (whether
a Danish company, a forwarding agent, or a subsidiary of a foreign
company) may in advance file a general, on-going registration with the
Danish customs authorities, thereby achieving an approval as a
legitimate importer as well as the advantage of being granted an
interest-free credit on the charges payable.
Generalized System of Preferences
duty-free imports into the EU in accordance with the GSP scheme are only
possible from so-called Least Developed Countries (‘LDCs’). As far
as the remaining developing countries are concerned, there are varying
reductions of duty, which are based on an evaluation of the individual
country’s competitiveness and the sensitivity of the product to the EU
115. Rules and regulations regarding the rates
of duty are under frequent adjustments and, therefore, need to be
monitored closely in order to check the product coverage and establish
the tariff classification, thereby identifying the correct GSP rate.
Prospects of obtaining additional preferences possibly related to
incentives such as the country or origin’s protection of labour
rights, protection of the environment, and ability to combat drug
production and trafficking may likewise be investigated.
116. It should be
possible to identify and calculate many of the relevant duty rates by
the aid of the so-called ‘TARIC’ database accessible at the website:
117. The GSP of the EU
is presently operational for another 3-year period of time running from
January 1st 2002 until December 31st 2004
following a European Council Regulation of December 10th
2001. The ‘New GSP’ has
replaced rather complicated, old tariff preferences by new tariff
preferences, according to which rates of duty are normally lowered by
3.5%. If the rate of duty is less than 1% once GSP has been deducted, it
is considered a nuisance tariff and is altogether suspended. A
standstill clause furthermore ensures that if duties under the old GSP
regime were lower, they remain at a lower level.
118. The Generalized
System of Preferences is also being availed of by, among others, the USA
and Canada, Japan, Norway, Poland, New Zealand and Australia - not just
by the EU.
119. When preparing
documentary evidence applying to imports from developing countries under
the GSP scheme, certificate of origin Form
A (GSP) should be availed of and correctly completed.
Intellectual Property Rights
120. Denmark enforces the majority of
international conventions and treaties regarding protection of
intellectual property rights including the WTO’s ‘TRIPS’
agreement. Denmark has
signed and ratified most major conventions in the area of intellectual
and industrial property.
121. Denmark is a signatory to Paris Convention
(1883), WIPO Convention (1967), Convention on International
Classification of Goods and Services (the Nice Arrangement) (1957). The
following conventions have been signed out but not
ratified: Trademark Registration Treaty (1973), International Agreement
on International Classification of Figurative Parts (1973), Madrid
Agreement Concerning the International Registration of Marks (1981) and
the Protocol of the Madrid Arrangement (1989).
122. In Denmark, trademarks are governed by the Trademark
Act, which states that a trademark may be protected by registration
or by use without registration. A trademark may consist of words and
combinations of words, numbers and letters, figures and depictions as
well as packaging of goods. To obtain protection a trademark must be
suitable to distinguish the product or services for which it is used
from other products and services. Only
trademarks that do not conflict with a trademark with a better priority
123. A registered
trademark is protected for 10 years from the date of registration. The
registration may be renewed for consecutive periods of 10 years. The
registration of a trademark may be cancelled if within a 5-year period
from the registration the owner has not made use of the trademark for
the products or services for which it was registered, or if such use has
been ceased for 5 consecutive years.
Although both registered and non-registered trademarks are equally
protected under the law, it is generally advisable to register a
trademark because, in cases of infringement, the legal process is much
125. The trademark
protection grants the owner an exclusive right to the trademark, and
protects against the use of similar or confusingly similar trademarks
for the same or a similar type of goods or services.
126. Foreigners may also
apply for registration of a trademark, provided the trademark is
registered in the applicant's home country or on the basis of
reciprocity between Denmark and the country concerned.
are required to designate an attorney in Denmark.
trademark may obtain protection within the whole EU by registration with
the EU Trademark Office in accordance with the EU Regulation on EU
trademarks. Denmark has
also adapted the EU Trademark Directive and applies the ‘global
consumption’ principle on parallel imports of branded products.
128. Denmark is a signatory to Paris Convention
(1883), Strasbourg Law Convention (1963), World Intelligence Property
Organization (WIPO) Convention (1967), Convention on International
Classification of Patents (1971), Patent Cooperation Treaty, Chapter I
and II (1970), European Patent Convention (1973).
In 1978 Denmark partly ratified the Patent Cooperation Treaty (PCT)
signed in Washington, D.C., on June 19, 1970. Denmark ratified the
European Patent Convention (EPC), which came into force on January 1,
1990. On the basis of a single European application, a patent can be
granted by the European Patent Office in all the signatory countries.
Together with the other EU countries, Denmark signed the altered
Community Patent Convention (CPC) in December 1989. The CPC complements
the European Patent Convention by unifying the patent laws of the EU
countries. However, the CPC is subject to parliamentary approval by all
the EU countries.
130. According to the Danish
Patent Act a patent can be granted on application to any person who
has made an invention that can be applied in the industry. Only new
inventions differing considerably from the state of the art can be
131. The patent
authorities examine whether these requirements for registration are met.
Applications must be filed with the Patent Office ("Patentdirektoratet").
If the applicant does not reside in Denmark he must appoint an agent
residing in Denmark to represent him in connection with the application
and after the registration.
132. Applications for an
International Patent or a European Patent according to the Patent
Cooperation Treaty (1971) and the European Patent Convention (1973)
respectively may be filed in Denmark or with a foreign competent
authority. Patents registered according to such applications filed
outside Denmark generally have the same effect as patents applied for
and registered with the Danish patent authorities.
Upon application, patents are granted by a Patents Commission appointed
by the Ministry of Industry for inventions that can be used in industry
or for industrial purposes (including agriculture). Non-residents are
required to designate an attorney in Denmark. Patents are protected for
20 years, unless they are cancelled or the annual fees are not paid.
this period the owner of the patent has the exclusive right to exploit
134. Denmark adheres to the Berne Convention (1886
as revised 1971), Universal Copyright Convention (1952 as revised 1971),
Geneva Convention (1961), WIPO Convention (1967), Rome Convention
(1961), Phonogram Convention (1971), as well as to other conventions on
135. Literary and artistic works are protected
by copyright according to the Copyright Act. Besides traditional literary and artistic works the
Act also protects non-fictional works,
works, composers, stage and film directors, painters and sculptors,
architects and designers, photographs, advertisements, maps and
computer software. Protection of
photographs and the topography of semi-conductors are governed by
136. Copyright arises
automatically when the work is created, i.e. without registration or
formalities. According to the Copyright Act the work must be created by
the author's own efforts and meet some low quality standards. The
creator is considered the author and the owner of the copyright. In the
case of employees, however, the general rule is that the copyright
passes to the employer to the extent required for the employer's
ordinary business. The holder of the copyright has an exclusive right to reproduce,
distribute and adapt the work. Copyright protection as a main rule lasts
until 50 years after the death of the author.
137. An Industrial
Design, which is defined as a model for a product's appearance or for an
ornament, is protected by the Industrial Designs Act.
or owners of industrial designs may register their designs to obtain the
sole right to exploit such designs commercially. Industrial designs will
be registered only if they are essentially different from designs
already generally known. Designs may be registered for a period of five
years, and can subsequently be renewed for two five-year periods. An
application for registration may include more than one design, but
generally not more than 20 as jointly registered. Persons domiciled in a
foreign country must apply for registration through an attorney resident
138. Initially the
protection resulting from a registration has effect for 5 years from the
date on which the application was filed, but the registration may be
renewed for two further periods of 5 years each.
139. A product which is
suitable for industrial use and which implies a solution to a technical
problem may upon application be registered as a utility
model. To obtain registration and thereby the exclusive right to
commercial use of the utility
model, the applicant must show that the product holds originality
and novelty. The protection of utility
models, which was introduced in Danish law in 1992, is aimed at
inventions, which do not qualify as inventions under the Patent Act. A
patent application may be used to apply for protection as a utility
model in that case. The application has priority from the day the
application for a patent was filed. The Act also contains rules
concerning international utility models in accordance with the Patent
Cooperation Treaty (1970).
140. Only on request by
the applicant, the Patent Office will initiate an examination procedure
with respect to novelty and originality. Generally a registration is
granted provided only that the product brings solution to a technical
problem and that it is suitable for industrial use. After registration
the owner may be met by objections to the registration, which can be
tried by the Patent Office and in court.
141. The protection of a utility model runs for 3 years but may be renewed for two
supplementary periods of 3 years and 4 years respectively (a total of 10
years), provided that the owner pays a renewal fee.
Business Visas for Denmark
142. A visa issued by
any Schengen country permits
free travel across the borders within the Schengen
States if not stated otherwise in the visa. The Schengen countries include: Austria, Denmark, Finland, France,
Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal, Spain and
Sweden. Though not being members of the EU Norway, Iceland and
Liechtenstein have joined the Schengen
cooperation in the EEA (European Economic Area). The maximum duration
for a visa is 90 days. Normally, the Schengen
visas are to be applied in the Embassy of the country, which is the main
destination of an Indian business traveller. If visit to more than one Schengen country is envisaged and the main destination cannot be
determined, then the Embassy of the country of first entry should be
approached for the issue the visa.
143. All Indian
nationals travelling to Denmark are required to have their passport
endorsed with a valid visa. Visas have to applied in the Royal Danish
Embassy, New Delhi (Telephone: 0091-11-3010900 Fax: 0091-11-3792019/
144. To obtain a visa the following requirements must be met:
- Two visa application forms (originals) properly filled in
with two passport size photos in colour.
- Passport valid at least 90 days after expiry of the visa.
- Valid visa for the country to be visited after Denmark,
unless applicant is returning directly to India.
- Evidence of sufficient funds for maintenance during stay
in the Schengen area, e.g.
a letter of invitation from the relatives, friends, sponsors
guaranteeing all costs during the stay. Copy of the invitation
letter should be sent/faxed directly to the Embassy from the
reference in Denmark.
- Original letter of invitation from a business partner in
Denmark, stating the purpose, the dates and the duration of the
- Official introduction letter from the Indian company or
organisation of which an applicant is an employee (including the
address, telephone, fax, employment position, purpose of trip) and
copy of the company's business license.
- Evidence of funds to cover expenses including access to
145. The Danish Embassy
in New Delhi may take between 3-5 working days for issuing the visas.
Visa application forms can be downloaded from the website
146. India and Denmark
concluded the Convention for the
Avoidance of Double Taxation and the prevention of fiscal evasion
with respect to taxes on income and on capital.
The agreement came into force on June 13, 1989.
147. India and Denmark
have also concluded a Bilateral
Investment Promotion and Protection Agreement (BIPPA).