Doing 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 8%.


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

Investor considerations

  • There is no discrimination between domestic and foreign investors.
  • Denmark offers free access to the EU market.
  • There is extensive foreign investment.
  • Government policy supports free enterprise and free trade.
  • Government and labour attitudes toward foreign investment are neutral.
  • The 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 corruption.

 7. When 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.

 8. The Danish government encourages foreign investment. Foreign 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.

 Investment policy

 10. 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 guarantees.


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 areas.

 12. 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.

 Grants & Loans

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

 Investor considerations

  • There are virtually no exchange controls.
  • Capital and earnings may be freely repatriated.
  • Residents must report information on foreign bank accounts.
  • Most industries are open to private enterprise.
  • 100% foreign ownership is usually permitted.

 Exchange controls

 16. Exchange 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.

 17. 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 from Denmark.

 18. In general, no foreign exchange controls/restrictions are 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

 19. Government 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.

 Company 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 (‘Aktieselskab’ or ‘A/S’)

Private Limited Company (‘Anpartsselskab’ or ‘ApS’)

Sole Proprietorship

Branches (of Foreign Limited Companies) and Representation Offices

General Partnership (‘Interessentskab’ or ‘I/S’)

Limited Partnership (‘Kommanditselskab’ or ‘K/S’)


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 registration.

 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 100%.

 23. 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 Accountants (IFAC).

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.

34. Establishment 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 enterprise.

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 into contracts.

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 Agency.

Trade barriers

40. 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.

Free-trade zones

41. Free-trade zones do not exist in Denmark.



Taxation policy

 42. The tax system neither favours nor discriminates against inward foreign investment. For individuals, the overall tax burden is fairly high. For corporations, it is in line with the average for EU member states. From January 1, 1999 the corporate tax rate is 32%.

Company Taxation

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 either.

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 too.

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%.

54. A number of business sectors are, however, exempted from paying VAT, the most important being: Hospital/medical/dental care, insurance, banking and certain other financial sectors, travel agencies.

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.

 59. Taxable income is based on gross income less deductions. The income tax consists of a three-tier state income tax and a flat rate local income tax. Combined top marginal income tax rate cannot exceed 59%.

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.


Labour Market

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 the employee.

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 ("Direktoratet for 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 requirements.


Stock 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 credit.



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 importer’s estate.


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 market research.

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 them.

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:

  • Consumer products must be labelled in Danish or in a language differing only slightly in spelling (Norwegian or, to some extent, Swedish).
  • Weights and measures must be indicated in the metric system.
  • A number of products must be clearly marked with the country of origin and must be CE-marked.
  • Labels/marking 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 importer’s instructions.

CE Marking

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 prototype approval.

Positive List

100. Another 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.                                                         

ISO Certification

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 control certificate.

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.


Customs 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.


GSP - Generalized System of Preferences

114. Completely 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 market.

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.

Trademark Laws

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 are protected.

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.

124. 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 simpler.

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. Foreigners are required to designate an attorney in Denmark.

127. A 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.

Patent Laws

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).

129. 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 patented. 

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.

133. 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. During this period the owner of the patent has the exclusive right to exploit the invention.

Copyright Laws

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 copyright protection. 

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, scientific 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 special statutes.

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.

Industrial Designs

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. Designers 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 in Denmark.

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.

Utility Models

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/ 3792891 Email:

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 visit. 
  • 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 foreign exchange.

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


Bilateral Agreements

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).


Copenhagen, March 6, 2002


Prepared by Economic & Commercial Section, Embassy of India, 15, Vangehusvej, DK-2100 Copenhagen, Tel: 39290854, Fax: 00 45 39270218 E-Mail:



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