Starting a private limited company (ApS) is one of the most popular ways to run a business in Denmark. However, as with any business decision, an ApS comes with both advantages and disadvantages that you should be aware of before making your choice. In this article, you will get a complete overview of what it means to set up an ApS company in 2025.
What is an ApS?
A private limited company (ApS) is an independent legal entity that is separate from its owners. Under the new rules from 27 February 2025, the capital requirement has been reduced to DKK 20,000, making it more accessible for entrepreneurs to set up an ApS company.
The 8 biggest advantages of an ApS
1. Limited liability – your greatest protection
The most important advantage of setting up an ApS is limited liability. As an owner, you are only liable up to the capital you have contributed to the company – typically DKK 20,000.
What this means in practice:
Your personal assets are protected
Creditors cannot pursue your house, car, or savings
Your maximum risk is your contributed capital
Example:
If your ApS goes bankrupt with a debt of DKK 500,000, you only lose your contributed DKK 20,000.
2. Tax advantages – save significant amounts
Corporate tax vs. personal tax:
An ApS pays 22% corporate tax
Personal income is taxed at up to 56%
Significant savings at higher income levels
Practical example – profit of DKK 500,000:
As an ApS: DKK 110,000 in tax
As personal income: up to DKK 280,000 in tax
Potential savings: DKK 170,000
3. Professional image and credibility
Why an ApS signals seriousness:
CVR number and official registration
Professional business address
Increased trust from customers and suppliers
Easier access to business credit
Marketing advantages:
Better opportunities for B2B sales
Greater credibility in tender processes
Professional communication
4. Flexible ownership structures
Options for multiple owners:
Easy allocation of shares
Flexible ownership structures
Option to bring in investors
Succession planning
Practical advantages:
Bring partners into the business
Sell parts of the business
Plan a generational handover
5. Tax-deductible expense options
Business deductions:
All business-related expenses
Better pension schemes
Company car and employee benefits
Representation and travel expenses
6. Continuity and transfer
The company outlives its owners:
An ApS exists independently of its owners
Easy transfer upon sale
Succession to the next generation
Stable business structure
7. Access to financing
Easier access to capital:
Banks prefer an ApS for business loans
Option for equity crowdfunding (from 2025)
Attractive company form for investors
Better financing terms
8. Option to retain profits
Building capital within the company:
Profits can remain in the company
Lower taxation than when paid out
Building equity
Financing growth
The 6 biggest disadvantages of an ApS
1. Capital requirement – DKK 20,000 must be invested
A minimum of DKK 20,000 must be contributed
The capital is tied up in the company
May be a barrier for start-ups
Comparison:
Sole proprietorship: DKK 0
ApS: DKK 20,000
2. Increased administration and compliance
Ongoing obligations:
Annual report
General meeting at least once a year
Ongoing bookkeeping and accounting
Costs:
Auditor: DKK 15,000–50,000
Accounting: DKK 20,000–60,000
3. Double taxation on dividends
Corporate tax: 22%
Dividend tax: 27% (up to DKK 67,500)
Dividend tax: 42% (above DKK 67,500)
Total taxation may exceed personal income tax.
4. Limited options for deducting losses
Losses cannot be offset against personal income
Carried forward within the company to later years
5. Complex formation and legal requirements
Legal documents
Registration with the Danish Business Authority
Higher formation costs
6. Less flexibility in day-to-day operations
Decisions must be documented
General meetings are required
Articles of association must be complied with
ApS vs. other company types
ApS vs. Sole proprietorship
Factor
ApS
Sole proprietorship
Start-up capital
DKK 20,000
DKK 0
Liability
Limited
Unlimited
Tax
22% + dividend tax
Up to 56%
Administration
High
Low
Professional image
High
Lower
ApS vs. A/S
Factor
ApS
A/S
Start-up capital
DKK 20,000
DKK 400,000
Ownership base
Few owners
Many shareholders
Management
Flexible
Board + executive management
Disclosure
Limited
Extensive
When should you choose an ApS?
An ApS is the right choice if:
✅ Annual turnover > DKK 500,000
✅ Limited liability is important
✅ You want to hire employees
✅ Professional credibility is crucial
Consider alternatives if:
❌ Turnover < DKK 200,000
❌ Minimal administration is desired
❌ Lack of start-up capital
❌ Expected losses
Conclusion: Is an ApS the right choice for you?
An ApS is a strong and professional company form that is best suited to businesses with growth ambitions, higher turnover, and a need for limited liability. For the right businesses, an ApS offers both tax and strategic advantages – but it also requires structure, capital, and planning.
Disclaimer
This article is for informational purposes only and does not constitute legal, tax, or financial advice. Rules may change, and individual circumstances vary.
We always recommend that you consult a lawyer, auditor, or tax adviser before deciding on a company form.
