AP's company creation - Pros and cons in 2025

Starting a limited liability company (ApS) is one of the most popular ways of doing business in Denmark. However, as with all business decisions, ApS comes with both pros and cons that you should know before making the choice. In this article you will get a complete overview of what it means to create ApS company in 2025.

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What is an ApS?

An Anpartsselskab (ApS) is an autonomous legal entity that is separate from its owners. With the new rules from February 27, 2025, the capital requirement has been reduced to DKK 20.000, making it more accessible for entrepreneurs to create ApS company.

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The 8 main advantages of ApS

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1. Limited Liability - Your Greatest Security

The main advantage by create ApS company is the limited liability. As the owner, you are only liable with the capital you have invested in the company - typically the DKK 20,000.

What does this mean in practice:

• Your private assets are protected
• Creditors can't go after your house, car or savings
• Maximum risk is your deposited capital

Example: If your ApS goes bankrupt with a debt of DKK 500,000, you will only lose your deposited DKK 20,000 - not your private assets.

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2. Tax Benefits - Save Significant Amounts

Corporate tax vs. personal tax

• ApS pays 22% corporation tax of profits
• Personal income is taxed at up to 56%
• Significant savings from higher revenues

Practical example:

• Profit of DKK 500,000:
  • As ApS: DKK 110.000 in tax (22%)
  • As personal income: Up to DKK 280,000 in tax (56%)
  • Potential savings: DKK 170,000

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3. Professional Image and Credibility

Why APs signal seriousness:

• CVR number and official registration
• Professional business address
• Increased trust from customers and suppliers
• Easier to get business credit

Marketing advantages:

• Better opportunities for B2B sales
• Increased credibility in bidding rounds
• Professional communication

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4. Flexible ownership structures

Options for multiple owners:

• Easy distribution of shares
• Flexible ownership structures
• Opportunity for investors
• Succession planning

Practical advantages:

• Bring partners into the company
• Sell parts of the company
• Plan generational change

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5. Tax Deductibility

Occupational deductions:

• All business-related expenses
• Better pension schemes
• Company car and other goods
• Representation and travel

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6. Continuity and Assignment

The company survives the owners:

• APs exist independently of owners
• Easy handover on sale
• Succession to the Next Generation
• Stable business structure

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7. Access to finance

Easier to get loans and investments:

• Banks prefer ApS for business loans
• Equity crowdfunding option (from 2025)
• Attractive to private investors
• Better terms on financing

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8. Possibility of retained profits

Capital building in the company:

• Profits may remain in the company
• Lower taxation than disbursement
• Building up equity
• Financing growth

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The 6 Biggest Disadvantages of APs

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1. Capital requirements - DKK 20,000 to be invested

Initial investment:

• A minimum of DKK 20,000 must be deposited
• The money is tied up in the company
• Can be a barrier for startups
• Capital must be available for operation

Comparison with sole proprietorship:

• Sole proprietorship: DKK 0 in start-up capital
• ApS: DKK 20.000 in initial capital

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2. Increased administration and compliance

Current liabilities:

• Annual annual report must be submitted
• Annual General Meeting at least once a year
• Ongoing accounting and accounting
• Compliance with company law

Time consumption and cost:

• 10-20 hours of additional administration annually
• Auditor costs: DKK 15,000-50,000 annually
• Accounting: DKK 20,000-60,000 annually

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3. Double taxation on dividends

Fiscal disadvantage of progressive taxation:

• Corporate tax: 22% of profits
• Dividend tax: 27% for dividends up to DKK 67,500
• Dividend tax: 42% for dividends above DKK 67,500
• Total taxation may exceed personal income

Practical examples:

Example 1 - Low yield (DKK 50,000):

• Profit in ApS: DKK 64,103
• Corporate tax (22%): DKK 14,103
• Remaining for dividend: DKK 50,000
• Dividend tax (27%): DKK 13,500
• Total tax: DKK 27,603 (43%)

Example 2 - High Yield (DKK 100,000):

• Profit in ApS: DKK 128.205
• Corporate tax (22%): DKK 28,205
• Remaining for dividend: DKK 100,000
• Dividend tax: DKK 18,225 (27% of first DKK 67,500) + DKK 13,650 (42% of remaining DKK 32,500)
• Total dividend tax: DKK 31,875
• Total tax: DKK 60,080 (47%)

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4. Limited Deficit Deductions

Cannot be set off in personal income:

• Deficits in ApS cannot be deducted personally
• Deficits carried forward to next year in the company
• No tax break on start-up losses

Comparison with sole proprietorship:

• Sole proprietorship: Deficits can be deducted from personal income
• ApS: Deficit remains in the company

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5. Complex creation and legal requirements

Creation process:

• Legal documents must be drawn up correctly
• Registration with the Danish Business Authority
• Longer processing time
• Higher cost of creation

Comparison of creation costs:

• Sole proprietorship: DKK 0
• ApS: DKK 670 + legal assistance + capital injection

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6. Less flexibility in daily operations

Formal requirements:

• Decisions must be documented
• General meetings shall be held
• Statutes must be observed
• Less spontaneous decision-making

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APs vs. other types of companies

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ApS vs. Sole proprietorship

ApS vs. A/S (Limited Liability Company)

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When should you choose ApS?

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ApS is the right choice if:

✅ Your expected annual turnover > DKK 500,000
‍✅ You will have limited liability
‍✅ You plan to hire employees
‍✅ You want professional credibility
‍✅ You want to optimize your tax situation
‍✅ You are considering future investors

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Consider alternatives if:

❌ Your turnover is less than DKK 200,000 annually
‍❌ You prefer minimal administration
‍❌ You do not have DKK 20.000 for initial capital
‍❌ You expect deficits in the first few years
‍❌ You run a very simple business

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Economic analysis: When do APs pay off?

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Break-even analysis with correct dividend taxes

For turnover of DKK 300,000:

• Additional costs for ApS: ~DKK 40.000 annually
• Tax savings: ~DKK 25,000 annually
• Net cost: DKK 15,000

For a turnover of DKK 600,000:

• Additional costs for ApS: ~DKK 45,000 annually
• Tax savings: ~DKK 80,000 annually
• Net savings: DKK 35,000

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Dividend tax optimization

Strategy for lower dividend tax:

• Keep annual dividend below DKK 67,500 for 27% rate
• Take advantage of the opportunity to retain profits in the company
• Plan payouts over several years
• Combine Pay and Dividends Strategically

Example of optimization:

• Instead of DKK 100,000 dividends in one year (total tax: 47%)
• Pay DKK 67,500 over two years (total tax: 43% both years)

Conclusion: ApS typically starts to pay off with annual turnover above DKK 500,000, but requires strategic planning of payouts.

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Flexum Coworkings Solution for APS Creation

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Complete package solution

What we offer:

• Legal preparation of all documents
• Registration with the Danish Business Authority
• Professional business address from day one
• Ongoing support and advice

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Special offer until September 30, 2025

Free APS Creation when buying a virtual office:

• Save DKK 975 on company incorporation
• Professional address from DKK 188/month
• Mail and package management included
• Fast process: 1-2 days

After September 30:

• APS Creation: DKK 495 with Virtual Office
• Still significant savings compared to competitors

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Benefits of Flexum Coworking

Professional Address:

• Prestigious location in Lyngby
• Protect your privacy
• Strengthen your brand from the start
• Flexible meeting facilities

Complete service:

• Legal security through simple law
• Personal advice
• Fast case processing
• Ongoing support

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Practical tips for APS owners

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Optimize your tax situation

Strategies for lower tax:

• Keep annual dividend below DKK 67,500 for 27% dividend tax
• Use the company for retirement savings
• Make the most of deductibles
• Plan payouts strategically over several years
• Optimally combine salary and dividends

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Manage your APs efficiently

Organizational tips:

• Use digital accounting systems
• Automate as much as possible
• Hold regular board meetings
• Document all important decisions

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Build your brand

Marketing with ApS:

• Use CVR number in all communication
• Professional website with company information
• Networking in business organizations
• Build credibility through consistency

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Future opportunities with ApS

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New financing options in 2025

Equity crowdfunding:

• From 1 January 2025, ApS will be able to raise capital through crowdfunding
• Opportunity to attract many small investors
• Alternative to traditional bank financing

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Growth Opportunities

Scaling the business:

• Easy approach to investors
• Professional structure for growth
• Possibility of acquisitions and mergers
• International expansion

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Conclusion: Is ApS the right choice for you?

ApS is a powerful business structure that offer significant benefits to the right companies. The main considerations are:

Choose ApS if:

• You expect annual revenue above DKK 500,000
• Limited liability is important to you
• You want to optimize your tax situation
• Professional image is essential for your business

Consider alternatives if:

• You start small with limited revenue
• You prefer minimal administration
• You do not have capital for deposits and current costs

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Get started with Flexum Coworking

Free Consultation: Call 70 555 255 for personal advice on whether ApS is the right choice for your company.

Special offer until September 30:✅ Free APS Creation when buying virtual office ✅ Professional address from only DKK 188/month ✅ Legal security through Simple Law ✅ Fast process - 1-2 days ✅ Ongoing support as your business grows

Visits flexum.dk/company creation or call today to get started with your ApS.

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Disclaimer

This article is written for informational purposes and does not constitute legal, tax or financial advice. Tax laws and corporate regulations can change, and individual circumstances vary considerably.

We strongly recommend that you consult qualified professionals - including lawyers, accountants or tax advisers - before making decisions on company form and company creation.

Flexum Coworking assumes no liability for any loss or damage that may arise as a result of using the information contained in this article.

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