19+ Pros And Cons of Doing Business in Denmark (Explained)

Denmark is known for its culture across the globe. According to the survey of the World Bank, the nation holds the 3rd position among 190 countries for doing business in the country. The government has innovative approaches to the future, and the developing yet stable economy attracts large investors to the country.

This article will highlight the major benefits and drawbacks of establishing a business in Denmark.

Benefits of Doing Business in Denmark The Drawbacks of Doing Business in Denmark 
Gender equality Getting credits 
Low crime rate Investor Protection Policy

Advantages of Doing Business in Denmark

  • Infrastructure:

Denmark has a highly developed infrastructure, which provides a great benefit to businesses in the country. The country has already made sites and business parks for starting a business.

It also has a large number of ports and airports that make travel and transportation easy to other countries. This attracts a large number of business owners, entrepreneurs, leaders, and international players within the country.

  • High education system:

Denmark provides high education to its students and hence successfully produces young skillful minds every year.

The young graduates are highly advanced with their subject knowledge and are also dedicated to their respective roles. With dedication, passion, and qualification of the young folks towards their work, the companies are on its way of development.

Many successful companies have developed from the country because of highly skilled staff and proper business strategies.

  • Innovative technology:

Denmark has remarkable technology and innovation from an early stage. Its telecommunications department is highly developed and makes the country work at a rapid rate.

The internet service is available at every location of the country, giving a significant benefit to all the business owners and entrepreneurs. 

  • Highly-advanced health sector:

The research and development sectors are highly advanced and acquire a major part of the GDP of the country. The health care sector is also advanced in the country, which makes the country healthier to develop.  

  • Tax Policies:

Denmark has business-friendly tax policies. The Corporate tax, VAT, is meager as compared to other countries.

100% of foreign offshore companies can be established in the country, which makes it more beneficial for foreign business owners and entrepreneurs. Moreover, the profit tax is dependent on the total amount of turnover of the company.

This attracts a large number of foreign investors and business leaders to the country.

  • Resources:

Denmark is blessed with natural resources. The petroleum industry booms in the country and brings a large amount of capital to the country.

The agriculture sector also contributes to the export and brings foreign currency to the country. This grabs the eyes of enormous international players and investors to Denmark for setting up their businesses.

Disadvantages of Doing Business in Denmark

  • Starting with business:

There are multiple procedures to follow for legalization in the country. It requires approval from NemID before commencing further processes.

Opening a bank account also consumes a lot of time. There is a minimum amount of capital investment needed before starting with business.

  • Physical Presence Required:

The physical presence of business owners is needed to get documents approved. Many different government departments are required to be visited to complete legalization and start with business.

This causes a significant delay in the development and expansion of companies.

  • Construction Permit Pain:

The construction permit is also a time-consuming process. It requires the completion of 8 different procedures to get the construction legalized and approved by the government. Other municipal authorities carry out multiple inspections.

Moreover, various municipal and government departments are required to be visited to get the construction permit and start further construction. This causes a delay in creating and developing the business.

  • Getting electricity:

The electricity connection also requires government approval and legalization processes, which causes a significant delay in developing the business.

There are companies like DONG and Kommune in Denmark which work under the government. The business owners need to apply for an electricity connection to these companies.

Further, multiple inspections are carried out, followed by meter installation and wiring work. This has a significant impact in the development and expansion timeline of the company.

  • Trading across Borders:

Trade across borders also requires the completion of time-consuming processes. There are a total of 4 documents for export and three documents for import to be legalized for the trade.

The entire documentation procedure takes up to 5 days for completion, and starting then, the transfer of goods is started. This sometimes causes a delay in supplying goods at a proper timeline.

  • Enforcement of contracts:

The procedures for enforcing any contract are very complicated and require legal authority support to complete the process.

It takes around 410 days to complete the process, which is lesser than in other countries. However, the procedures are highly complicated and require a proper amount of attention to get completed.

  • Payment of tax:

There are a total of 10 types of taxes needed to be paid. Multiple government departments are required in order to be visited for the payment and approval of compensation.

It takes up to 130 hours of the company to complete the process of tax payment. Moreover, there are many different types of taxes in the country by which many companies may be unfamiliar, like environmental tax and many more.

  • Solving Insolvency:

The company, once caught in insolvency, has experienced great difficulty in bringing up a solution. It takes up to 1 year of time on average to get out of bankruptcy.

The recovery rate is comparatively higher than OECD norms. However, it causes a delay in the development and growth of businesses.

  • Culture:

Business culture is quite strict and follows a certain number of etiquette. Many times this causes hurdles for developing and growing because of the strict rules. The business community does not readily accept change in business strategies.

This makes it somehow difficult for new business leaders and startups to survive and succeed in the country.

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