Sole proprietorship in Denmark (enkeltmandsvirksomhed) — taxes and costs
Published: 2026-07-24
Enkeltmandsvirksomhed is the Danish sole proprietorship — the simplest business form, run by one person responsible for the business. It requires no capital and is cheap to set up, but the owner is liable for obligations with their entire personal assets. For tax, the business is reported together with the owner's income. Below we explain liability, taxes, costs and VAT (moms), and who this form suits. To compare it with an ApS company or see the full registration path, see our umbrella guide on starting a company in Denmark.
What is an enkeltmandsvirksomhed?
An enkeltmandsvirksomhed is a business run by one person who is personally responsible for it. The business is not a separate legal entity distinct from the owner — the key difference from an ApS. In practice, the owner is liable for the business's debts with all of their assets, including personal ones.
The business receives a CVR number (8 digits) once registered by Erhvervsstyrelsen (the Virk portal, virk.dk). The form is most often chosen by freelancers, tradespeople and those starting out on a small scale who value simplicity and a low start-up cost.
How is a sole proprietorship taxed?
An enkeltmandsvirksomhed's profit is taxed as the owner's personal income — there is no separate company tax. During the year you pay advance tax. Advance tax is based on a preliminary yearly assessment (forskudsopgørelse), which can be adjusted if needed, and the final annual settlement is filed later via the tax return (oplysningsskema) — on that basis the authority calculates any top-up or refund. Denmark also offers special schemes for businesses, such as virksomhedsordningen, which allow retained profits and interest to be treated differently — their use depends on the situation.
Specific rates, thresholds and deduction rules change and depend on circumstances — it is best to confirm the settlement with a Danish adviser or accountant. This guide is not tax advice.
What does it cost and what obligations does it have?
An enkeltmandsvirksomhed is cheap to start: it requires no capital, and registration via Virk is essentially free. This is the main cost advantage over an ApS.
Obligations are simpler than in an ApS: the business keeps accounts, files tax and — once turnover exceeds DKK 50,000 over 12 months — registers for VAT (moms). An enkeltmandsvirksomhed usually has no duty to file a separate annual report (årsrapport) with the register or to have an audit. If it hires, employer obligations apply. The main risk is not the cost but personal liability.
Who is an enkeltmandsvirksomhed for, and when is an ApS better?
An enkeltmandsvirksomhed suits a small scale, a single owner and limited risk best — when you value simplicity and a low start-up cost. As turnover grows, with hiring, partners or greater financial risk, limiting liability — which an ApS provides — matters more. The table below summarises the main pros and cons.
| Aspect | Pro | Con |
|---|---|---|
| Start-up | no capital, cheap registration via Virk | — |
| Liability | — | full, with personal assets |
| Administration | simpler; usually no årsrapport or audit | no clear separation of business from person |
| Tax | no separate company tax | profit taxed as personal income |
Frequently asked questions
- Does a sole proprietorship separate business assets from personal ones?
- No. In an enkeltmandsvirksomhed the business is not a separate legal entity, so the owner is liable for its obligations with all of their assets, including personal ones. This is the key difference from an ApS, where liability is limited to the company's assets.
- How is tax settled in a Danish sole proprietorship?
- Profit is taxed as the owner's personal income; there is no separate company tax. During the year you pay advance tax. You may also use special schemes (e.g. virksomhedsordningen), which treat retained profits differently. The exact approach depends on the situation — confirm it with a Danish adviser.
- How much does it cost to start a sole proprietorship in Denmark?
- An enkeltmandsvirksomhed requires no capital, and registration via the Virk portal is essentially free. The main costs are ongoing accounting, not the registration itself. It is worth confirming current rules and any fees before starting.
- Does a sole proprietorship need VAT (moms)?
- Only after taxable turnover exceeds a threshold — in Denmark that is DKK 50,000 over a 12-month period. Below that, a business usually does not charge VAT. Registration is handled by Skattestyrelsen (via Virk). Thresholds can change.
- When is an ApS better than a sole proprietorship?
- Usually when financial risk grows, you plan to hire, want partners or want to separate business assets from personal ones. An ApS limits liability to the company's assets but requires DKK 20,000 of capital and full accounting. We expand on the comparison in a separate guide on the ApS company.
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This guide is for information purposes only and does not constitute legal or tax advice. Laws and registry rules may change — the information held in the relevant country's official registers is always decisive.