Valg af virksomhedsform for en iværksætter

Thomas Funch & Jesper Lomborg

Student thesis: Diploma thesis


This thesis is about some of the different business types, that you can start up and run your business in, in Denmark. The thesis will describe the general legal regulations and the tax regulations of the different business types. Based on the regulations, the thesis will compare the different business types and examine what is the most optimal for an entrepreneur. It is possible to choose between a variety of different business types. The most used business type in Denmark is a sole proprietorship. This kind of business type is owned by a single person, who is personal liable to the full extent of one´s assets for the business´ obligations. There are no capital requirements for this type of business form, as the business is a part of the proprietor’s self‐assessment. When you are doing business in this form, you can choose between different taxation forms. The standard regulations are the Personal Taxation Scheme (Personskatteloven). An alternative is the Business Taxation Scheme (Virksomhedsskatteordningen). The last taxation form is not commonly used and is called the Return on Capital Scheme (Kapitalafkastordningen). The Personal Taxation Scheme is the same regulations as normal employees would use. This means that the business profit will be taxed as personal income and that the interests will be deducted as capital income. The Business Taxation Scheme is the most used taxation scheme, as it gives a lot of possibilities to optimize the tax. In this tax form, you are able to deduct the interest directly in the personal income. Furthermore the proprietor has the possibility to choose to save a part of the profit (the part that he has not transferred to his personal account) and only pay business tax of this part. The Business Taxation Scheme requires some calculations as you will need to calculate the return on capital basis, return on capital and a deposit account. As a result, this taxation scheme is only recommendable if the proprietor hire an accountant to calculate the tax, as it can be too complex for the proprietor to do by himself. The Return on Capital Scheme is a simplified version of the Business Taxation Scheme, where some of the same benefits are achievable. The business profit before interests is taxed as personal income. The interests are deducted as capital income. This also involves a calculation of a return on capital, which are then removed from the personal income and instead are moved to capital income. In this way the taxation will be lower, as capital income is taxed lighter than personal income. In addition to a sole proprietorship you can choose to start a corporation. A corporation is owned by one or several. Corporations come in many different varieties, but the thesis will focus on private limited companies. There is a capital requirement when starting up a private limited corporation. The capital requirement ranges from DKK 1 to DKK 500.000 depending on the corporation type. In a corporation, the owner is only liable with the invested capital. A corporation is its own legal entity and therefore the corporation assets may not be mixed with the owners private assets. A private limited corporation is taxed after the Danish Corporation Tax Act (Selskabsskatteloven). The corporation needs to pay corporation tax of the taxable income. The corporation tax is 23.5 % in 2015. In 2016 it will be 22 %. The owner of the corporation is only taxed of his salary or the dividend he chooses to pay himself. Whether you should choose a sole proprietorship or a corporation is not an easy choice, as the owner who wants to start up a company has to consider which kind of risk he is willing to take. In the proprietorship you are liable to the full extent of your assets, where there is a split between the company’s finances and your personal finances. Furthermore the owner has to consider the taxations consequences for respectively the sole proprietorship and the corporation. The calculations in this thesis show that when starting a sole proprietorship, the Business Taxation Scheme is the most advantageous taxation vise. The owner has the opportunity to get a higher taxation value of the interests and is able to save part of the profit for later taxation. Furthermore the thesis shows that the overall taxation is nearly the same whether you chose a sole proprietorship with the Business Taxation Scheme or you chose a corporation. The thesis also show, that you will have to look at the size of the business, as you are personal liable in a sole proprietorship, therefore it can be advantageous to start a corporation even though the tax will be a slightly higher.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
Publication date2015
Number of pages93