When you start your own business, you must register it with the Danish Business Authority. As a sole proprietorship, you can log in using NemID and register the business directly with the Danish Business Authority via www.virk.dk.
What constitutes a commercial enterprise?
SKAT determines whether your activity is a commercial enterprise by examining the purpose of the business. First and foremost, we examine whether the business is a hobby or whether your principal purpose is to make money. We also check whether you have adopted a reasonably professional approach and whether your business can live up to the normal standards associated with your business sector.
SKAT considers your business to be a commercial enterprise when you run it to make money but at the same time run the risk of incurring more expenses than income.
Typically, a self-employed businessman runs his business for his own account and risk with the clear aim of making a profit, while an employee often has a contract with his employer and ‘only’ runs the risk of losing his job.
To qualify as a commercial enterprise, your business must meet two conditions:
If your business does not meet these two conditions, it is regarded as a non-commercial or hobby enterprise.
A non-commercial enterprise is also referred to as a hobby enterprise. We consider your business to be a hobby enterprise if your principal purpose is not to generate income but to cultivate your hobby, e.g. painting, horse riding, breeding horses etc.
If your business is classified as a non-commercial enterprise, you cannot be registered for VAT.