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Successfully investing in Denmark

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last updated on 19 May 2021 | reading time approx. 3 minutes

  

 

How do you assess the current economic situation in Denmark?

Due to expansive financial politics supporting closed businesses, extensive digital infrastructure and a flexible labor market and industry, Denmark performed relatively well through the Covid-19 pandemic. Denmark has suffered a decrease in GDP of 3.3 per cent in 2020, which relative to other European economies is very little. The Danish labour market has also suffered the least in comparison.

The crisis has shown that the Danish industry is less sensitive to economic conjunctures and already in the beginning of 2021, the industry was back to pre-crisis level. Although there is a risk that the numbers of bankruptcies might rise, when the aid-packages and other liquidity schemes end, it is generally expected that the growth will return during springtime, where the majority of restrictions are gradually lifted. Experience from the reopening in the summer 2020 show that the economic activity quickly returned. In conclusion, Denmark has suffered a minor setback compared to other countries. Once restrictions are lifted, the country will return to normal quickly.

 

How would you describe the investment climate in Denmark? Which sectors offer the largest potential?

Denmark has consecutively been in the top 5 of the World banks “Ease of doing business” list, which ranks countries according to how easy it is to start and operate businesses. Compared with Denmark’s generally strong economic numbers in comparison to other countries, it seems evident that the country has one of the best investment climates in the world. Denmark strives to expand in knowledge-based and high-tech industries of the future, placing great emphasis on Research & Development and green energy. Moreover, Denmark hosts some the most conscious consumer who are willing to pay more for “green” and sustainable products.  Sectors that expert assess to have large growth potential are, i.a. IT, pharmaceutical industry, sustainability, and green energy.

 

What challenges do German companies face during their business ventures into Denmark?

The temporary travel restrictions, according to which travelers to Denmark must have a purpose worthy of recognition and a negative Covid-19 test not older than 24 hours, is currently the greatest challenge. Luckily, this restriction is only temporary.

In more general terms; one of the challenges of German companies venturing into Denmark might be the difference between the Danish and German labour market. The difference is mainly that the Danish labour market is very flexible and subject to only few acts of law, but at the same time more collective bargaining agreements apply. Trade and labour unions are thus very widespread and influential. The trade unions are e.g. trying to stop the import of foreign labour in order to ensure the relatively high levels of salary compared to the rest of Europe, especially protecting unskilled labour.

The Danish tax regulations for employers and employees can be a challenge. If a permanent establishment is set in Denmark, the employer is required to deduct and pay taxes. In addition, foreign service providers are required to register their activities in a special register (the RUT register). If they fail to do so, the company is at risk of a fine of 10,000 Danish kroner (DKK).

With the right advisor, these challenges are not grave and the danish public digital infrastructure makes the necessary legal registrations etc. easy to comply with.

 

What opportunities does the cross-border Öresund region offer for investors?

Together the Öresund Region has weathered the corona crisis very well and the economies are expected to return quickly back to normal. The Öresund Region is a gateway to Europe. So far, over 300 high-tech companies have established their presence in this cross-border region, approx. 100 of whom operate in the bio-tech sector. Access to both Danish and Swedish markets comes with many advantages such as tax benefits, larger markets to venture and great possibility for hiring highly skilled employees.

 

In your opinion, how will Denmark develop?

The Danish economy has solid prerequisites for adjusting to more permanent changes in demand and methods of productions because of the crisis. Denmark has a flexible labour market which is able to adjust to economic conjunctures and a welfare state with strong digital infrastructure ready to invest in the private market. These factors will lead to quick recovery. In 2020, the Danish economy was assessed by the World Economic Forum as one of the most adaptable economies. Consequently, Denmark will have a sound solid economic development in the wake of Covid-19.

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