Your financial situation as self employed or startup

VAT

If you sell for more than DKK 50,000 a year, you are required to register for VAT.

Your revenue – not your profit – is decisive for when you are required to register for VAT. It is not necessarily an advantage to wait until you have sold for DKK 50,000 excl. VAT. If you wait, you might not be entitled to deduct VAT on your investments.

You do not have to register for VAT if you only sell products and services subject to VAT for less than DKK 50,000 a year excl. VAT. However, you may decide to register anyway. It is an advantage if you mostly sell to businesses registered for VAT.

If your business sells services not subject to VAT, such as healthcare, freelance articles or art, they are exempt from VAT but subject to what is known as payroll tax.

If your revenue is less than DKK 5 million a year, you are required to submit VAT returns every six months.

Use a Business House

At Startvækst – startvaekst.virk.dk (in Danish) – you can see what events the regional business houses offer.

Remember that your business must comply with a number of formal reporting requirements. Here, you can read more about the deadlines you need to know in terms of VAT, tax, unemployment benefits, etc.

Venture financing for your startup

If you or your business has any relation to CBS, you can apply for venture capital at CBSStartup.dk. Djøf is behind CBSStartup and as a founding member, we have made the startup of CBSStartup possible.

Fees

As a self-employed person, you have to make agreements with customers and subcontractors on the provision of services. Always make sure to make written agreements stating the service to be provided, the price of the work, the deadlines agreed and where the work is to be performed.

When you set your fee, there are many factors you need to consider. 

Djøf does not have a fixed recommended rate for self-employed. However, when you set your fee as self-employed or freelancer, you need to remember that the fee is to cover everything that is included in a fixed salary, i.e. pension, holiday, public holidays, sickness, sick child, supplementary training, maternity/paternity leave, administration and gaps between jobs.

Based on a calculation of those elements, Djøf Privat has made a recommended calculation factor for tasks paid on a fee basis corresponding to twice the hourly rate received by a permanent employee in the relevant industry sector. See more about salaries on Djøf's salary pages.

If, as a self-employed person, you have overhead expenses for e.g. rent, office supplies, employees, etc., such costs should be added to the calculation factor on a pro-rata basis.

Speaking of engagement rates

Rates for university graduates - valid from 1st of April 2019.

• Rates for speaking engagements/lectures: For every lesson of 45-60 minutes for every hour or part of an hour: DKK 2,751
• Payment for participation in subsequent discussions etc.: 30% of the rate under A for every hour or part of an hour: DKK 825.
• Payment for preparing written material: Payment for the preparation of written material should be charged separately, provided that prior agreement has been made for the provision of written material and on the payment for preparing it.
• Reimbursement of costs: Costs of material should be reimbursed on a separate basis.
• Mileage allowance, hourly and daily allowance: Mileage allowance (1st class) as well as hourly and daily benefits (maximum rate) can be charged according to the current rules for civil servants.

Bankruptcy and the Employees Gurantee Fund

As a self-employed person, you are not entitled to cover from the Employees' Guarantee Fund if your customer or your own business goes bankrupt.

As indicated by the name, the Employees' Guarantee Fund only comprises employees and covers their claims for salary, holiday allowance, etc. when a bankruptcy order has been issued.

The Employees' Guarantee Fund does not cover any claims from the general manager or co-owners of the business and their nearest relatives. If, as a self-employed person, your spouse, parents, children or other close relatives are working for you, the Employees' Guarantee Fund will not cover any claims for salary in a bankruptcy situation.

If your customer goes bankrupt, the Employees' Guarantee Fund will not cover your outstanding fee, and your claim against the bankrupt estate will be an 'unsecured claim'. Only in very rare cases will the bankrupt estate be able to cover unsecured creditors.

Minimise your loss

If you are aware that a customer is in financial difficulties, you might agree to send an invoice every or every two weeks with a short payment period, or you may demand payment of a retainer before you start the job. This way, you can minimise your loss in a bankruptcy situation.