Types of Partnerships in Denmark

There are three types of partnership entities in Denmark:

  1. KS (Limited Partnership).
  2. PS (Limited Partnership Company).
  3. IS (Partnership).

The significant differences between types of partnerships:

  • IS and KS are subjects to minimal legal regulations.
  • PS is a subject to the same regulation according to the Danish Companies Act which applies to Danish limited companies (AS).

 

KS (Limited Partnership).

Danish Limited Partnership (abbreviated KS) is a ‘hybrid company’ that consists of two (minimum) or more different types of companies.

There are two types of partners in KS:

  1. General partner (komplemmentarer). General partner is personally and jointly liable with no limitation for the debts and obligations, and has unlimited administrative authority. The general partner can be an individual as well as limited liability company, which significantly reduces the scope of libility of the general partner.
  2. Limited partner (kommanditister). Limited partner has liability for the debts and obligations that is limited to his actual contribution into the capital of KS.
  • Terms are agreed between partners in the partners’ agreement.
  • KS is not a subject to the Danish Companies Act.
  • Suitable for a big number of partners.

PS (Limited Partnership Company).

 

Limited Partnership PS is a company that carries business in a form of partnership. Has a structure identical to KS.

PS can have one or more general partners with no limitations in liabilities of the partnership as well as limited liability partners.

 

General characteristic of PS:

  • Regulated in almost the same manner as AS companies.
  • Its structure ensures a high degree of predictability and legal regulation.
  • Suitable for a big number of partners.
  • Ensures a high degree of predictability.
  • Has an obligation to include the word ”partnerselskab” or the abbreviation  ”PS” in the name.
  • Debt may be collected from the PS or the general partner personally.

 

IS (Partnership)

IS Partnership is a form of Danish partnership, in which all members are personally, jointly and severally liable with no limitations for the debts and obligations of the partnership.

  • Creditors are allowed to collect debt from the partners personally.
  • A Limited Liability Company can be a partner in IS, thereby significantly reducing its liabilities.
  • Partners have a veto power on administrative matters; therefore, it is not suitable for a big number of partners.

 

Organizational information on Danish Partnerships

  • An investor in a Danish partnership is not obliged to have a taxable presence (permanent establishment in Denmark).
  • Registered companies and partnerships in Denmark have to have an appointed person that is responsible for the entity in the absence of the investor.
  • General partner can have an ownership of 0%, but obliged to have a minimum of administrative and economic authority.
  • It should be agreed in the partnership agreement that a sale of shares to a third party can occur only after the limited partner in advance offered them to his partners in the partnership at a predetermined or at least agreed upon price.

 

Summary of Danish Partnerships

Item

IS

KS

PS

Limited liability

-

+

+

Subject to Danish Companies Act

-

-

+

Capital requirements

-

-

+

Tax transparence

+

+

+

Corporate income tax

-

-

-

VAT

-

-

-

Tax on Dividends

-

-

-

Withholding tax

-

-

-

Audit and accounting

+

+

+

Annual reporting

+

+

+

Possibility to avoid annual report preparation

+

+

-