Hej! If you’re a Danish business owner operating in the USA, you may already be familiar with the strict compliance and legal requirements that come with running a business in Denmark. However, navigating the different reporting requirements and regulations in the US can be a whole new challenge. From beneficial ownership reporting to tax compliance, it’s important to stay informed and ensure that your business is meeting all necessary obligations in both countries. In this blog, we will explore the key compliance and legal considerations that Danish businesses operating in the USA need to be aware of to ensure smooth operations and avoid any potential pitfalls.

Registration Requirements

The United States consists of 50 states and 5 territories, each with its own set of business regulations. To operate legally, businesses must adhere to both state-specific rules and federal laws.

State-Level Registration:

When establishing a business presence in the United States, businesses from Denmark must complete state-level registration in any state where significant business activities occur. This requirement typically applies if your company:

• Has a physical presence in the state
• Frequently meets with clients in the state
• Derives a significant portion of revenue from the state
• Has employees working in the state

Incorporating your Danish Company in the US

Even if none of the specific criteria apply, a Danish company must still choose a home state for registration when conducting business in the US. This involves forming a U.S. entity, such as a corporation, LLC, or other business structure, in that state. This registration ensures that the company is officially recognized and compliant with US regulations, regardless of its level of business activity in any individual state.

The newly formed U.S. entity will operate as a subsidiary of the foreign company. This means that while the U.S. entity is legally independent, it remains under the ownership and control of the parent company based in Denmark. This structure allows the company to conduct business in the US while maintaining its international headquarters.

We recommend using Northwest Registered Agent if your foreign company needs to incorporate. They offer expert guidance and can serve as a reliable registered agent for your business, ensuring compliance and smooth operations.

Federal Requirements

In addition to state requirements, Danish companies must also comply with federal regulations:

• Federal Tax ID: Obtain an Employer Identification Number (EIN) from the IRS. This number is essential for tax reporting and opening U.S. bank accounts.
• Industry Regulations: Companies may need to follow specific federal regulations depending on the industry. For example:
• Import/Export Laws: If the company is involved in importing or exporting goods, it must meet U.S. customs regulations. This includes adhering to rules for tariffs, duties, and necessary documentation.

Beneficial Ownership Information Reporting Requirements

For Danish businesses conducting operations in the U.S., adhering to Beneficial Ownership Information Reporting (BOIR) requirements is crucial. The Corporate Transparency Act mandates that companies disclose the individuals who own or control them. This applies to most entities, including those that are incorporated or registered in any U.S. state. The goal is to enhance transparency and combat illicit activities such as money laundering and terrorism financing.

A beneficial owner is an individual who controls the company or owns 25% or more of its shares, either directly or indirectly. For compliance with BOIR requirements, businesses must report information about these individuals, including their names, addresses, and identification details. Failure to file this report can result in significant penalties and legal consequences. Therefore, companies from Denmark need to ensure they meet these reporting obligations promptly and accurately.

For your convenience, you can file your Beneficial Ownership Information Report directly on our website. Click here to complete the process in just a few minutes and ensure your business complies with U.S. regulations.

Additional Considerations for Danish Businesses:

Tax Treaties

The tax treaty between the United States and Denmark offers significant advantages for Danish businesses operating in the USA. This agreement helps prevent double taxation and provides clarity on tax obligations for companies engaged in cross-border activities. By establishing clear guidelines for income taxation, the treaty promotes smoother business operations and reduces potential tax-related complications. For more detailed information about the specific provisions and benefits of this tax treaty, click here to access the official IRS documents.

Trade Considerations

When conducting business with the USA, Danish companies should be aware of the existing trade agreements between the European Union and the United States. While there is no specific bilateral trade agreement between Denmark and the USA, Danish businesses benefit from the broader EU-US trade relationship. It’s crucial to stay informed about ongoing negotiations and potential changes in trade policies. Additionally, Danish companies should familiarize themselves with US customs regulations, tariffs, and import requirements specific to their industry. Certain sectors may have additional regulations or certifications required for market entry. It’s advisable to consult with trade experts or legal professionals to ensure compliance with all relevant US trade laws and regulations. Furthermore, Danish businesses should stay updated on any industry-specific standards or certifications that may be necessary for their products or services in the US market.

Your Path to Compliance: Key Takeaways for Danish Businesses in the U.S.

Operating a Danish business within the USA requires careful attention to legal obligations, from establishing your home state to incorporating and filing a beneficial ownership report. Meeting these requirements is essential for ensuring compliance and securing your business’s success in the American market. By understanding and adhering to these steps, you can confidently navigate the complexities of doing business in the U.S. and focus on growing your enterprise.

Ready to get started? Click here to file your BOIR in just a few short minutes. We make the process easy, fast, and secure so you can focus on what matters—your business.