Benefit rights after conclusive termination of an own business

When you register as unemployed after having run your own business, the general rule is that you cannot receive benefits before the business has been conclusively closed.

Learn more about:

How to ensure your business is considered closed

Certificate of termination after deregistration from CVR (central business register)

Your business is considered closed or terminated when it is registered as such with the central business register, and you have sent us a certificate of termination from the Danish Tax Agency.

Bankruptcy or forced sale

Your business is considered closed in case of bankruptcy or forced sale. In case of forced sale, you need to send us a transcript from the enforcement court (fogedretten) about the forced sale. In case of bankruptcy, CA can ordinarily see the bankruptcy notice in the official gazette (Statstidende). If it has not yet appeared there, we ask you to send it to us.

Farming out or renting out

If you have farmed out or rented out your business under a mutually irrevocable contract for at least 3 years, it is considered closed as far as you are concerned. 

You must send us a copy of the contract to this effect, together with a declaration that you no longer work in the business.

Solemn declaration

As long as you are unable to deregister from the central business register and thus cannot obtain a certificate of termination from the Danish Tax Agency, there are other ways in which your business can be considered closed. In this case, send us a solemn declaration that any business activity aims solely at liquidation. 

Please note that you cannot claim benefits for the first 2 months after we have received your solemn declaration. If you send us a certificate of termination to document that your business is deregistered from the central business register (CVR) before the 2 months have passed, you are entitled to benefits the day after deregistration. However, at least 3 weeks must have passed from the day we receive your solemn declaration.

Note: You must document within 6 months that your business is closed. If you are unable to do so, you cannot receive benefits before you have submitted a certificate of termination or a similar document.

The hours you spend liquidating the business will result in deductions in your benefits.

NB! If you ran your business as a corporation 

If you sell your shares, your business is considered closed when the Danish Business Authority (Erhvervsstyrelsen) has recorded that you no longer own the company (whether an ApS, A/S or similar). 

If you resign from a company with more than one owner, you must send us a registration certificate from the tax authorities stating that you are no longer a co-owner.

If you are still a co-owner, your business is considered closed when you produce a registration certificate from the tax authorities about changes in ownership, declaring that you no longer hold controlling influence over the company. You are seen to have controlling influence when you or your spouse, individually or together with close family, hold at least 50% of the joint capital of the company or have a controlling share of votes in the company. The change in ownership relations must be registered with the Danish Business Authority (Erhvervsstyrelsen).

Even if you retain ownership of a holding company, your business is considered closed if you document that:

  • All commercial activity in your company has ceased. You must be able to document, for example by VAT deregistration, that the means of operation, inventory, etc., have been sold 
  • You have communicated to the Danish Business Authority (Erhvervsstyrelsen) that the company’s object clause has been changed into the administration of assets, wealth management or similar. 

Your business is carried on by your spouse 

Your business is considered closed when we have received a solemn declaration from you and your spouse that you have resigned from your spouse’s business. This applies if you were an assisting spouse without being a co-owner and without having a wage agreement with your spouse under the provisions of the Tax at Source Act. This also applies if the tax authorities consider you as a co-liable spouse. If you take up work in the business again, at least 2 years must pass before you can resign by giving a solemn declaration.

If you were a co-owner of the business, your business is considered closed when the Danish Business Authority (Erhvervsstyrelsen) has recorded that you are no longer an owner.

If you were an assisting spouse with a wage agreement, you are considered a wage earner. But note that you cannot claim benefits for the first 3 weeks after you stop working.

You gain benefit rights only after a waiting period

If you close down your own business as a main occupation you cannot claim benefits before a waiting period has passed. The waiting period always runs from the day after you have documented that your business is closed. 

The waiting period is generally 3 weeks, but it may be 1 week if the closure is caused by bankruptcy or forced sale. If you have made a solemn declaration about the closure, the waiting period is 2 months. However, if you send us a certificate of termination before the 2 months have passed, you will be entitled to benefits the day after your business is deregistered from the central business register. But note that at least 3 weeks must pass from the day we received your solemn declaration.

 

Your right to start a new business is restricted

Job search period

If you start a new business within 6 months of closing down a previous business that was your main occupation, you are excluded from receiving benefits until the 6 months have passed, whether you close your business or not. This so-called job search period does not apply if the closure is due to bankruptcy, or where the closure concerns the running of an own business as a secondary occupation.

No more than one termination per benefit period

Only one termination of an own business is accepted per 2-year benefit period. 

This means that if you start a new business (Business 1) in your benefit period and then close it, the closing-down of a potential new business (Business 2) will result in the loss of benefit rights. This rule also applies to running your own business as a secondary occupation.

The above does not apply to the following instances of closure:

  • Termination before October 1, 2018
  • Termination of business in connection with gaining the right to a 2-year benefit period
  • Termination of a spare-time activity or asset management.

 

Contact CA's specialists in benefit rights for the self-employed

Tel. 3314 9045 or write to ca@ca.dk