Partnership within the European Union, NATO, and the Baltic Sea region forum are factors that provide a solid foundation for Polish-Danish economic cooperation. Since 1999, there has been a high, 9 percent dynamics and a consistently positive trade balance. Polish entrepreneurs eagerly seek business partners in Copenhagen, Odense, Esbjerg, or Aarhus. And once they find them, they ask themselves: how to verify a Danish counterpart? Especially now, in the era of international economic restrictions and high sanctions threatened for their violation.
Ensuring due diligence in verifying a business partner
In today’s times, establishing a company is very easy. In many countries, it can be done without even leaving home, via the Internet. Therefore, one can never be certain who is really behind the created name and entry in the register until it is verified. Verification involves actions commonly used in business intelligence, primarily focusing on checking the reliability and currency of the contractor’s documentation, such as the National Court Register (KRS), Tax Identification Number (NIP), Statistical Number (REGON), as well as permits and certificates necessary for conducting a specific type of activity.
Verification can be carried out by obtaining information from the relevant individuals and institutions, such as: registry courts, the Social Insurance Institution (ZUS), tax offices, or national and international chambers of commerce. It is worth delving into the knowledge about the history of the activity and its owners, including opinions about the company, also by searching the Internet or asking other entrepreneurs, contractors of this entity, and directly the interested party itself. It should be remembered that failing to exercise due diligence in selecting a contractor entails legal consequences, such as being accused of knowingly participating in irregularities, and the resulting further tax and legal sanctions.
Economic cooperation with Denmark
Economic relations with Denmark are governed by the provisions of EU agreements and treaties, as Denmark, like Poland, is a member of the European Union. The most important bilateral agreements in economic matters include: the convention on the avoidance of double taxation and the prevention of fiscal evasion with respect to income and wealth taxes, concluded in Warsaw on December 6, 2001, a memorandum from June 16, 2004, on cooperation in the field of energy issues between the competent national energy authorities, a joint communication on cooperation from April 2015, and an agreement on the Baltic Pipe project signed on December 11, 2018.
In 2019, Denmark was Poland’s 17th partner in exports and 21st in imports. Meanwhile, Poland ranked 8th among Denmark’s most important trading partners in exports and 6th in terms of imports. According to data from the end of 2018, Poland exports the most to Denmark: products of the electromechanical and chemical industries, agricultural and food products, as well as non-ferrous metals and derivatives. We import similar products: agricultural and food products, products of the electromechanical and chemical industries, as well as metallurgical products. According to data from the Central Statistical Office from 2019, the Danish capital’s share in the Polish market was worth over PLN 4.1 billion. Polish direct investments in Denmark amounted to over EUR 35 million at the end of 2018, although according to Danish institutions, the amount was EUR 80 million.
On a daily basis, around 30,000 Poles live and work in Denmark, which accounts for less than 0.5% of the total population of the country. Many Polish institutions operate in Denmark. We have strong cultural cooperation with Denmark and the aforementioned fruitful economic cooperation. Polish entrepreneurs who engage in trade with Danish companies or are considering starting cooperation with a Danish entrepreneur should first thoroughly check them to avoid negative consequences of failing to exercise due diligence in selecting a contractor.
National and EU sanctions
In connection with the violation of the territorial integrity of Ukraine, the European Union imposed 11 packages of sanctions on Russia by June 23, 2023. Poland also imposes additional sanctions. These include key individuals in Russia, as well as companies from this country and Belarus. Trade in goods and services with Russian and Belarusian companies is prohibited. Polish entrepreneurs face financial penalties of up to PLN 20 million and up to 15 years of imprisonment for violating these sanctions. However, Russian and Belarusian entrepreneurs have learned to circumvent international bans by using, among other things, complex holding structures established in other countries, where it is difficult to detect the actual ownership structure.
As reported by Money.pl, Sweden has the highest support for sanctions against Russia in connection with its armed aggression against Ukraine. 95% of the Swedish population supports this policy. Poland and Denmark are tied in second place with 90% support each. After the outbreak of the war in Ukraine, in April 2022, the Danish Foreign Minister Jeppe Kofod stated in an interview with Reuters that Denmark would press the European Union to impose the strongest possible sanctions in connection with Russia’s attack on Ukraine.
Detailed information on the types of transactions covered by the EU’s ban on transactions with Belarus and Russia can be found on the European Council’s website: https://www.consilium.europa.eu/. The Official Journal of the EU at the address: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0269-20220721 contains a list of individuals and entities subject to sanctions. The Polish Ministry of Internal Affairs and Administration also maintains an up-to-date register of entities subject to sanctions, where you can check the contractor, their connections, reasons for inclusion in the register, and applied sanctions: https://www.gov.pl/web/mswia/lista-osob-i-podmiotow-objetych-sankcjami.
Therefore, the first step in checking a company from Denmark can be to see if it appears in any of the above registers. Useful information can also be found in Council Regulation (EU) 2022/576 of April 8, 2022, amending Regulation (EU) No 833/2014 concerning restrictive measures in connection with Russia’s actions destabilizing the situation in Ukraine.
On August 3, 2023, the European Union expanded the scope of sanctions imposed on Belarus to combat circumvention of regulations. The new measures amend Regulation (EC) 765/2006 concerning restrictive measures in connection with the situation in Belarus. The changes ensure a closer alignment of EU sanctions against Russia and Belarus and help ensure that Russian sanctions cannot be circumvented by Belarus. These measures extend the export ban to Belarus on a range of highly sensitive goods and technologies contributing to the military and technological strengthening of Belarus. The Council also imposes an additional ban on the export of firearms and ammunition, as well as goods and technologies suitable for use in aviation and space industries. The changes also adjust the sanctions against Belarus to the sanctions system against Russia. These restrictive measures were introduced in an expedited manner due to the urgent nature of combating circumvention of regulations concerning certain highly sensitive goods and technologies.
Economic intelligence, or how to verify a Danish counterpart
Verification of a counterpart can be entrusted to a professional economic intelligence agency, which deals with the execution of such orders on a daily basis. A private detective in Warsaw, Poznań, Wrocław, or other cities will know how to obtain necessary verifying information about the current or future counterpart.
The most important way to verify a counterpart and their potential connections to Belarus or Russia is to establish the entity that is their ultimate beneficiary, and then check if they are listed on the aforementioned sanctions list maintained by the Ministry of the Interior and Administration. Findings can be made in the Central Register of Ultimate Beneficiaries maintained by the Minister of Finance: https://crbr.podatki.gov.pl/adcrbr/#/wyszukaj
Environmental intelligence
A publicly available way to gather information about a counterpart is to search the resources of the Internet. Verify the company, check if it has a website, what opinions exist about it, and perhaps come across some publication about it. If we don’t want to do this ourselves for certainty, we can entrust the research to a detective agency specializing in professional economic intelligence. Because there are many more sources of information than just the World Wide Web. You can contact the Embassy of the Republic of Poland in Copenhagen with a query about a specific entity, whether complaints have been received from other entrepreneurs, or whether, according to the knowledge of the diplomatic mission, the company has a bad reputation? Similar information can be provided by Polish-Danish chambers of commerce.
Direct inquiry to the counterpart
In case of difficulty in determining the ownership structure of a business partner using available registers, another method of verification within the scope of economic intelligence is to directly request confirmation from them about who their ultimate beneficiary is. Of course, to validate the response received, you can ask the Danish entrepreneur to provide documents confirming their declarations.
Polish and EU registers
In the Public Information Bulletin of the Ministry of Entrepreneurship and Technology, as the minister responsible for the economy, a register of representations of foreign entrepreneurs is maintained. If we find the representation of our counterpart in this register, we can assume that they themselves still exist and conduct business.
Another such register where you can check the counterpart is the European VAT taxpayer register and the EORI register. Companies and individuals wishing to carry out commercial activities within the European Union must use an EORI number as an identification number in all customs procedures. The VAT Information Exchange System (VIES), a search engine run by the European Commission, allows you to check whether a given entity is registered as conducting intra-Community transactions. This is essential, among other things, to apply a 0% VAT rate to a transaction. If VIES does not confirm the registration of the counterpart, you can request verification from the tax office of the country where they are based. It is also worth checking whether the company has the necessary permits and certificates if they are required in a given country. The EU Business Register (http://www.eubusinessregister.org/) enables searching for companies from around the world.
The Insolvent Debtors Register allows you to check whether a given counterpart is not listed on its list. There are also economic information bureaus that have detailed information about the activities of companies. BIK, the Credit Information Bureau, established by the Polish Bank Association, collects data on the credit history of bank customers, credit unions, and also non-bank loan companies.
Danish Business Registers
The Business Register is maintained by the Danish Business Authority – Erhvervsstyrelsen – at www.erhvervsstyrelsen.dk. The activities of Erhvervsstyrelsen include supervision and monitoring of businesses, financial resources, money laundering cases, accounting, exports, and EU controls. Erhvervsstyrelsen is responsible for the Central Business Register, known as Det Centrale Virksomhedsregister or CVR Virk for short. This is the main national register containing information about all Danish and Greenlandic companies, except small private companies with an annual turnover not exceeding DKK 50,000 (they are not required to account for VAT but must pay income taxes). It is accessible to everyone.
CVR Virk provides information about legal entities, their organizational units, founders, owners, and persons managing the company, as well as balances, data, and financial reports of individuals and legal entities managing limited liability or joint-stock companies. It can be found, among other things: the name of the searched company, its assigned number in the register, its address and legal form, the date of establishment and closure of the company, its status, whether it is bankrupt, undergoing restructuring, or in liquidation, a description of the main type of activity, the company’s share capital, information about the ownership structure and persons constituting it, real beneficiaries, related entities, number of employees, financial reports, and other documents. Access to all this information is free. Obtaining some documents is paid, such as minutes from the annual general meeting, management report, division plan, company agreement/statute. The register is available in Danish, English, and Greenlandic. https://datacvr.virk.dk/
BiQ – is the largest Danish commercial reference agency with information about over 950,000 individuals and their managerial positions in over 1,500,000 Danish companies from the last 30 years. BiQ collects information from Erhvervsstyrelsen and the official Official Journal to create overviews of corporate networks and ownership structures. The service is paid, but offers a free trial access. The service is in Danish. https://biq.dk/
The Danish Financial Supervisory Authority (FSA) Company Register contains data on companies supervised by the Danish Financial Supervisory Authority. It also includes data on companies to which the FSA has granted authorization or notification to carry out financial activities in Denmark. It also includes companies that are only registered and not subject to supervision. The company register includes functions for browsing information about individual companies, extracting information about multiple companies, and viewing data set visualizations. Available in English and Danish. Basic information access is free. https://virksomhedsregister.finanstilsynet.dk/index-en.html
It’s worth thoroughly checking the counterpart
Before making a transaction or entering into cooperation with a Danish counterpart, it’s better to conduct economic intelligence and thoroughly check them, especially to ensure they are not associated with Belarus or Russia. Violating the bans imposed on specific types of transactions with these countries and with certain individuals and companies can result in a financial penalty of up to PLN 20 million, and imprisonment ranging from 3 to 15 years. Additionally, verifying the counterpart, exercising due diligence in their selection, is a requirement that always applies when conducting business activities, incumbent on entrepreneurs as professional market participants.
Do you already know how to verify a company from Denmark? If not, or if you need to find more detailed information, we can help you. Feel free to contact us.
