Business Costs

• Business Costs in Denmark


• Electricity costs are favorable


• Low Telecommunication rates

Establishing and running a business operation involves various types of costs. Denmark provides competitive costs for important factors such as real estate, communications and energy.

Space renting rates are the lowest in Europe

Prices for renting space are favorable in Denmark. The cost for renting office space in the Greater Copenhagen Area is in the range of DKK 600 - 1600 pr sqm with typical rents found within the DKK 900 - 1250 pr sqm range. Table 1 shows comparative prime office rents in main cities in Europe.

Table 1. Prime office rents (USD/sqm/annum). Source: Sadolin/Albæk -

ONCOR International "The Greater Copenhagen property market 1998".

Prices for workshops and storage facilities are in the range of DKK 300-500 pr sqm. At the beginning of 1998 the overall office vacancy rate in Copenhagen was estimated at 2,7%resulting in increased building activities. New space are currently being build north west and south west of Copenhagen at existing industrial areas. Prime space are being build at the north, inner and south harbours in Copenhagen. A new development area is Ørestaden situated next to motorways and rail lines and close to Copenhagen Airport and CopenhagenCity.

Rents has increased 11% in 1997 due to a strong demand for office space. For 1998strong demands for office space are expected to continue thus resulting in increase inprices above expected inflation rate. Building of new space is however believed to keepprice increases resonable. In 1997 more than 50% of new leases was space rented by foreign companies.

Denmark has a reliable and abundant energy supply. The infrastructure is very well developed ensuring quality and service even in the most remote areas. The price for energy is differentiated according to the total yearly consumption by the buyer and the time of the day energy is consumed. Table 2 gives an example of rates in the Greater Copenhagenarea:

Table 2. Energy rates pr kWh in DKK including state tax, CO2-tax and SO2-tax butexcluding

VAT in the Greater Copenhagen area. Source: Nesa A/S "Rate information for electricity, 1998".

1. Early morning, midday and mid evening USD 1.00 equals DKK 7.00

2. 9 PM to 6 AM

The so called energy taxes (CO2 and SO2) may be partly refunded for industrial manufacturing units depending on the environmental load generated by the production.

Compared to other European countries Danish energy prices are competitive as listed in table 3

Table 3. Electricity costs for industrial clients. Source: "The World Competitiveness

Yearbook, 1997"

The telecommunication market in Denmark was completely liberalised in 1996. From having one sole supplier of telecommunications there are now six suppliers: Debitel, Mobilix,Sonofon, Tele Danmark,

Tele2 and Telia. The liberalisation has created a fierce competition and telecommunication costs are still falling. Besides, Denmark has been a leading country in the development of mobil phones as well as mobile phoning - the country is 100% covered by at least 2 of the mentioned companies.

Denmark has one of the lowest telephone charges among the OECD countries - see table 4for details on selected countries. The OECD average is USD 1.027 and is based on a basket of 2.911 calls.

Table 4. Telephone charges, basket of business telephone charges in 1996, in USD

Source: OECD "Communications Outlook, 1997"

Besides, Denmark has the lowest charges in OECD among the above listed group of countries when it comes to Data Communication and Mobile Telecommunication. Details are reported by OECD in "Communications Outlook, 1997".

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© 1996 by Invest in Denmark

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