Denmark Modernizes Its Bookkeeping Act to Promote the Digitalization of Accounting
On February 1, 2023, the requirements for digital standard accounting systems come into force.
On October 31, 2023, the digital standard systems that want to be registered by 1 January 2024 must be notified to the Danish Business Authority.
Last May, the Danish parliament passed a package of reforms affecting the Danish Bookkeeping Act (Act no. 700 of May 24, 2022), which replaces the previous act that had been in force since 1999. The main objective remains to strengthen the fight against tax fraud and increase the degree of digitalization of Danish companies' accounting records.
The requirement for digital accounting includes the following two basic accounting duties:
- Record the company's transactions in a digital accounting system and
- Store the records and attachments documenting the records in a digital accounting system, or at least store a complete backup copy of the records, on a server with a vendor or other third party.
The requirements for digital accounting systems will come into effect in a phased-in manner over the next few years. The phased introduction will ensure that companies and providers of digital accounting systems have time to adapt to the new requirements and, at the same time, have the opportunity to take advantage of the benefits of automated accounting systems.
For the time being, the Danish authority has updated the timeline related to the requirements for digital accounting systems. Subsequently, the Danish authority will publish the mandatory implementation dates for companies.
- 1 February 2023: requirements for digital standard accounting systems come into force.
- 31 October 2023: Digital standard systems that must be registered by 1 January 2024 must be notified to the Danish Business Authority.
- 1 November – 31 December 2023: Notified systems are checked and registered by the Danish Business Authority.
- 1 January 2024: Notified systems will be registered.
- 2024 (expected): Accounting firms must digitally book fiscal years beginning after July 1, 2024.
- 2026 (expected): Sole proprietorships and certain partnerships must book digitally as of fiscal years beginning after an as-yet undetermined effective date in 2026.
Confirmation of specific and technical requirements is still pending. Drafts of what would be the SAF-T system have been published with the intention of a staggered implementation from 2024 to 2026.
What is the new Bookkeeping Act in Denmark?
The new law requires businesses to digitize their accounting records. This change is significant because it will make it easier to track financial information and make better decisions. A digital accounting system that has been approved by the Danish authority must be used, and it must meet a number of requirements that have been defined by the Danish government through an executive order. The Danish government is soon going to expand the information available on certification for digital suppliers. This will allow suppliers to be verified and certified in a more efficient way.
According to the new Article 15, three basic requirements apply to any digital accounting system, whether it is a standard system or a specially developed system.
- The system must be able to record company transactions with the specification of attachments for each record and store records and attachments for five years.
- The system must meet recognized IT security standards, including user and access management, as well as ensure automatic backup of records and attachments.
- The system must be able to automatically send and receive electronic invoices, as well as account for transactions in a public standard accounting system.
The requirements for specially developed bookkeeping systems will also only come into force at a later date. The requirements for this will be drawn up in the first half of 2023.
The Danish Business Authority will provide information on requirements and effective dates as they become available. EDICOM will stay tuned for any updates to inform you of upcoming dates.
e-Invoicing in Denmark
Since 2005, it has been mandatory for both Danish government authorities and their suppliers to use e-Invoices in the Peppol BIS 3.0 format via the Peppol network, thereby connecting with public entities registered in the national SMP NemHandel.
Denmark is also considering implementing electronic ordering and cataloging for specific categories of goods, thus encouraging the use of e-commerce in the public sector.
In the B2B sector, companies have the freedom to use e-Invoicing as long as they both agree to do so.