Denmark Modernizes Its Bookkeeping Act to Promote the Digitalization of Accounting
January 1, 2025: Digital accounting rules come into force for companies using a non-registered accounting system.
No earlier than July 1, 2026: Rules come into force for non-accounting companies with a net turnover of more than DKK 300,000 in the two preceding income/accounting years and using a non-registered accounting system.
The Danish parliament has 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.
Digital Bookkeeping implementation timeline
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.
The Danish Authority has published the timeline related to the requirements for digital accounting systems.
Time Schedule
- 1 February 2023: requirements for digital standard accounting systems come into force.
- 31 October 2023: Deadline for providers of standard bookkeeping systems to be registered within the Danish Business Authority.
- 1 January 2024: Notified systems will be registered.
The Danish Authority (Erhvervsstyrelsen) has published the expected dates of entry into force of the Accounting Act.
- January 1, 2025: Digital accounting rules come into force for companies using a non-registered accounting system.
- No earlier than July 1, 2026: Rules come into force for non-accounting companies with a net turnover of more than DKK 300,000 in the two preceding income/accounting years and using a non-registered accounting system.
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.
