Accounting in Denmark

Bookkeeping in Denmark covers all legal forms of business, from a sole proprietorship to all types of companies. The bookkeeping of the different companies varies considerably in terms of difficulty, documentation, deadlines, taxes and legal provisions. If you have decided to set up your own business in Denmark, it is worth considering your Danish business accounting options in advance. Bookkeeping for a company in Denmark can be handled by yourself or you can enlist the help of certified accountants who will professionally handle your company’s affairs and take care of such matters as compliance with the regulations governing bookkeeping in Denmark, the Danish chart of accounts, reporting and also point out your rights and obligations.

What does Danish accounting do?

Danish accounting applies to any businessman doing their own business in the Kingdom of Denmark and covers a wide range of issues, which, if not known and complied with, will result in severe fines. The most important matters concerning Danish accounting include:

  1. the laws governing Danish accounting;
  2. the classification of reporting obligations;
  3. accounting for Danish sole proprietorships;
  4. accounting for Danish companies;
  5. chart of Danish accounts;
  6. auditing in Danish companies;
  7. deadlines, documentation, costs and rates for different types of business;
  8. registering your own business in Denmark;
  9. taxes, insurance, benefits;
  10. registration and permits;
  11. accounts and adjustments – SKAT;
  12. Danish accounting rules;
  13. Danish employer obligations;
  14. Nemkonto, Tastselv, Pension, CPR, A-kasse, health card – DK.

Laws governing Danish accounting

Denmark is one of the most caring Scandinavian countries, characterized by a high degree of pro-social policy intervention, a free and flexible labour market, good social welfare and high taxes.

An entrepreneur who decides to run his/her own business in Denmark should familiarize himself/herself in advance with the laws regulating Danish accounting (concerning bookkeeping and business records).

The following are the legal acts relating to Danish accounting:

  1. Accounting Act 1998 – in which you will find information that talks about the organization of accounting, the keeping of accounting records and economic records. Danish accounting is largely based on the accounting chart of accounts, which deals firstly with the structure of the profit and loss account (the first group of accounts is sales revenue and the 6 cost groups), and secondly with the structure of the balance sheet account (assets, capitals, liabilities);
  2. The Financial Reporting Act 2001 (DFSA, amended in 2015) – in which you will find information talking about all the provisions relating to the preparation of financial statements. This act talks about two types of profit and loss – comparative and calculation – and the Danish income statement templates do not include templates for net profit deductions. These statements refer to the classes into which Danish companies are divided:
    • Class A, which includes Danish companies owned by individuals; such companies are not required to keep financial statements and their accounting is mainly based on tax accounts;
    • Class B, consisting of all Danish public companies, private limited liability companies and limited partnerships (with no more than 50 employees and a maximum of DKK 36 million in total assets);
    • Class C, consisting of all Danish public companies, private limited liability companies and limited partnerships (with more than 50 employees and total assets of at least DKK 36 million);
    • Class D, which includes all Danish public limited companies. The accounting of such companies is the most complex, as it deals with the preparation of balance sheets, reports on the company’s management, profit and loss accounts and financial flows, as well as any statements on changes in equity and complementary information.

[INFOGRAPHIC:
Other useful laws in Danish company accounting are:
The Public and Private Limited Liability Companies Act 2009;
The Approved Auditors and Audit Firms Act 2008;
The Financial Activities Act 2011;
The Securities Trading Act 2012.]

All financial reporting requirements for Danish companies are set out in European Union regulations and directives and then transposed into Danish law, as in the case of the EU Accounting Directive 2015, which was transposed into the Danish Financial Reporting Act.

Oversight of the areas of Danish financial reporting, Danish audit and Danish accounting standards have been entrusted by the Danish Parliament to two governmental institutions:

  1. DFSA, or the Danish Financial Supervisory Authority;
  2. The DBA, or Danish Business Authority (until 2012 the Danish Trade and Companies Agency) operating under the aegis of the Ministry of Economic Affairs and Development and overseeing the financial reporting of unfunded business entities. However, in practice, since 2007, the power to set Danish accounting standards has been delegated to the Danish Accounting Standards Committee – DASC(owned by the FSR, the Danish Auditors’ Committee). The DASC does not have a legal mandate, but its recommendations and technical manuals represent a high level of Danish accounting; the Committee sets guidelines for small, medium and large Danish companies (belonging to Class B and C).

According to current law in Denmark, auditors are regulated at the state level. The key piece of legislation that regulates the auditing profession in Denmark is The Danish Act on Approved Auditors and Audit Firms (the Audit Act) Consolidated Act No. 1287 of November 20, 2018. The Act makes it clear that responsibility for public oversight of auditors lies with the Ministry of Industry, Business and Financial Affairs. This ministry is consecutively under the permanent supervision of the Parliament in Denmark. Obtaining the official title of State Certified Public Accountant (SPA) is exactly what the Act No. 617 of June 12, 2013 refers to. The establishment and management of initial professional development (IPD) for SPAs are the joint responsibilities of the Danish Financial Supervisory Authority (DSFA), the Danish Business Authority (DBA) and the universities operating in Denmark. The requirements for candidates are that they have a university degree at the master’s level, have successfully completed three years of training to prepare them for the accounting profession, and have passed a final examination to verify their professional competence. The training along with the exam is offered by the FSR and the DBA. Individuals who are members of the FSR – danske revisorer, or organizations of professional accountants, have been required to complete an apprenticeship since 2006. The apprenticeship should last for a minimum of 120 hours and should not be completed in more than three years. The fact that apprenticeships have been completed is checked in detail by state authorities. The adopted Audit Law gives the DBA such privileges and responsibilities as conducting quality assurance reviews, protecting the CSO designation, cooperating and sharing key information on audit oversight with other government authorities, including those from other countries, registering, approving and licensing audit firms and auditors, adopting regulations and standards for reporting, ethics, auditing and education, and conducting investigations. The FSR also has the power to manage members who belong to the organization. Among other things, it is involved in establishing and enforcing ethical requirements, setting standards for accounting in Denmark and auditing, working with the Danish Financial Supervisory Authority and the Danish Business Agency to set specific requirements on the initial and continuing professional development of accountants, and working with the DBA through which investigations are conducted and disciplining individual FSR members. The body that oversees the financial sector and has the authority to establish new educational requirements for Danish auditors is the Danish Financial Supervisory Authority. According to Executive Order No. 1406 of December 11, 2013 for the SPA, auditors responsible for conducting statutory audits for financial institutions must absolutely obtain a minimum of 180 hours of professional practice, and this should include 60 hours of additional professional preparation through which candidates will acquire specialized knowledge of performing accounting and auditing services.

Classification of reporting obligations

Danish company accounting is largely based on the preparation of financial statements, the principles of which are contained in the Financial Reporting Act showing the division of all Danish business activities into 4 classes (A, B, C and D) according to the following criteria:

  • legal form,
  • company size,
  • number of employees,
  • total assets,
  • annual net turnover.

Class A – includes all private, small and large Danish companies with up to 10 employees (full-time), total assets of up to DKK 7 million and annual net turnover of up to DKK 14 million. Danish law does not mandate companies in this class to prepare financial statements (this depends on established paragraphs in the company’s articles of association), apart from statements for tax purposes.

[INFOGRAPHIC:
If a company’s articles of association contain rules on financial reporting, then such a report should include:
the Danish company’s management statement,
the annual balance sheet,
profit and loss account,
additional information.]

Class B – includes all private and public limited liability companies, limited partnerships, commercial foundations and other companies that:

  • employ up to 10 employees (full-time), have total assets of up to DKK 2.7 million and a net turnover of no more than DKK 5.4 million,
  • have up to 50 employees (full-time), their total assets are up to DKK 44 million and their net turnover does not exceed DKK 89 million.

The reports of the above Danish companies should include:

  • a summary of the company’s management activities,
  • an annual balance sheet,
  • profit and loss account,
  • a statement of changes in equity,
  • additional information.

Danish companies in Class B are entitled to use the over-plan directives that were issued by the DASC in 2013 or IFRS, and some recommendations, relating to measurement, disclosure and recognition, are optional for companies in this class and necessary for companies in Class C.

Class C – includes all medium and large companies, private and public limited liability companies, limited partnerships, commercial foundations and other companies that:

  • have up to 250 employees (full-time), their total assets are up to DKK 156 million and their net turnover does not exceed DKK 313 million,
  • have more than 250 employees (full-time), their total assets are more than DKK 156 million and their net turnover exceeds DKK 313 million.

[INFOGRAPHIC:
The report of Class C companies should include:
a summary of the activities of the company’s management;
an annual balance sheet;
profit and loss account;
cash flow statement;
statement of changes in equity;
additional information.]

Class D – includes all state-owned joint stock companies that are required to prepare consolidated financial statements according to the rules given by IFRS (the obligation expires on 1 May, after 4 or 6 years), and listed companies that prepare separate financial statements.

The report of such companies should include:

  • a summary of the activities of the company’s management,
  • an annual balance sheet,
  • profit and loss account,
  • cash flow statement,
  • statement of changes in equity,
  • additional information.

Accounting for a one-person company (ENKELTMANDSVIRKSOMHED)

The accounting of Danish sole proprietorships is not complicated, and these companies have been assigned to Class A according to the Danish Financial Reporting Act.

Enkeltmandsvirksomhed’s accounting is mainly based on tax settlements with the Danish Tax Authority (SKAT, www.skat.dk), whereas 12-monthly reports, including profit and loss accounts, balance sheets, additional information, presentation of accounting rules and a summary of management activities, are optional.

Accounting for such a Danish business also takes care of drawing up a Forretningsplan, i.e. a detailed description of the company the entrepreneur intends to set up and run in Denmark. Such a plan should include the entrepreneur’s vision and idea for his or her own business, as well as the scope of activities, duties and financial possibilities.

A sole proprietorship must be registered with the Danish Erhvervsstyrelsen (via the Danish website www.virk.dk) and entrepreneurs who choose to operate such a legal form should use a personal registration number CPR. Accounting for a sole proprietorship is fairly straightforward to manage; the company does not require share capital to be raised, the minimum start-up costs are estimated at DKK 10,000 (PLN 5,000), tax on this type of business is declared only on one tax return (income is taxed only once), the business owner has the right to grant a power of attorney to other persons to act on behalf of the business, which does not need to be registered for VAT if its annual income does not exceed DKK 50,000.

[INFOGRAPHIC:
The owner of an Enkeltmandsvirksomhed is liable with his or her own assets for its liabilities and should choose one of three taxation options for such a company:
Taxation according to the Capital Act (Kapitalafkastordning), which implies that part of the company’s profit can be transferred to personal income and part to capital income;
Taxation of the profit as personal income, i.e. the same as for employed persons;
Taxation in accordance with the Corporations Act (Virksomhedsordning), which assumes that costs from credit interest can be written off, but we can also retain the profit from the company in the form of bank savings, which will also be beneficial for us.]

Owners of a sole proprietorship who pay taxes and contributions are entitled to pension and health benefits the same as those who are employed in Denmark. Once a quarter or once every six months, you have to submit a tax return (income tax and VAT) via the Danish tax authority’s website (SKAT, via the LetLøn system). Advance income tax payments are due on 20 March and 20 November.

Accounting for companies

Much more complicated is the accounting of Danish companies in class B, C and D, such as:

  1. General partnership (Interessentskab – I/S);
  2. Limited liability company (Anpartsselskab – ApS);
  3. Limited partnership (Kommanditselskab – K/S);
  4. Public limited company (Aktieselskab – A/S).
Such companies, according to the Danish Financial Reporting Act, are required to prepare reports that include a description of the management’s activities, a profit and loss account, a cash flow statement, a statement of changes in equity, a balance sheet and additional information.

All Danish companies whose securities are traded on a regulated market are required to apply IFRS standards, as adopted by the European Union, in their consolidated financial statements.

Below, you will find more information on accounting in Danish companies:

  • If you set up and run a company in Denmark, there is a corporation tax, CIT, which is 22%, but if a Danish company’s annual turnover exceeds DKK 20,000, it becomes liable for VAT, which is 25%;
  • The Danish Enterprise Authority is responsible for all changes that take place in company law and accounting law;
  • The Danish Accounting Standards Committee (DASC) was established by the FSR to issue non-mandatory technical standards and guidelines for the preparation of financial statements (Regnskabsvejledninger) for unlisted entities. Since 2004, the DASC’s main technical role has been to analyse and prepare exposure draft comments, discussion papers and draft comment letters from EFRAG and the IASB Board, provide technical information on current accounting issues and conduct outreach activities;
  • International Financial Reporting Standards (IFRSs) are standards, interpretations and frameworks adopted by the International Accounting Standards Board (IASB);
  • IFRS are considered to be a principles-based set of standards because they establish broad principles as well as dictate specific treatment;
  • The recommendations enable individual companies to organize their management optimally according to the 'comply or explain’ principle. Non-compliance is therefore not incompatible with the spirit of the recommendations, but merely due to the fact that the company has chosen a different approach.

Danish chart of accounts

In Denmark, an accounting chart of accounts is a special arrangement of accounts that has been adopted by a business entity in order to keep the economic records of companies transparently.

Such a plan shows the order of the individual accounts in the ledger through a detailed list. The Danish chart of accounts contains a class layout that corresponds to the structure of the profit and loss account and the balance sheet.

The most important account groups in the Danish chart of accounts relating to the profit and loss account structure are shown below:

  1. Account group: net revenue from sale of goods; account number: 1100; account name: sales of goods.
  2. Account group: production costs; account number: 2100; account name: sales.
  3. Account group: other external costs:
    • account number: 3100; account name: advertising cost,
    • account no: 3200; account name: housing stock maintenance costs,
    • account number: 3300; account name: cash shortage,
    • account no: 3400; account name: costs of exported vehicle,
    • account no: 3900; account name: other costs.
  4. Account group: employer’s costs:
    • account number: 4100; account name: wages,
    • account number: 4200; account name: pension allowance.
  5. Account group: depreciation:
    • account number: 5100; account name: depreciation of means of transport,
    • account number: 5200; account name: depreciation of equipment.
  6. Account group: interest; account number: 6100; account name: interest (income).
  7. Account group: interest; account no: 7100; account name: interest (expenses).
  8. Account group: extraordinary items:
    • account number: 8100; account name: extraordinary gains,
    • account number: 8200; account name: extraordinary losses.
  9. Account group: taxes; account number: 9000; account name: corporate income tax.Layout of account classes relating to the balance sheet:
  10. Account group: fixed assets:
    • account number: 112; account name: tangible assets,
    • account number: 11120; account name: cars,
    • account no: 11121; account name: write-offs on cars,
    • account no: 11130; account name: furniture,
    • account no: 11131; account name: depreciation allowances for furniture.
  11. Account group: current assets:
    • account no: 121; account name: inventories,
    • account number: 12110; account name: composition,
    • account no: 122; account name: accounts receivable,
    • account no: 12210; account name: receivables from recipients,
    • account no: 12220; accruals.
    • account no: 123; account name: cash,
    • account no: 12310; account name: cash,
    • account no: 12320; account name: bank account,
    • account number: 1230; account name: savings account.
  12. Account group: capitals:
    • account number: 121; account name: share capital,
    • account no: 134; account name: reserve capital,
    • account no: 135; account name: financial result.
  13. Account group: liabilities:
    • account number: 141; account name: long-term liabilities,
    • account number: 14110; account name: mortgages,
    • account no: 142; account name: current liabilities,
    • account no: 14210; account name: revolving credit,
    • account no: 14220; account name: receivables,
    • account no: 14230; account name: pension supplement,
    • account no: 14240; account name: from labour market contributions,
    • account no: 14250; account name: from taxes,
    • account number: 14250; account name: tax settlements,
    • account number: 14290; account name: other liabilities.

Deductions:

  • account number: 21000; account name: profit and loss account,
  • account number: 22000; account name: balance sheet.

Audit of Danish companies

The Danish Financial Reporting Act also contains information on the audit of financial statements prepared by Danish companies. In Denmark, the accounts are audited by registered (or authorized) public auditors, who should be independent and external.

We distinguish between the following types of audit:

  1. financial audit – i.e. a comprehensive audit of the financial statements, conducted by a certified auditor. Such a financial audit is supposed to show whether all the financial and asset information presented by the owner of the company in question is true; whether the financial statements comply with Danish or international accounting principles;
  2. compliance audit – examines whether the companies’ financial systems and operations comply with the law;
  3. management audit – assesses the efficiency and economy of financial management by Danish companies;
  4. QA – which is the Danish quality control system for, among other things, financial statements.
The audit of Danish companies in Class A and B is optional and depends on what threshold their annual turnover has reached. These companies can use the type of audit of their choice and agree with the auditors which service, among the available attestation services (accounting assistance, financial statement audit or audit), is the most beneficial for their company.

[INFOGRAPHIC:
Individual Danish B-class companies have two options to choose from:
audit of financial statements;
audit-light – a restated form of audit covering financial statements from 1 January 2013.].

More important information on the audit of Danish companies is presented below:

  • internal audit must be included in the planning and modification of Danish companies’ accounting systems;
  • good audit practice is set out in the Auditor General Act, which states that the internal audit function should not be dependent on the head of the entity for its planning, execution and organization, and that internal auditors should have access to the necessary information;
  • the Danish Ministry of Finance has the right to indicate which subject areas within the company will be examined in detail;
  • RSB – the Danish Financial Supervisory Authority adheres to ISAs, i.e. International Standards on Auditing;
  • in 2011, from the merger of 3 Danish organizations: FSR (Danish Statutory Auditors), FRR (Danish Institute of Certified Public Accountants) and REVIFORA (association for young accountants and trainees), FSR, the proffessional Danish accounting organization that deals with auditing, auditing of financial statements, bookkeeping and taxation in Danish companies;
  • Danish auditors, state authorized public accountants (SPA, or State Authorized Public Accountant) appointed as auditors and audit firms are audited, every six years, by the DSAA, or the Audit Supervisory Authority (established by the DBA).

Costs in a Danish company

Danish company accounting also deals with costs, accounts, balance sheets and assets.

The Danish balance sheet formula shows the assets divided according to the principle of increasing liquidity, i.e. from the least liquid (Intangible Assets) to the most liquid (cash), and the liabilities are grouped into debt and equity.

Below is the Danish balance sheet template:
Below is the Danish balance sheet template:

  1. Fixed assets:
    • intangible assets:
      • completed development projects including concessions, patents, trademarks and similar rights that originate from development projects,
      • acquired concessions, patents, licences, trademarks and similar rights,
      • goodwill,
      • development projects in progress, and advances for IPE;
    • tangible fixed assets:
      • land and buildings,
      • plant and machinery,
      • other (equipment, fixtures and fittings),
      • property, plant and equipment in progress and advances for fixed assets;
    • financial assets:
      • shares in related parties,
      • receivables from related parties,
      • investments in associates,
      • receivables from associates,
      • other investments,
      • other receivables,
      • shares,
      • receivables from owners and management.
  2. Current assets:
    • inventories:
      • raw materials and consumables,
      • work in progress,
      • finished goods and merchandise,
      • advances for goods;
    • receivables:
      • trade receivables,
      • contracts for work in progress,
      • receivables from related parties,
      • receivables from associates,
      • other receivables,
      • receivables from owners and management,
      • settlements;
    • investments:
      • investments in associates,
      • equities,
      • other investments;
    • cash:
      • liabilities,
      • capital (paid-in capital, agio, revaluation reserve, other reserves, profit/loss),
      • provisions (provision for pensions and similar obligations, provision for annual tax, other provisions);
      • current and non-current liabilities (mortgage debt, other debts incurred by issuing bonds, loans, profit shares of debt instruments,
      • advances received from customers, trade payables, payables to related parties, payables to associates, income tax, other liabilities),
      • accruals.

Documents in Danish business operations

The website of Erhvervsstyrelsen, or the Danish Business Authority (www.erhvervsstyrelsen.dk), contains all issues concerning the registration, accounting and operation of companies in Denmark.

Relevant information on Danish companies can be found at https://www.virk.dk. The following data can be found there:

  • CVR, or company registration number;
  • company name;
  • the company’s address;
  • date of establishment and liquidation of the company in question;
  • type of business activity;
  • details of owners, partners, management;
  • number of employees;
  • contact details;
  • information on loans;
  • information on accounting, balance sheet, financial reporting, and personal and company data (limited liability companies, joint stock companies);
  • sectors and sub-sectors;
  • related companies;
  • accounting rules;
  • documents needed to set up the business in question.

Some Danish documents are:

  1. Oplysningsskema (formerly selvangivelse), which is a tax return form that is issued by the Danish Tax Authority (SKAT) and then sent to the address (Danish or Polish) provided at registration and to the taxpayer’s electronic mailbox. The document is intended, among other things, for self-employed persons and must be completed by 1 September of the following tax year. On the basis of the returned form, the office will prepare årsopgørelse.
  2. Årsopgørelsen, a document issued and sent on 15 March by SKAT, contains the preliminary tax decision (the amount of the refund or surcharge). If any part of the information in the årsopgørelse is incorrect, or the taxpayer is entitled to additional allowances, the document can be corrected electronically through TastSelv and sent back to the office as a completed annual return, by 1 May. For entrepreneurs, the document is prepared later, based on the completed oplysningsskema. The tax, in the amount calculated in finalårsopgørelsen, must be paid to the office by 1 July. For tax above DKK 21,798, the amount is divided into three instalments to be paid in August, September and October.
  3. Oplysningsseddel, which is a document that summarizes the employee’s earnings. Every Danish employer is obliged to issue such a document to its employees after the end of their work.
Danish employers are obliged to keep their employees’ records (upon termination of their contract) for a period of 5 years.

Danish imports vs. Danish exports

For Denmark, the most important trading partners are the EU countries (primarily Germany, Sweden, the UK and the Netherlands; Poland is in 13th place). Denmark exports the most foodstuffs, live animals, chemicals and chemical products, while it imports the most machinery, equipment, processed products, chemicals and chemical products.

The Danish Board of Trade (Eksportrådet) is responsible for Denmark’s cooperation with other countries (in 1995 Polish and Danish investors established the Danish-Polish Chamber of Commerce).

The Europe Agreement of 16 December 1991 normalizes trade between the European Union and Poland. Thanks to this agreement, a free trade zone for industrial goods was created (since 1999). This means that preferential tariff rates apply, the same for all EU countries, which are usually 0% (except for agricultural products, processed agricultural products and foodstuffs). In order to apply the preferential rate, it is necessary to present „EUR1” (certificate of origin of products) to Danish customs officials. Customs duty is calculated on the customs value of the goods, i.e. on the invoice price, which has been increased by insurance and transport costs.

The 25 per cent MOMS, or value-added tax (VAT), applies to agricultural, industrial products and almost all services.

The differentiated excise duty covers the following goods:

  • ice cream,
  • coffee,
  • video cassettes,
  • tobacco products,
  • spirits,
  • chocolate products,
  • light bulbs,
  • beer,
  • wine,
  • tea,
  • cars,
  • fuels,
  • disposable packaging.

The Danish Veterinary and Food Inspectorate (Fødevarestyrelsen) is responsible for issuing permits and licences to entrepreneurs who plan to start importing food.

All food products should be labelled with their ingredients in Danish and meet standards that set criteria for the use of preservatives. A warning should be placed on any packaging of goods that pose a risk to health and life (e.g. chemicals or medicines).

On the other hand, the Ministry of the Environment (Department of Chemical Products) supervises entrepreneurs who wish to introduce all kinds of cosmetics and cleaning products and detergents into the Danish market (the Department must receive a report on the activities of such companies every 1 February).

Danish business owners who wish to deal with the import of chemicals or products containing hazardous chemicals should check whether the substances in question appear on the EINECS list of hazardous substances (the Ministry of the Environment must be informed of any chemical substance outside the list). Before chemicals are placed on the Danish market, they must be allocated to the appropriate group (for commercial or private use).

Below is a list of industrial products that should be CE marked (according to the New Approach Directives):

  • toys,
  • machinery,
  • gas appliances,
  • lifts,
  • low-voltage electrical products,
  • construction products,
  • personal protective equipment,
  • simple pressure vessels,
  • electromagnetic compatibility,
  • non-automatic weighing instruments,
  • energy efficiency of freezers and refrigerators,
  • diagnostic equipment (in vitro),
  • active medical implants,
  • telecommunications terminal equipment,
  • recreational boats and yachts,
  • explosives for civilian use,
  • cable systems for the transport of people,
  • efficiency of water power boilers,
  • equipment used in potentially explosive atmospheres.
The Contact Law is a law that deals with the conclusion of contracts. Both Poland and Denmark have a UN Convention on Contracts for the International Sale of Goods.

Other relevant agreements are:

  • Agreement on the Development of Economic Cooperation, May 1976;
  • Agreement on cooperation in the field of energy, 1990;
  • Agreement on cooperation in the field of environmental protection, 1990;
  • Agreement between the former Ministry of Spatial Planning and Construction of the Republic of Poland and the Ministry of Environment and Energy of the Kingdom of Denmark on assistance to the energy and environment sector, 1995;
  • Agreement between the Ministry of Agriculture and Food of the Republic of Poland and the Ministry of Food, Agriculture and Fisheries of the Kingdom of Denmark on technical assistance and cooperation, 25 June 1999;
  • Agreement between the Ministry of Economy of the Republic of Poland and the Ministry of Trade and Industry of the Kingdom of Denmark on developing and strengthening the private sector in Poland, 18 June 1999 (extending the 1994 Memorandum until the end of 2001).

Obligations of a Danish employer

Danish entrepreneurs who decide to hire employees should read the Employment Document Act (Ansættelsesbevisloven) in advance. This act states that persons employed by a Danish company are due a document containing information about the most important working conditions. Danish employees are often protected by so-called collective agreements, i.e. an agreement on working conditions that is concluded between employers and employees, through trade unions or employee associations.

Danish employers are obliged to comply with Danish labour law and Danish health and safety regulations found on the website of the Danish Labour Inspection Authority (UIP).

Danish business owners who employ employees should:

  • provide their employees with personal protective equipment;
  • insure their employees against accidents and occupational diseases;
  • not discriminate against their employees;
  • provide their employees with decent wages;
  • ensure that employees comply with safety rules when doing their work;
  • provide a suitable working environment;
  • prevent injuries at work;
  • instruct workers on health and safety at work;
  • provide employees with health and safety training at least once a year;
  • cooperate with Danish Health and Safety at Work on an ongoing basis.

Employers from the European Union who wish to post their employees to work in the Kingdom of Denmark must comply with the posting rules contained in the following documents:

  • EU Directive 96/71 of 16 December 1996 on the posting of workers abroad (Working Environment Act, Equal Pay Act, Act prohibiting discrimination in the labour market, Legal Relations Act, Act on Equal Treatment of Men and Women in Employment and Parental Leave),
  • Danish Posting of Workers Act No 993 of 15 December 1999,
  • Polish employees who have been posted to work in Denmark should, prior to their departure, be provided with an A-1 form (confirming payment of employee social security contributions and specifying the Polish regulations for such insurance in the country), which is issued by ZUS in the form of a certificate.
All Danish companies should be registered with the Danish Commerce and Companies Agency (www.erhvervsstyrelsen.dk), which gives companies a Central Company Register number (CVR, www.datacvr.virk.dk), and with the Register of Foreign Service Providers – RUT (any changes to a Danish company must also be reported).

Anticipated developments in Danish accounting

On May 24, 2022, the Danish parliament decided to adopt reform packages to replace the previous 1999 law. This was prompted by the state authorities’ focus on increasing the ubiquity of digitization of accounting records of companies operating in Denmark and maintaining a strong position in the fight against tax evaders. This law officially came into effect on July 1, 2022. According to its contents, it is planned that:
– As of October 1, 2023, corporations registered in Denmark will have an irrevocable obligation to provide Danish authorities with financial statements for each fiscal year,
– As of January 1, 2026, all operating companies and associations that conduct their business in Denmark, which will exceed an annual net turnover of DKK 300,000 (or about EUR 40,000) for two consecutive years, will also be required to provide annual financial statements to the Danish authorities.
These changes have not yet been officially carried out, they are only planned, although the Danish authorities are actively pursuing them. This requirement has been postponed until December 13, as finally decided by the Danish Business Authority (Erhvervsstyrelsen). Details on the new timetable for the above changes are expected to be announced when the new government takes office and makes decisions on the matter. The process of confirming technical and detailed requirements is still underway. Currently, the only specifics are the sketches of the SAF-T system that have been created, which illustrate what it is likely to look like. The system is to be phased into general use from 2024. It is estimated that it will be in widespread use by 2026.
The requirements of digital accounting include two primary responsibilities:
– recording all transactions that take place in the company in a special digital accounting system,
– storing and securing records and attachments that document records in the digital accounting system – the minimum requirement is to keep at least backup copies of records, for which you can use, for example, a vendor’s server or any other.

New requirements for Danish digital accounting systems

According to a recently introduced new Danish law, companies are required to digitize accounting records related to their operations. With the introduction of this change, the operation of many businesses will be significantly simplified, as the special system will make it much easier to obtain current financial information and, consequently, allow company managements to make more accurate decisions and create better thought-out long-term strategies. The system provided by the Danish authorities has been officially approved by them and meets a number of very stringent requirements which were previously imposed by the Danish government at the time of the Executive Order. It is the only official system that companies registered in Denmark should use. The planned activities of the Danish government is to expand the available information on the certification of digital suppliers, which will allow for much faster certification but also verification. According to the newly enacted Article 15, any digital accounting system must meet three basic requirements. These guidelines apply to any digital accounting system, regardless of whether it is specially developed or a standard system.

  1. The system must operate according to established IT security standards. This not only ensures data protection and more secure management of access and users, but also ensures that when any attachments or records are added, they are automatically backed up in case they are lost.
  2. The system must be efficient enough to record transactions carried out by the company with the specification of attachments for each record. It is also necessary to store in the system all attachments and records from at least the last five years.
  3. The system must have the function to send and receive invoices electronically, without the need for an employee to do it each time. Another necessary function is the automatic settlement of transactions through a publicly available accounting system.

E-invoicing in Denmark

In 2005, legislation was introduced in Denmark that imposes on Danish government authorities and their suppliers the use of e-Invoices. This type of invoice should be created in Peppol BIS 3.0 format using the Peppol network. This way, public entities that have previously been registered with the national SMP NemHandel are connected to each other. Expected changes to be introduced in Denmark in the near future regarding this issue include cataloging for selected categories of goods and the ability to place orders electronically. Such measures will be aimed at convincing Danish institutions operating in the public sector to make increasing use of e-commerce opportunities. At this point, e-invoicing can also be used by companies working together on a B2B basis, but there is no official requirement to do so. The only condition is that both parties agree to this type of operation.

FAQ

  1. What accounting standards apply in Denmark?

    Accounting in Denmark is conditioned by the EU Regulation 1606/2002 on the application of international accounting standards (IAS), which prescribes the use of IFRS standards, as adopted by the European Union, for the consolidated financial statements of European companies whose securities are traded on a regulated securities market (since 2005). The EU IAS Regulation allows members of the European Union to permit and require the use of IFRS standards adopted by the EU in the separate financial statements of companies (statutory accounts) and/or in the financial statements of companies whose securities are not traded on a regulated securities market. Within Denmark (according to the IAS assumptions), IFRS standards adopted by the European Union may optionally be used for the consolidated and separate financial statements of Danish companies that do not trade on a regulated market. The Kingdom of Denmark includes two autonomous territories, the Faroe Islands and Greenland, where EU law does not apply.

  2. What is a-kasse?

    A-kasse is an unemployment insurance fund. Unemployment insurance is optional, but you must become a member of a-kasse in order to receive benefits when you lose your job.

  3. Is it possible to settle online with the tax authorities in Denmark?

    In Denmark, it is possible to settle online using the special 8-digit code TastSelv (which can be ordered via www.skat.dk) found on Årsopgørelsen or Forskudsopgørelsen (tax card).

  4. What is Skat til udbetaling?

    Skat til udbetaling – the wording on the tax decision from the office that indicates the amount of tax refund.

  5. What is Restskat til betaling?

    Restskat til betaling – the wording placed on the tax decision of the office, specifying the amount of the additional payment for SKAT.

  6. What is a NemKonto?

    NemKonto is an employee bank account into which SKAT tax refunds and work pay are transferred.

  7. What is Feriepenge and to whom is it due?

    Feriepenge is a holiday benefit to which all persons legally working in Denmark are entitled. A Danish worker is entitled to 2.08 days’ holiday for every month worked, i.e. 25 days (5 weeks). You can also apply for Feriepenge up to six months after you have finished working in Denmark, but you must register at Folkeregister municipal office before you leave the country. Feriepenge is paid into a NemKonto for up to 3 months, for the previous tax year, which runs from 1 September to 31 August of the following calendar year, and can only be used in the following holiday year from 1 May to 30 April.

  8. What is a Feriekonto?

    Feriekonto – a special fund to which Danish employers are obliged to pay their employees’ holiday contributions (12% of gross salary less 8% allocated for social purposes).

  9. How long do I have to wait in Denmark for my tax refund?

    You have to wait approximately 6 months for your tax refund from the Danish Tax Authority.

  10. What is Årsopgørelsen?

    Årsopgørelsen are tax decisions that can be found on the website of the Danish Tax Authority.

  11. What is a Personfradrag?

    Personfradrag is a personal tax allowance to which Danish residents who have worked in Denmark for 12 months are entitled.

  12. What are the Danish tax credits?
    • relief for commuting from accommodation and residence to work,
    • relief on accommodation,
    • relief on meals.
  13. What is a pension?

    A pension is a Danish private pension accumulated in private pension funds (Danica Pension, PFA Pension, Pensiondanmark, Industriens Pension).

  14. What is folkepension?

    Folkepension is the Danish state pension, to which all Danish citizens over the age of 65 are entitled.

  15. What is ATP?

    ATP is the Danish occupational scheme, which is part of the second pension pillar and covers all Danish citizens over the age of 16.

  16. What is the Sundhedskortet health card?

    This is a Danish health card, the so-called yellow card, which must be set up by anyone planning to stay in Denmark for more than 3 months. The insurance card is issued together with a CPR number and guarantees free medical care (except dental treatment).