All Danish companies required to implement electronic invoicing
Denmark, like many other countries around the world, is introducing a new rule that requires companies to use electronic invoicing. This is part of an effort to make the economy more digital and to reduce tax fraud.
Although Denmark has allowed e-invoicing since 2005, it was not mandatory for B2B companies to use it. Only public administrators and suppliers who worked with the government were required to use e-invoicing.
On May 19th, 2022, the Danish parliament passed the Bookkeeping Act, which requires all companies, regardless of their size, to issue, receive, process, and store their invoices electronically.
Although the implementation of the Act was delayed due to the formation of a new government, it will soon come into effect.
Unimaze has been monitoring the progress of e-invoicing in Denmark. If you're interested in learning more about this digital transformation in the country, keep reading.
E-invoicing requirements in Denmark: A brief overview
E-invoicing is a way of sending and receiving invoices electronically. There are different models for e-invoicing depending on who the sender and receiver are:
- B2G (business-to-government) e-invoicing can be centralized through a system called Peppol. This means that all invoices are sent through a central platform.
- B2B (business-to-business) e-invoicing typically follows a post-audit model where invoices are first processed by the buyer before payment.
There are certain requirements that need to be met in order to use e-invoicing. For B2G, it's mandatory to use a specific infrastructure called Nemhandel or Peppol. For B2B, there are no mandatory infrastructure requirements.
There are also specific formats that need to be used for e-invoicing. For B2G, the OIOUBL or Peppol BIS formats are mandatory. For B2B, there are no mandatory formats.
When it comes to who can issue and receive e-invoices, for B2G it's mandatory for suppliers to all contracting authorities. For B2B, there are no explicit requirements for issuing.
Receiving e-invoices is mandatory for all contracting authorities in B2G. For B2B, the buyer needs to give their consent to receive e-invoices. Digital signatures are not required for e-invoicing. Archiving e-invoices abroad is allowed under specific circumstances.
The period of time that e-invoices need to be archived depends on whether the property is movable or immovable. For movable property, the archiving period is 5 years, and for immovable property, it's 10 years.
The roadmap to mandatory e-invoicing in Denmark for B2B transactions
In Denmark, it will soon be mandatory for businesses to use electronic invoicing (e-invoicing) for their B2B transactions. This will be rolled out in stages over the next few years.
In January 2023, the Danish Business Authority will provide detailed requirements for businesses to send and receive e-invoices. System suppliers will then need to make sure their products meet these new regulations and apply for approval from the authority.
From January 2024, all B2B businesses in Denmark will need to use the approved e-invoicing system for B, C, and D accounting classes. And from January 2026, private companies in class A accounting class generating more than DKK 300,000 will also need to comply with mandatory e-invoicing.
Even if a business generates less than DKK 300,000, they will still need to comply with all other legal requirements. The introduction of mandatory e-invoicing in Denmark is expected to have significant economic benefits and boost business competitiveness, as well as making it easier to do business with the public sector.
Overall, the adoption of e-invoicing in Denmark is set to bring many benefits for B2B businesses, including faster and more efficient invoicing processes, improved accuracy, and reduced administrative costs.
5 reasons why electronic invoicing is the way forward for Danish businesses
1. Save Time
Making electronic invoices mandatory in Denmark will simplify the invoicing process by removing unnecessary steps. This means that using a cloud e-invoicing solution will help both businesses and customers save a lot of time.
2. Cut Costs
Paperless invoicing in Denmark means that companies will no longer have to pay for postage or paper. Additionally, businesses will not need to use e-invoice templates or send PDF emails. By eliminating these costs, the Accounts Payable staff can focus on more important tasks.
3. Easy Invoice Tracking
When using e-invoices, B2B businesses can easily track the status of their invoices, including when they were sent, viewed, and paid. This eliminates the uncertainty that an invoice may have been lost or not received by the other party. Late payments can often occur when invoices are misplaced or lost, and up to 11% of customers report not receiving invoices at all. With e-invoicing, customers can receive invoices within minutes, which results in faster payment processing.
4. Fewer Errors
Statistics show that 61% of late invoice payments are due to incorrect invoices.
Electronic invoices reduce manual input, automate business processes, and minimize errors and typos. Sending invoices with the correct details eliminates unnecessary back-and-forth communication between trading partners, which leads to faster payments.
5. Improved Customer Service
E-invoicing makes it easier and more convenient for customers to receive invoices in their preferred format. Using a standard digital management platform, customers can quickly access documents with just one click. Since e-invoicing improves efficiency by 70%, B2B businesses in Denmark can take advantage of early payment discounts, resulting in more savings.
Digital invoice system in Denmark
Denmark uses a centralized system for Peppol invoicing, which is connected to the NemHandel platform. NemHandel is a digital system that allows businesses to exchange documents with public authorities. In Denmark, it's required by law for trading entities to use NemHandel when exchanging business documents with the government.
To use NemHandel, businesses need to connect their accounting system to an access point. This ensures that the data being sent and received is secure and meets the mandatory standards. Peppol is overseen by the Danish Business Authority, which registers and approves Peppol Access Point providers. Unimaze is an authorized provider helping businesses comply with the mandatory e-invoicing.
NemHandel supports two e-invoice formats, OIOUBL and Peppol BIS. The Danish government aims to use Peppol e-invoicing to promote cross-border trade, make electronic catalogs and orders mandatory for public procurement, increase the use of electronic invoicing and e-procurement in the public sector, provide a technical framework for connectivity, and promote B2B e-invoicing in the long term.
Frequently Asked Questions about e-Invoicing in Denmark
What information is required on a Danish invoice?
When issuing an invoice in Denmark, keep in mind key information such as:
- Invoice number: This is a unique identifier of the invoice that can be used to track it.
- Issue date: This is the date when the invoice was created.
- Supplier information: This includes the name, address and CVR (Central Business Register) number of the company issuing the invoice.
- Customer information: This includes the name, address and CVR number of the company that will receive the invoice.
- Description of goods or services: This should be a detailed description of what was sold.
- Quantity and price: This includes the number of goods or services sold and the price for each item.
- Total amount: This is the total amount to be paid, including any applicable taxes.
- Payment terms: This includes the payment term and accepted payment methods.
- VAT number: Include the supplier's VAT number, if applicable.
- Tax rate: This is the percentage of VAT applied to the total amount.
Note that in Denmark, invoices should be issued in Danish kroner (DKK), and VAT should be included in the total amount. In addition, the supplier should include its CVR number, which is a unique identification number for companies in Denmark. By including all this information, businesses can be sure that their invoices comply with Danish regulations.
What is the purpose of an EAN number in Denmark?
An EAN (European Article Number) number is a unique identifier given to products sold in the European market. In Denmark, EAN numbers are used to identify products for sales and inventory tracking, as well as to facilitate communication between businesses.
The EAN number is made up of 13 digits and includes a barcode that can be easily scanned at the point of sale. This helps companies identify products from different suppliers and provides clarity by avoiding confusion caused by different product codes.
In Denmark, GS1 Denmark is the non-profit organization responsible for managing and maintaining the EAN system. They assign EAN numbers to products to ensure that they can be easily identified and tracked by businesses throughout the country.
By using EAN numbers and barcodes, businesses in Denmark can keep track of their inventory and ensure that products are accurately identified and sold to customers. This helps to streamline the sales process and makes it easier for companies to exchange information and do business with one another.
What are the main provisions of the Danish Bookkeeping Act?
The Danish Bookkeeping Act (Bogføringsloven) is a law that regulates how financial transactions are recorded and reported in Denmark.
The Act outlines the legal requirements for bookkeeping and accounting and the responsibilities of individuals and companies in maintaining accurate financial records. These records must include all financial transactions, such as sales, purchases, and expenses, and must be kept for at least 5 years.
Companies must make their financial records available to the tax authorities upon request and prepare annual financial statements audited by a certified public accountant. These statements must be submitted to the Danish Business Authority (Erhvervsstyrelsen) and made public.
The Danish Bookkeeping Act aims to promote transparency and accountability in companies' financial dealings and ensure that accurate and reliable financial information is available for stakeholders to make informed decisions.