Compulsory use of digital invoicing in Denmark
Denmark is making progress towards implementing e-invoicing in business-to-business (B2B) relations
Denmark has been using e-invoicing in the public sector (B2G) since 2005, where it is compulsory for public administrations and their suppliers to use it for all contracting work. This means that suppliers must issue invoices electronically, while authorities must receive them electronically. However, the use of e-invoicing in business-to-business (B2B) relations has only recently been regulated.
Timeline for implementation
B2B e-Invoicing in Denmark will be phased in gradually according to the following timeline:
- January 2023: The Danish Business Authority will publish detailed requirements, which system suppliers will need to adapt their products to. They will then need to apply for approval of their systems from the Agency.
- January 2024: Companies with accounting classes B, C and D will be required to use an approved digital accounting system.
- January 2026: Personally owned accounting class A companies with a turnover of more than DKK 300,000 will also need to comply with this requirement.
Sole proprietorships with a turnover of less than DKK 300,000 will be exempt from the requirement to use a digital accounting system, but they will still need to comply with all other aspects of the law.
Streamlining business document exchange in Denmark: A look at NemHandel and PEPPOL
There is a system called NemHandel that allows private companies and public authorities in Denmark to exchange digital business documents. This system has been required by law since 2005 for exchanging business documents with authorities. To use NemHandel, your accounting system needs to be connected to an access point to ensure security compliance.
PEPPOL is a system that enables cross-border e-procurement, and in Denmark, the PEPPOL Authority is the Danish Business Authority (ERST). ERST is responsible for registering companies that want to use the PEPPOL network as an access point or service metadata publisher, and for promoting the long-term adoption of e-procurement using the PEPPOL network. Both NemHandel and PEPPOL are supported by a centralized model.
Automated business reporting and digital accounting systems
Automated business reporting obliges companies to send electronic invoices using an approved digital accounting system. As with e-invoices sent to the public sector, other e-invoices will also be sent via a central receiving portal.
There are three types of digital accounting systems that companies can use. The first is a cloud-based system where companies record their transactions and store receipts. This system must be hosted by a third party - the system provider or the provider's host. The second type is a hybrid system, which is installed locally in the company. It has a feature that automatically makes copies of registrations and documents, which are then stored at the third party. The third type of system is specifically created for a company and stores registrations and attachments only on the company's server. However, backups are made continuously and stored with a third party.
If a company does not use an approved, registered system, its system must meet the same requirements as approved systems.
Storage obligations for electronic invoicing in Denmark
Companies are required to keep their accounting records safe for five years after the end of the financial year they relate to. This means that they need to make sure that all the documents are stored securely and can be accessed if needed. Interestingly, in Denmark, the requirement to keep accounting materials has been abolished.
How often records are updated and checked for accuracy
Companies registered in Denmark must keep very accurate records of all their transactions, preferably as soon as possible after the transaction. For companies that are too complex, have too many transactions or the transactions are too large, they can group purchases or sales together based on daily cash statements.
Companies need to keep track of all their transactions with supporting documents and include references to where they are recorded in the books of accounts. The supporting documents should contain enough information to identify the transaction, including the date and amount of the transaction. If the supporting document comes from an external source, it should be cross-referenced to the company's records.