Denmark phases in new requirements for digital accounting systems, with implications for businesses and accounting firms

In May of last year, the Danish parliament approved a set of reforms that will impact the Danish Bookkeeping Act (Act no. 700 of May 24, 2022). This new act will replace the previous one, which had been in place since 1999. The main goal of these reforms is to combat tax fraud and increase the digitalization of accounting records for Danish companies.

The new regulations require companies to fulfill two basic accounting duties:

Record all company transactions in a digital accounting system
Store records and any accompanying documents digitally in an accounting system or have a complete backup copy of the records stored on a server with a third party vendor or service.

New requirements for digital accounting systems to be phased in over next few years

In the next few years, there will be new requirements for using digital accounting systems. These requirements will be introduced gradually so that companies and providers have time to adjust and enjoy the benefits of automated accounting systems. The Danish authority has updated the timeline for these requirements, and they will let companies know when they have to start using them.

There is a timeline for when companies must start using digital accounting systems in Denmark:

From February 1st, 2023, companies must use digital standard accounting systems.
If a company needs to register a digital system by January 1st, 2024, they must notify the Danish Business Authority by October 31st, 2023.
Between November and December 2023, the Authority will check and register the notified systems.
By January 1st, 2024, all notified systems will be registered.
In addition, there are plans to require all accounting firms to use digital systems for fiscal years beginning after July 1st, 2024. For sole proprietorships and some partnerships, they will need to book digitally for fiscal years beginning after a specific date in 2026 (which is still undetermined).

The specific technical requirements for the digital accounting systems are still pending. However, drafts of the SAF-T system have been published, and there will be a staggered implementation from 2024 to 2026.

New law mandates businesses to digitize accounting records in Denmark

A new law requires Danish companies to use digital accounting systems to record all financial information. This change is very significant and can bring extremely beneficial results, as it will make tracking financial data and making better business decisions much easier. The digital accounting system used must meet certain requirements set by the Danish government and be approved by the Danish authorities.

There are three basic requirements for any digital accounting system, whether it is a standard system or a specially developed one. First, it must be able to record all company transactions and store the records and attachments for at least five years. Second, the system must meet recognized IT security standards to protect the information and ensure automatic backup of records and attachments. Finally, it must be able to send and receive electronic invoices and account for transactions in a public standard accounting system.

The requirements for specially developed bookkeeping systems will be announced at a later date, in the first half of 2023. The Danish Business Authority will provide information on the requirements and when they will come into effect. EDICOM will keep up to date on any changes and inform you of upcoming dates.

E-invoicing and e-commerce in Denmark's public and private sectors

Danish government bodies have already been using e-invoices since 2005, making it much easier to connect with other public entities. Discussions are still underway about using electronic ordering and cataloging for certain goods in Denmark, with the aim of encouraging e-commerce in the public sector.

For business-to-business transactions, companies are free to choose whether or not to use e-Invoicing as long as both parties agree to it.