Denmark's new bookkeeping law requires digital invoicing and changes to accounting practices

Starting from July 1st, 2022, businesses in Denmark are required to use eInvoicing to exchange and store invoices electronically due to the new Bookkeeping Law. This law aims to improve the fight against fraud and errors in VAT and tax returns. The requirement for digital bookkeeping depends on the company type and turnover.

Software providers who offer digital invoicing and accounting-related services in Denmark must register with the Danish Business Authority and get a “digital bookkeeping system” status. The Danish Business Authority is currently preparing a template for the bookkeeping process, and it will be available with guidance information on their website in early autumn 2022.

The impact of Denmark's new bookkeeping law on company accounting and IT systems

The new bookkeeping law in Denmark means that there will be significant changes in the way companies keep their accounts as it requires more use of IT systems.

Here are some of the important changes that have been made:

- Companies need to organize and carry out their bookkeeping in a way that fits their type, the number of transactions they make, and the financial scope of those transactions.
- They need to make sure that their VAT, taxes, and fees are based on up-to-date information.
- Companies are now required to do their bookkeeping digitally and provide the necessary infrastructure for this to happen.
- Providers of digital bookkeeping systems in the Danish market must now have their systems certified.

From January 1st, 2024, companies that use approved systems will be liable under the law. Companies with a turnover of more than DKK 300,000 (around € 40,304) are expected to meet these requirements by January 1st, 2026.

The extent of the legislation

In Denmark, there are different types of business companies such as joint stock and limited companies, business foundations, cooperatives, and sole proprietorships. Foreign companies can also carry out business activities in Denmark through branches. If a branch has a turnover of more than DKK 300,000 for two years in a row, it must follow new rules for digital bookkeeping under the DBA.

In order to comply with these regulations, Danish accountants providing digital accounting services must have the right software to record transactions by different companies and store numerous records and attachments on a server. Such software must also meet certain requirements, such as displaying and securely storing attachments for five years, having recognized IT security standards, and automating administrative processes such as sending and receiving e-invoices. Suppliers must submit their systems to the DBA and make sure they meet all the requirements of the Danish accounting system.