New Danish bookkeeping act to impact companies in Denmark: What you need to know
On May 19th, 2022, the Danish Parliament approved a new law called the Bookkeeping Act. This new law will have an impact on all companies in Denmark in the long run. However, many companies have already been affected by this law since July 1st, 2022.
The law will have a significant impact on companies classified as B or C in terms of accounting. This includes companies with limited liability such as private limited companies (ApS) and limited liability companies (A/S) that do not exceed two of the following limits for two consecutive years:
Class B
- Turnover: DKK 0-89 million
- Balance Sheet Total: DKK 0-44 million
- Number of Employees: 0-50
Class C - Medium
- Turnover: DKK 89-313 million
- Balance Sheet Total: DKK 44-156 million
- Number of Employees: 50-250
Class C - Large
- Turnover: > DKK 313 million
- Balance Sheet Total: > DKK 156 million
- Number of Employees: > 250
The new Bookkeeping Act in Denmark has brought about some changes that will affect companies in Denmark. The most important changes affect companies in accounting classes B and C. Here are some of the changes:
The definition of accounting material has been expanded to include more information that must be stored digitally for at least five years. For example, companies must store documentation of information related to the notes and management's review in the annual report. They must also store information related to accounting estimates like depreciation periods and scrap values for fixed assets.
Companies must prepare descriptions of their systems and processes for bookkeeping. These descriptions should include procedures for recording all transactions, keeping accounting records safe, and information about staff responsible for these procedures. These descriptions must be kept for a minimum of five years as part of the company's accounting material.
Companies are required to prepare reconciliations of their bookkeeping to ensure up-to-date and accurate records. This is important for reporting taxes, VAT, duties, and annual reports. Companies must prepare necessary reconciliations like reconciling bank accounts, debtors, and creditors no later than the deadline for reporting VAT.
Overall, the changes brought about by the new law will have a significant impact on companies in Denmark, and it's important that they comply with these new regulations to avoid any penalties or fines.
Starting from January 1, 2024, companies in Denmark must use a digital bookkeeping system that meets the requirements of the new Danish Bookkeeping Act and is registered with the Danish Business Authority. This means that companies must keep their vouchers and invoices digitally stored in the bookkeeping system.
It's unclear if this law will affect companies with year-ends on or after June 30, 2022, or if it will only apply to financial years starting from January 1, 2023, and later. The Danish Business Authority is expected to provide more information about this as soon as possible.