The recently implemented bookkeeping act in Denmark has arrived. How will it impact you?
At the end of May 2021, the Danish parliament gave final approval to a new accounting law that will take effect on July 1, 2022. The law had been in development for some time and introduces new requirements and rules. If you are worried about sudden changes, don't worry - the new rules will be introduced gradually. In this article, we will guide you through the most important aspects of the new accounting law.
A brief overview of the Bookkeeping Act
In 2021, the Danish Parliament agreed on a reform package to strengthen the fight against fraud and increase digitalization of bookkeeping in the Danish economy. As part of this package, a new Bookkeeping Act was presented and later passed at the end of May.
The updated Accounting Law aims to simplify business administration by digitizing and automating bookkeeping. The law now requires companies to keep their accounts digitally in an appropriate, secure accounting system and to store receipts online. While the new requirements may seem daunting, they represent an opportunity for companies to streamline processes, digitize records and use the data to gain valuable insights.
Which individuals or groups will be impacted by the act?
The new law will impact most businesses in Denmark. Companies that have earned at least DKK 300,000 annually for two consecutive years will have to comply with the new regulations. Associations with business activities will also be required to meet these regulations. The timing for the switch to digital bookkeeping will depend on your reporting category.
The changes of greatest importance
The most important changes in the new law are related to digital accounting. This means that all business transactions must be recorded and receipts must be kept, and a registered and approved digital accounting system must be used. Under the new law, companies are required to keep digital voucher records in the accounting system, as well as a backup of all accounting materials. For Danish companies, this means a slow shift away from traditional to digital. However, the specific documents that must be stored digitally have not yet been determined by the Danish Business Authority.
Important dates for companies to remember
Don't worry just yet - the new laws about digital bookkeeping and storage won't be fully in place until later on. Some parts of the law will start on July 1st, but the rules about digital bookkeeping won't come into effect until later.
One thing that companies should be aware of now is that they need to use a digital accounting system that's been registered and approved. There are some requirements that the vendors who make these systems need to meet, but we don't know exactly what those requirements are yet. They will be announced by January 1st, 2023, and the systems need to be registered and approved by July 1st of that year. This gives vendors time to make any changes they need to in order to meet the new rules. We'll let you know more when we find out the specific requirements.
It's time for companies to switch to digital bookkeeping, but the deadline for most companies is not until January 1st, 2024. This applies to companies in reporting classes B, C, and D. For larger companies in reporting class A with a revenue of more than DKK 300,000, the deadline is January 1st, 2026.
Here are the key dates to remember:
- July 1st, 2022: The new law takes effect.
- July 1st, 2023: Digital accounting systems need to be registered and approved.
- January 1st, 2024: Companies in reporting classes B, C, and D must start using digital bookkeeping systems.
- January 1st, 2026: Larger companies in reporting class A with a revenue of more than DKK 300,000 must start using digital bookkeeping systems.
Digital accounting systems approval and stricter rules
Most companies' digital accounting systems will be automatically approved by July 1st, 2023. However, if a company uses a self-developed accounting system or the accounting system of its foreign parent company, it doesn't need to be registered with the Danish Business Authority. But, the company is still responsible for ensuring that its systems meet all the requirements. The new act also brings stricter rules and higher fines for non-compliance. Authorities may request to see your company's accounting material, and if you can't present it in digital form, you could face fines of up to DKK 1.5 million.