Understanding the rules and requirements for accounting record keeping in Denmark

Under Danish law, companies are required to keep their accounting records. However, this can be quite difficult for international groups of companies. Accordingly, Danish companies and subsidiaries may seek permission to keep their accounting records outside Denmark. Recently, the process for obtaining such permission has become more flexible, and it appears that all accounting records, with the exception of physical vouchers, system descriptions and passwords, can be stored abroad.

Retaining accounting records in Denmark and other nordic countries

According to the Danish Bookkeeping Act, companies are generally required to keep their accounting records within Denmark. However, they may also keep them in other Nordic countries such as Finland, Iceland, Norway, or Sweden, as long as they follow certain rules. These rules include keeping the records in compliance with the Danish Bookkeeping Act, making sure they can be accessed at any time, and keeping system descriptions and passwords in Denmark for public authorities to access if needed.

If a company is operating abroad, they may keep their accounting records in another country for 1-2 months. If the company is conducting activities in a foreign country, they may keep their accounting records for those activities outside of Denmark for 3-4 months. However, any internal or external vouchers related to the foreign activities must be kept abroad for the entire 5-year retention period.

Consequences of non-compliance with accounting rules in Denmark

If you do not comply with Danish accounting laws, your company may be fined. Those responsible for the company's accounting, usually the board of directors, as well as the company itself, can be fined. If you break the rules intentionally or in a very bad way, you could also be fined under Danish law, which could mean going to jail for up to a year and a half for the board. In addition, the company may not be allowed to keep accounting records outside Denmark for 1 to 5 years.

Getting permission to keep accounting records abroad for foreign companies in Denmark

If you want to keep your accounting records outside of the Nordic countries forever, you need to get permission from the Danish Business Authority.

This is particularly important for foreign companies that have a permanent establishment or a subsidiary in Denmark, and want to keep their accounting records at their head office, parent company, or shared service center in another country.

In the past, it was difficult to get permission from the Danish Business Authority to keep accounting records outside of the Nordic countries. However, things have changed, and now it's easier to get permission. As long as you apply and get permission, you can keep all your accounting records abroad, except for system descriptions, passwords, and physical vouchers if they exist.

Permission is granted in certain cases, such as when a company is part of an international group, keeping accounting records abroad saves money, and there's no risk of the permission being used to harm Danish tax or investigation authorities (as long as there are no ongoing tax or investigation cases). The company must agree to follow conditions set by the Business Authority. If these circumstances apply, the Appeals Board sends the case back to the Business Authority to decide on the conditions of permission.

In some cases sent back to the Business Authority, they required that copies of receipts be kept in Denmark. However, for two complainants, the Appeals Board decided that permission should not be conditional on keeping electronic receipts in Denmark.

Requirements for companies keeping accounting records abroad while operating in Denmark

These are the rules and requirements for companies who want to keep their accounting records abroad while doing business in Denmark:

I. The records must be kept in accordance with the Danish Bookkeeping Act. This means that the company must follow the same rules for keeping records as if they were in Denmark.

II. Any descriptions of systems and passwords needed to access the records must be kept in Denmark. This is to ensure that Danish authorities can access the records if needed.

III. Physical vouchers, such as receipts or invoices, must also be kept in Denmark.

IV. The company must be able to print the accounting records from their address in Denmark through an online connection to the server abroad.

V. The company must guarantee that Danish authorities can access and print the accounting records retained abroad at any time without the need for a court order from the foreign authorities.

VI. Permission to keep accounting records abroad is usually limited to three years. If the company wants to continue keeping records abroad, they must submit a new application before the current permission expires.

Overall, these rules and requirements are in place to ensure that companies operating in Denmark are keeping accurate and accessible accounting records in compliance with Danish law.

Financial record keeping requirements under Danish law

According to Danish law, businesses must keep accurate financial records for at least 5 years after the end of the relevant financial year. This includes documenting all transactions with vouchers and ensuring that all entries can be traced to the financial statements. If the records are kept electronically or on microfilm, they must be able to be printed out without any changes. Additionally, the system used to retrieve and print the records must be documented in hard copy.

Accounting record transfer rules for non-EU countries under Danish law

If a company needs to transfer their accounting records to a country that isn't part of the European Union and doesn't have an agreement in place that aligns with the EU's rules on data protection and free data movement, then they have to follow specific rules set out in the Danish Act on Processing of Data. However, if the country they want to transfer to is Iceland or Norway, then there are agreements in place that match the EU's rules.

Advantages of concentrating accounting records for international groups in Denmark

International groups with branches or subsidiaries in Denmark may benefit from keeping their bookkeeping and accounting records in one central location. To do this, they should consider applying for permission to retain their accounting records abroad. This can lead to significant reductions in administrative and economic resources, especially since most accounting records are now kept electronically. It's important to follow the most recent guidelines and regulations when applying for permission.