Denmark consistently ranks among the best countries for doing business, thanks to its efficient regulatory framework, digital infrastructure, and transparency. However, for both local and foreign entrepreneurs, one essential aspect of operating in the Danish market is understanding bookkeeping obligations. Accurate and timely bookkeeping is more than just a formality—it is a legal requirement and a tool for making smart financial decisions. This article explains the fundamentals of bookkeeping in Denmark, what is required by law, and how to stay compliant while leveraging technology to simplify the process.
Understanding the Danish Bookkeeping Act
The core of bookkeeping regulation in Denmark is defined by the Danish Bookkeeping Act (Bogføringsloven). It mandates that all businesses—regardless of size or sector—must record their financial transactions in a structured, timely, and secure manner. The aim is to ensure the traceability and reliability of financial data.
As of the most recent amendment in 2024, the Bookkeeping Act requires that companies use digital accounting systems approved or certified by the Danish Business Authority (Erhvervsstyrelsen). This reform promotes transparency and helps reduce administrative burdens by encouraging automated data management.
In practice, bookkeeping must include every financial activity: income, expenses, assets, liabilities, and equity. All entries must be supported by documentation (e.g., receipts, contracts, or invoices), and records must be kept for a minimum of five years.
Who Needs to Keep Books in Denmark
In Denmark, the obligation to maintain bookkeeping applies to:
- Sole proprietors (Enkeltmandsvirksomhed)
- Limited liability companies (ApS, A/S)
- Partnerships (I/S, K/S)
- Branches of foreign companies
- Nonprofit organizations and associations that engage in economic activity
Even small-scale freelancers are expected to keep structured records of their business operations, especially if they are VAT-registered or employ others.
The level of bookkeeping detail depends on the company type and its classification under the Danish Financial Statements Act (Årsregnskabsloven). For example, a large A/S company will need to meet more extensive requirements than a single-person business.
Choosing the Right Bookkeeping Tools
Modern bookkeeping in Denmark is increasingly digital. Many companies rely on cloud-based software to comply with reporting standards and streamline operations. Below are some commonly used bookkeeping tools tailored to the Danish market:
- Dinero: Ideal for startups, freelancers, and small businesses. Offers invoice creation, bank reconciliation, and VAT reporting.
- Billy: Known for its intuitive interface and simple setup, good for sole proprietors.
- e-conomic: Offers advanced features such as inventory tracking and payroll integration, best for SMEs.
- Visma eAccounting: Strong automation features and tax reporting functions.
To meet the requirements of the new Bookkeeping Act, companies must ensure their chosen tool is certified by the Danish Business Authority or will be updated to comply with certification standards by 2026.
VAT and Tax Reporting through Bookkeeping
A major function of bookkeeping is to facilitate accurate VAT (Moms) and corporate tax reporting. In Denmark:
- Businesses earning more than DKK 50,000 per year must register for VAT.
- VAT returns are usually submitted on a monthly, quarterly, or biannual basis, depending on turnover.
- Businesses must calculate and report sales VAT (output tax) and purchases VAT (input tax).
- Corporate income tax is reported once per year, based on the company’s financial statements.
- Payroll taxes, pension contributions, and social security payments must also be recorded accurately.
Using bookkeeping software that connects directly with SKAT.dk —Denmark’s official tax authority portal—simplifies this process and reduces the risk of noncompliance.
E-Invoicing and Integration with Public Systems
Denmark was one of the first countries to introduce mandatory e-invoicing for B2G (Business-to-Government) transactions. Companies must send electronic invoices through the NemHandel platform when dealing with public institutions.
For B2B and B2C interactions, e-invoicing is not yet legally required, but its adoption is growing rapidly. Benefits include:
- Faster processing and payments
- Automated entry into bookkeeping systems
- Lower risk of errors
Businesses also need to integrate with national systems such as:
- NemKonto: A designated bank account used for receiving public payments.
- MitID: A secure digital ID used for business logins and digital signatures.
- Digital Post: Official communication platform between businesses and Danish authorities.
A certified bookkeeping system usually includes features that support integration with these platforms.
Auditing Requirements in Denmark
Depending on the business classification, some companies are legally required to submit audited financial statements:
- Class A: Small sole proprietors and partnerships – audit not required.
- Class B: Small private limited companies – audit may be waived if below certain thresholds.
- Class C and D: Medium and large companies – audit is mandatory.
Audits must be conducted by a state-authorized public accountant and include checks on the bookkeeping system, documentation accuracy, and financial statement consistency.
Bookkeeping for Foreign Companies in Denmark
International companies doing business in Denmark must also adhere to local bookkeeping standards. Common challenges include:
- Language: Most accounting software and tax documents are in Danish. Some solutions offer English versions, but not all communications from authorities are translated.
- Local expectations: Danish accounting practices and reporting formats may differ from international norms.
- Regulatory registration: Foreign companies must obtain a CVR number and may need to register a local branch.
To ensure compliance, foreign businesses are strongly advised to hire a local bookkeeper or accounting firm familiar with Danish law and digital infrastructure.
Best Practices for Bookkeeping in Denmark
To stay compliant and maintain financial health, businesses in Denmark should follow these best practices:
- Automate where possible: Use certified software that can handle invoicing, payroll, and tax filing automatically.
- Keep documents organized: Store all relevant paperwork securely, preferably in digital format.
- Reconcile accounts regularly: Match bank statements with internal records monthly.
- Work with professionals: Consider hiring a local bookkeeper or accountant, especially during the first years of operation.
- Monitor deadlines: VAT, tax returns, and other filings must be submitted on time to avoid penalties.
Bookkeeping in Denmark is governed by a strong legal framework and supported by a robust digital infrastructure. From VAT registration to e-invoicing and data retention, businesses are expected to follow clear, standardized procedures. By leveraging the right tools and professional support, companies can turn bookkeeping from a burden into a strategic advantage. For local entrepreneurs and international firms alike, mastering bookkeeping is an essential step toward building a successful business in Denmark.