The new Danish Bookkeeping Act is here. How does that affect you?

The Danish Bookkeeping Act has been modernized, and there are now requirements for digital bookkeeping in a digital accounting system and digital storage of vouchers.

TL;DRDenmark's modernized Bookkeeping Act, passed at the end of May 2022 and effective from July 1, 2022, introduces mandatory digital bookkeeping and digital storage of vouchers for most Danish companies. Requirements are phased in over time based on company size and reporting class, giving businesses a transition window to upgrade their accounting systems.

At the end of May, the Danish Parliament passed the new Bookkeeping Act. The act, which has been well underway, is now effective from 1 July 2022. The new requirements and rules of the act are approaching. Before you worried about the date of application, we can reassure you that the transition will not be as sudden. The requirements will come into force step by step. We will walk you through the most important key points in this article.

The Bookkeeping Act in short

In 2021 the Danish Parliament agreed on a political deal about a reform package for the Danish economy. The purpose of the deal was to strengthen the effort against fraud and increase the degree of digitalization of bookkeeping. Later a bill was presented regarding a new bookkeeping act, which was passed by the Parliament at the end of May.

The Bookkeeping Act has been modernized and it aims to ease companies’ administration through digitization and automation of bookkeeping. Now there are requirements for digital bookkeeping in a digital accounting system as well as storing vouchers online.

There are a lot of requirements in the new act and it can therefore be a big change for some companies to adapt to. However, it also offers an opportunity for companies to streamline, digitize and utilize data to create value and insight.

Who is the act going to affect?

Most Danish companies will be affected by the act as companies with annual revenue of DKK 300.000 two years in a row have to live up to the new requirements. You also have to meet the requirements if you run an association with business activities. The timing of the transition to digital bookkeeping varies depending on your reporting class.

The most significant changes

The most significant changes in the new act are without a doubt the requirements revolving around the digitization of bookkeeping. The introduction of this requirement of digital bookkeeping of transactions, storing of vouchers, and usage of a registered and approved digital accounting system.

The new act emphasizes that companies must register and store vouchers digitally in a digital accounting system. In addition, there is a requirement to keep a digital backup copy of the accounting material. We can not specify exactly which documents are covered by the digital storage obligation, as it has not yet been determined by the Danish Business Authority.

Timetable

As promised, you do not have to worry – not yet at least. Part of the act enters into force on 1 July, but the requirements regarding digital bookkeeping and storing will be implemented throughout the next couple of years.

As mentioned, companies must now use a registered and approved digital accounting system. There is a list of requirements for vendors of digital accounting systems, but the specific requirements are still being prepared and are therefore not known yet. They will be published no later than 1 January 2023, after which the systems must be registered and approved no later than 1 July 2023. This will give vendors the time to develop the new and necessary functions. We will follow up when we know the specific requirements.

Then it is time for digital bookkeeping. Most companies need to focus on 1 January 2024. This is when the requirement for digital bookkeeping will apply to companies in reporting classes B, C, and D. For companies in reporting class A with a revenue of more than DKK 300,000, the date is 1 January 2026.

The most important dates: 1 July 2022 – the act is effective 1 July 2023 – registration and approval of digital accounting systems 1 January 2024 – requirements for digital bookkeeping in digital bookkeeping system for companies in reporting classes B, C, and D 1 January 2026 – requirements for digital bookkeeping in digital bookkeeping system for companies in reporting class A

Fines as a consequence

It is expected that the digital accounting systems most companies are already using will be approved automatically on 1 July 2023 at the latest. Other companies maybe use perhaps an accounting system they developed themselves or the accounting system of their foreign parent company. If this is the case, they do not have to be registered with the Danish Business Authority, but the company is responsible for ensuring that the systems comply with all requirements.

With the new act also comes stricter rules and larger fines for non-compliance. Authorities may require insight into your company’s accounting material, and if your company is unable to present digital accounting material, you may risk fines of up to DKK 1.5 million.

Are you prepared?

Today many companies are already storing their vouchers online. At least our customers do, as Acubiz delivers digital and bookkeeping-related data for any finance system.

However, there are still companies that are holding back, which, for most, is not possible after 1 January 2024. Those companies may as well start digitizing and automating expense management. Better today than tomorrow.  

We will return with further information about the Bookkeeping Act when there is news. Sign up for our webinar on Monday, where Jesper Lohmann Andersen from BDO takes you through everything we know.

Frequently Asked Questions

What are the key changes introduced by the new Danish Bookkeeping Act?

The most significant changes are mandatory digital bookkeeping in an approved accounting system and online storage of vouchers. The act also requires companies to document their bookkeeping procedures. These requirements replace the previous paper-friendly approach and push all affected companies toward fully digital processes.

Which companies are affected by the new Danish Bookkeeping Act?

Most Danish companies are affected. Specifically, any company with annual revenue exceeding DKK 300,000 for two consecutive years must comply. Associations with business activities are also included. The timing of when specific requirements apply depends on the company's accounting class.

Will all requirements of the new Bookkeeping Act apply immediately from July 2022?

No. The requirements are being phased in gradually based on company size and reporting class. Smaller companies have a longer transition window than larger ones. Companies should identify their specific accounting class to determine their personal compliance timeline.

What opportunity does the new Bookkeeping Act create beyond compliance?

Moving to digital bookkeeping creates an opportunity to streamline processes, reduce administrative overhead, and generate better quality data for analysis and decision-making. The act provides a clear external mandate for digital transformation that finance leaders can use to drive internal change.