To increase the digitalization of Danish companies and prevent tax fraud, a new bookkeeping act was passed by the Danish Parliament in May 2022. The new digital bookkeeping system is a digital service that allows companies to store the recorded transactions and receipts.
The Digital Book Act includes several provisions, one of which mandates companies to maintain digital records and create a detailed description of their bookkeeping process.
One of the models mentioned in the Digital Bookkeeping Act is the new e-Invoice system. Since 2005, it has been mandatory for Danish government authorities and suppliers to use electronic invoices in the PEPPOL BIS 3.0 format via the PEPPOL network. For B2B transactions, e-Invoicing is still voluntary; if both parties agree, electronic invoices can be exchanged. Denmark has adopted a centralized model that operates using the PEPPOL system, supported by the official NemHandel platform.
We have gathered the top-five questions from our clients.
- What is Digital Bookkeeping in Denmark?
According to the new law, businesses are required to digitize their accounting records to make it easier to track financial information. Therefore, businesses must comply with the requirements of a digital accounting system approved by Danish authorities. Whether it is a standard or a specially developed system, there are three basic requirements, explained below, for applying for the digital accounting system:
- Registration of the company’s continued transactions with attachments for each registration. Safe storage of registrations and attachments for five years must be supported by the system.
- Appropriate technical and organizational cyber security measures, including user and access management, as well as automatic backup and appendices.
- Support automation of administrative processes, like sending and receiving standardized e-invoices, and allow standardized accounting in accordance with a public standard chart of account.
- What is the new system’s implementation timeline?
The published timeline for implementation of the digital bookkeeping system is as follows:
- 1 February 2023: Requirements for digital standard accounting systems come into force.
- 31 October 2023: Providers report their accounting system to the Danish Business Authority if it is to be registered as a digital standard accounting system by 1 January 2024.
- 1 November-31 December 2023: Notified systems will be checked and registered by the Danish Business Authority. If the notified system complies with the requirements of standard digital bookkeeping systems, it will be registered.
- 1 January 2024: Notified systems are registered.
- 2024 (expected): From the financial year (beginning 1 July 2024) accounting companies must book digitally.
- 2026 (expected): From fiscal years beginning after an as-yet-undetermined effective date of 2026, it will be mandatory for sole proprietorships and certain associations to book digitally.
- Who will be under the scope?
Booking digitally is mandatory for companies that are liable for accounting according to the Annual Accounts Act. It can be applied to other companies and associations.
The rules also cover bookkeepers and others that carry out bookkeeping for other companies, including:
- All companies.
- Associations that have commercial operations.
- Organizations that are liable to pay taxes in Denmark.
- Companies that receive public subsidies.
- Other companies and associations are not obliged to submit an annual report to ERST, but have a turnover of DKK 300,000 (about EUR 40,300) or more in two consecutive years.
- What is ERST and what are the requirements for becoming a foreign PEPPOL service provider in Denmark?
The Danish Business Authority (ERST) is the PEPPOL authority in the country and is responsible for the registration of companies that wish to become PEPPOL access points or service metadata publisher. The other responsibilities of ERST are:
- Reporting
- Securing the national interests of Denmark in this context
- Aligning overarching interests in the e-Business space with other agencies
- Quality assurance of operators’ services
- Ensuring the long-term adoption of e-Procurement, using the PEPPOL Network as the platform
No special requirements and certification process are necessary to operate as a PEPPOL service provider. If you are already a PEPPOL access point, then it’s possible to operate in Denmark like in any other part of the PEPPOL network.
- What is the NemHandel Portal?
NemHandel is a national service that can be used by companies to submit electronic invoices securely over the internet. Business documents can be exchanged between private companies and public authorities. The portal has been in use since 2005. However, sending and receiving business documents via the NemHandel portal can be done only if the company’s accounting system is connected to an access point that ensures that invoice data meets the necessary security standards.
To get more information about the process and our solutions, please contact us at contact@snitechnogy.net.
