Bookkeeping in Denmark: What Every Business Needs to Know

 

Bookkeeping is a legal obligation and business necessity in Denmark. Whether you're a local entrepreneur, freelancer, or international investor, understanding how bookkeeping in Denmark works is essential to stay compliant and financially organized. This article covers the rules, tools, and best practices that will help you keep accurate books in the Danish market.

What Is Bookkeeping in Denmark?

Bookkeeping (bogføring) refers to the process of recording all financial transactions—sales, expenses, salaries, taxes—accurately and in a timely manner. It’s the foundation of sound accounting, tax reporting, and financial planning.

In Denmark, proper bookkeeping is required for:

• Annual tax declarations
• VAT reporting
• Payroll management
• Annual financial statements
• Potential audits by the Danish Tax Agency (Skattestyrelsen)

Companies must ensure that all financial data is traceable, well-documented, and stored securely for at least five years.

Who Needs to Keep Books in Denmark?

Bookkeeping is mandatory for all Danish-registered businesses, including:

• Sole proprietorships (Enkeltmandsvirksomhed)
• Private limited companies (ApS)
• Public limited companies (A/S)
• Freelancers and self-employed professionals
• Foreign branches operating in Denmark

Even non-VAT-registered businesses must maintain a basic level of bookkeeping to document income and expenses.

Bookkeeping Rules and Legal Requirements

Denmark follows the Bookkeeping Act (Bogføringsloven), which outlines how financial records should be managed. Some of the key principles include:

1. Double-entry bookkeeping

Each transaction must be recorded in two accounts (e.g. debit and credit), ensuring balanced records.

2. Real-time recording

Transactions should be booked as close as possible to their actual occurrence—not at month-end.

3. Digital recordkeeping

All records must be stored digitally using systems that meet Danish compliance standards.

4. Audit trail

Every entry must be traceable to an original document (invoice, receipt, bank statement).

Failure to meet these standards may result in warnings, penalties, or audit flags.

What Needs to Be Recorded?

To stay compliant, your bookkeeping in Denmark must include:

• Sales invoices (including VAT if applicable)
• Purchase invoices and receipts
• Bank transactions and reconciliations
• Payroll records and salary slips
• VAT reports and settlements
• Fixed asset depreciation schedules
• Loan agreements and financial contracts

Each transaction must be dated, categorized, and documented clearly.

Bookkeeping vs. Accounting: What's the Difference?

While bookkeeping involves the daily recording of financial data, accounting is a broader term that includes:

• Interpreting financial information
• Preparing financial statements
• Tax planning and strategy
• Budgeting and forecasting

In Denmark, you may handle your own bookkeeping and then hire an accountant to review, finalize, and submit your annual report or tax return.

Best Bookkeeping Software in Denmark

Digital bookkeeping is the norm in Denmark. Most businesses use cloud-based software that is compliant with local tax systems and integrates with Danish banks.

Recommended tools:

• Dinero – Intuitive and perfect for freelancers or sole traders
• Billy – Easy to use with automatic VAT calculations
• e-conomic – Robust features for SMEs and accountants
• Regnskabsprogrammer fra Visma – For larger businesses with more complex needs

All software platforms support invoice generation, bank reconciliation, payroll, and export of data to tax authorities.

Bookkeeping for VAT (Moms) in Denmark

If your company is VAT-registered, you must track VAT on all sales and purchases and file regular reports.

Bookkeeping for VAT should include:

• Outgoing invoices with VAT breakdown
• Incoming invoices showing deductible VAT
• Credit notes and corrections
• Cross-border EU VAT transactions (reverse charge, OSS schemes)

VAT returns are usually filed monthly or quarterly via SKAT’s TastSelv Erhverv platform.

Bookkeeping for Payroll and Employment

If your business has employees, additional bookkeeping duties apply:

• Recording gross salaries, tax withholdings (A-skat), and AM-bidrag
• Managing holiday pay (feriepenge) and ATP pension contributions
• Submitting monthly reports to eIndkomst
• Storing digital payslips and employment contracts

Accurate payroll bookkeeping ensures compliance with labor laws and employee rights.

Can You Do Bookkeeping Yourself?

Yes—many freelancers and small business owners in Denmark do their own bookkeeping using software. However, it requires:

• Understanding Danish tax law and accounting principles
• Keeping up with deadlines and reporting obligations
• Staying updated with changes to the Bookkeeping Act

As your business grows, outsourcing bookkeeping to a certified bookkeeper (bogholder) or accountant (revisor) can save time and reduce the risk of errors.

Hiring a Bookkeeper in Denmark

A professional bookkeeper can help with:

• Daily transaction entry
• Bank reconciliation
• Invoice and VAT tracking
• Payroll setup
• Preparation for tax filing and annual reporting

Bookkeepers in Denmark typically charge a monthly fee or hourly rate, depending on the scope and volume of work.

Make sure the person or firm you hire:

• Uses compliant software
• Has experience in your industry
• Communicates in Danish and/or English
• Is familiar with SKAT, VAT, and payroll systems

Bookkeeping and Annual Reporting

Bookkeeping directly feeds into your annual report (årsrapport), which is mandatory for companies like ApS and A/S.

The report includes:

• Balance sheet
• Profit and loss statement
• Notes and disclosures
• Audit opinion (if required)

Without proper bookkeeping, this report cannot be generated accurately—leading to delays, rejections, or fines.

Penalties for Poor Bookkeeping

The Danish authorities take bookkeeping seriously. Penalties for non-compliance may include:

• Fines for missing or incorrect VAT reports
• Tax reassessments based on estimations
• Loss of VAT deductions
• Legal action or forced liquidation (for serious breaches)

Good bookkeeping protects your business from these risks and ensures you're ready for audits or funding opportunities.

Bookkeeping in Denmark is not just about compliance—it's about control. Accurate records help you understand your finances, plan better, and grow faster. Whether you manage your books yourself or hire a professional, staying organized and compliant will save you time, money, and stress.