Starting and running a business in Denmark can be a rewarding experience. The country consistently ranks among the most business-friendly nations in the world, with a transparent legal system, efficient digital public services, and a strong economy.
However, one area that often surprises foreign entrepreneurs is bookkeeping — the structured, rule-bound process of recording, organizing, and reporting a company’s financial transactions.
If you are planning to set up a business in Denmark, understanding the local bookkeeping requirements is essential. This guide will walk you through the key principles, systems, and best practices you need to know.
Why Bookkeeping Matters in Denmark
In Denmark, bookkeeping is more than a mere formality; it is a legal requirement under the Danish Bookkeeping Act (Bogføringsloven). The law ensures that all companies maintain accurate, reliable, and traceable financial records that reflect their economic activities.
Proper bookkeeping helps:
- Comply with tax and VAT reporting obligations
- Avoid fines and legal issues
- Provide a transparent picture of the company’s financial health
- Support decision-making and investor confidence
Even small sole proprietorships are expected to keep proper accounts, and all financial records must be kept in Danish kroner (DKK), unless special permission is obtained.
Who Must Keep Books?
All entities engaged in commercial activity in Denmark are required to maintain accounting records. This includes:
- Sole proprietorships (Enkeltmandsvirksomhed)
- Private limited companies (ApS)
- Public limited companies (A/S)
- Branches of foreign companies
- Partnerships and associations engaged in business
Each must follow the same general bookkeeping principles, though the level of detail and reporting obligations differ depending on company size and turnover.
The Danish Bookkeeping Act: Main Rules
The Bookkeeping Act sets out the basic framework for how transactions must be recorded and stored.
a. Documentation
Every entry in your accounts must be supported by verifiable documentation— typically invoices, receipts, bank statements, or contracts. Each transaction must clearly show:
- Date of the transaction
- Amount and currency
- Nature or purpose
- Names of the parties involved
Scanned or electronic documents are acceptable, provided they remain accessible and unaltered.
b. Double-Entry System
Danish bookkeeping follows the double-entry principle, meaning every transaction affects at least two accounts — one debit and one credit. For instance, if you buy office supplies, your “expenses” account is debited, and your “cash” account is credited.
c. Chronological Order
All transactions should be entered in a clear, time-ordered, and organized manner. You can use either manual records or digital accounting systems, but everything must be traceable.
d. Storage Period
All accounting records and supporting documents must be kept for five years from the end of the financial year. They can be stored electronically in Denmark or another EU/EEA country, as long as the data can be accessed promptly by the Danish authorities.
Digitalization and the E-Bookkeeping Requirement
Denmark is one of the most digitally advanced economies in the world, and bookkeeping is no exception. Since 2023, the new Bookkeeping Act has required companies to keep digital records and use approved digital bookkeeping systems.
These systems must:
- Automatically record and back up data
- Ensure data integrity and prevent unauthorized changes
- Allow access from the Danish Business Authority (Erhvervsstyrelsen).
- Support VAT and tax reporting functions
Examples of popular accounting software in Denmark include e-conomic, Dinero, Billy, and Microsoft Dynamics 365. Foreign entrepreneurs can choose English-language interfaces and even integrate systems with payroll and banking platforms.
VAT Registration and Tax Filing
If your business turnover exceeds DKK 50,000 within 12 months, you must register for VAT (moms). VAT-registered companies must:
- Charge VAT on sales (typically 25%)
- Collect and remit VAT to the Danish Tax Agency (Skattestyrelsen)
- VAT returns must be filed either every quarter or every six months
Accurate bookkeeping is crucial here — errors in VAT reporting can lead to significant fines. The VAT system in Denmark is fully electronic; submissions are made via the TastSelv Erhverv online portal.
You also need to prepare annual financial statements and corporate tax returns, depending on your company type and turnover. The accounting data you keep during the year directly supports these filings.
Language and Currency Requirements
While many Danish officials and accountants speak fluent English, bookkeeping documents must generally be in Danish and in Danish kroner (DKK). However, it is acceptable to maintain bilingual invoices and ledgers for internal use, as long as you can provide Danish translations to authorities upon request.
If you operate internationally, your accounting system should handle currency conversion automatically, with exchange rates based on the date of each transaction.
Working with a Local Accountant or Bookkeeper
For foreigners unfamiliar with Danish accounting practices, hiring a local bookkeeper or accountant can save time and prevent mistakes. Certified accountants (registrerede revisorer or statsautoriserede revisorer) can:
- Set up your accounting system
- Prepare financial statements
- Handle VAT and tax filings
- Ensure compliance with Danish law
Many small businesses in Denmark outsource their bookkeeping completely, often for a fixed monthly fee depending on the volume of transactions.
Common Accounting Challenges for Foreign Entrepreneurs
Foreigners often encounter the same challenges when managing bookkeeping in Denmark:
a. Understanding Danish Tax Rules
The interplay between corporate tax, VAT, payroll tax (AM-bidrag), and personal taxation can be complex. Misclassifying income or failing to report VAT correctly can result in penalties.
b. Language and Documentation
Invoices or contracts from abroad must often be translated or reformatted to comply with Danish standards.
c. Digital Requirements
Companies used to paper accounting systems must adapt to Denmark’s digital-first approach — including secure digital storage, e-invoicing (NemHandel), and online submissions.
d. Payroll Accounting
If you hire employees, you must register as an employer and use the E-income system to report salaries, tax withholding (A-skat), and labor market contributions. Payroll accounting integrates closely with bookkeeping.
Best Practices for Accurate and Efficient Bookkeeping
To stay compliant and organized, follow these practical tips:
- Automate early: Use a certified digital bookkeeping system from day one.
- Keep records updated: Enter transactions weekly rather than quarterly to avoid backlogs.
- Separate personal and business finances: Use distinct bank accounts.
- Reconcile monthly: Match your bank statements to your ledger regularly.
- Stay informed: Follow updates from the Danish Business Authority on bookkeeping rules.
- Back up your data: Use secure cloud storage with EU-based servers.
- Work with a professional: A bilingual accountant can help bridge language and legal gaps.
Penalties for Non-Compliance
Failing to keep proper books or using unapproved digital systems can lead to:
- Administrative fines
- Mandatory audits
- Suspension of the company’s registration
- In severe cases, legal action or forced closure
Authorities take bookkeeping seriously because accurate accounting underpins the integrity of Denmark’s tax system.
Danish bookkeeping, despite its initial strictness, aims to foster transparency, trust, and efficiency. Once you establish your systems, they largely automate the process, allowing you to concentrate on your company’s growth.
Foreign entrepreneurs who adapt quickly to Denmark’s digital and regulatory environment often find that the structure actually supports their success. A well-kept set of books not only satisfies the authorities — it gives you a clear, real-time view of your company’s performance and future potential.