Denmark is consistently ranked among the world’s easiest countries to do business in, due in part to its transparent and reliable financial system. For companies operating in or entering the Danish market, understanding the accounting rules, reporting requirements, and tax obligations is essential for success and compliance.
In this article, we’ll break down the key elements of accounting in Denmark, focusing on statutory requirements, corporate obligations, and modern trends shaping the financial landscape.
Structure of Danish Accounting Regulation
Denmark’s accounting regulation is built around the Danish Financial Statements Act, which is the main legal framework governing how businesses must prepare and submit their financial reports. This act ensures transparency and comparability while supporting the country’s corporate and tax systems.
The law divides companies into several categories based on their size and nature, each with different levels of reporting and auditing obligations. This tiered system ensures proportionality—smaller businesses have simpler requirements, while large corporations are held to stricter standards.
Company Classes and Their Requirements
Under the Danish Financial Statements Act, companies are grouped into four classes:
- Class A – Small businesses and sole proprietors
- Class B – Small to medium-sized private limited companies
- Class C – Large private companies
- Class D – Publicly traded companies
Each class comes with increasing levels of complexity in accounting and reporting obligations. For example, Class A companies are not required to publish annual reports, while Class D companies must comply with IFRS and are subject to audit and disclosure rules designed for investor transparency.
Financial Statements: What’s Required?
Depending on the class, companies must prepare various financial documents annually, which may include:
- Balance Sheet
- Profit and Loss Account
- Cash Flow Statement (for Class C and D)
- Notes to the Accounts
- Management Commentary
- Auditor’s Report (if applicable)
All financial statements must be submitted to the Danish Business Authority through an online portal, typically within five months after the end of the financial year. Larger companies have shorter deadlines (four months for publicly listed companies).
The official filing language is Danish, and the figures must be reported in Danish kroner (DKK).
The Role of Auditing
Auditing is an important part of Denmark’s accounting ecosystem. However, not all companies require an audit. The Danish audit requirement depends on whether the company exceeds two of the following thresholds:
- Annual revenue over DKK 8 million
- Total assets over DKK 4 million
- More than 12 full-time employees
If the thresholds are exceeded for two consecutive years, the company must engage a state-authorized public accountant (statsautoriseret revisor) to audit their financials. Exempt companies may still choose to undergo a voluntary audit for credibility with investors or banks.
Taxation and Accounting: A Close Relationship
Denmark has an integrated approach where accounting and tax reporting are closely linked. Financial statements form the basis for the corporate tax return, which must be submitted electronically within six months after the financial year ends.
Key tax-related elements tied to accounting include:
- Corporate income tax rate: 22% (flat rate)
- Value-added tax (VAT): 25%, applicable to most goods and services
- Withholding taxes: Applicable to dividends and certain payments to foreign entities
- Transfer pricing documentation: Required for intercompany transactions
Proper accounting ensures correct tax filings and reduces the risk of penalties or audits from the Danish Tax Agency (Skattestyrelsen).
Bookkeeping Obligations
All Danish businesses must maintain accurate and verifiable books. According to bookkeeping regulations:
- Transactions must be recorded on an ongoing basis
- Documentation (invoices, receipts, contracts) must support every entry
- Records must be stored for at least five years, either digitally or physically
Failure to meet bookkeeping requirements can result in penalties or rejection of the company’s annual report.
The use of digital accounting systems is highly encouraged and widespread in Denmark. In many cases, integration with banks and public systems (e.g., NemKonto) makes bookkeeping faster and more accurate.
IFRS and Danish GAAP: Which to Use?
Most Danish companies use Danish GAAP, which is aligned with the Financial Statements Act. However, companies listed on a regulated market are required to use International Financial Reporting Standards (IFRS).
Many multinational firms operating in Denmark opt for IFRS voluntarily, especially if they are part of an international group. This facilitates consolidation and reporting across different jurisdictions.
Nonetheless, Danish GAAP remains comprehensive and is fully adequate for SMEs and non-listed companies.
E-Invoicing and Digital Tools
Denmark is at the forefront of digital business processes, including accounting. Since 2005, it has been mandatory for companies doing business with public authorities to issue e-invoices in the OIOUBL format.
Beyond public sector dealings, e-invoicing is becoming increasingly common in the private sector. Most businesses use modern accounting platforms such as:
- e-conomic
- Dinero
- Billy
- Visma
- Navision / Microsoft Dynamics
These tools simplify bookkeeping, automate reporting, and often integrate directly with the Danish Tax Agency and Business Authority systems.
Sustainability and ESG Accounting
As part of Denmark’s commitment to sustainable business, new non-financial reporting obligations are being introduced under EU law. These include requirements for large companies to disclose:
- Climate impact
- Gender equality and diversity
- Business ethics and anti-corruption policies
With the adoption of the Corporate Sustainability Reporting Directive (CSRD), more Danish companies will need to include ESG data in their annual reports starting in 2024–2025. Accounting departments must now track both financial and non-financial metrics.
Foreign Investors and Danish Compliance
Foreign companies setting up a business in Denmark must comply with the same accounting and reporting obligations as Danish firms. However, they may face additional challenges such as:
- Language requirements (Danish documentation)
- Currency reporting in DKK
- Adapting foreign accounting practices to Danish standards
To ensure smooth market entry, many foreign companies rely on local accounting firms that provide advisory, compliance, and representation services. Denmark’s transparent and well-organized legal system makes it an attractive environment for foreign direct investment.
Challenges for Businesses
While Denmark offers a highly efficient accounting environment, companies may face some challenges, such as:
- Keeping up with evolving regulations, especially around digital reporting and ESG
- Managing compliance costs for smaller firms, particularly when audits are required
- Understanding the local legal language and terminology
However, with proper planning, use of modern tools, and professional support, these challenges are manageable.
The Future of Accounting in Denmark
Looking ahead, Denmark’s accounting landscape is expected to become even more digital and integrated. Key future trends include:
- Automation of bookkeeping through AI and machine learning
- Mandatory e-reporting for all tax and accounting filings
- Wider adoption of sustainability metrics in financial disclosures
These developments will enhance efficiency and reliability, but they also demand new skills and awareness from accounting professionals.
Accounting in Denmark is structured, transparent, and increasingly digital. For companies operating in the Danish market, understanding and adhering to accounting requirements is essential for legal compliance and business success.
Guest writer
