Denmark Launches Digital Invoicing and Bookkeeping in July 2024

Denmark is at the forefront of digital transformation in the field of accounting and invoicing. The country has been a pioneer in electronic invoicing, making it mandatory for all B2G transactions as early as 2005. Now, Denmark is taking another significant step by implementing digital invoicing and bookkeeping requirements for businesses. This new law, known as the “Bookkeeping Act,” will come into effect in phases, with the first phase starting on July 1, 2024.

Background and Overview

The Bookkeeping Act was adopted in 2022 and aims to modernize accounting practices in Denmark by mandating digital bookkeeping and invoicing for businesses. This move is part of a broader effort to promote digitalization and reduce manual processes in accounting. The law requires businesses to use certified digital bookkeeping systems or develop their own solutions in compliance with the law.

Phased Implementation

The implementation of the Bookkeeping Act will occur in stages, depending on the size of the company and the type of digital bookkeeping solution they choose. The key milestones are as follows:

• January 1, 2024: Publication of all certified digital bookkeeping systems.
• July 1, 2024: Medium and large companies using a certified accounting software.
• January 1, 2025: Medium and large companies using their own custom software.
• January 1, 2026: Financial companies (of any size) and personally-owned companies with an annual turnover in 2024 and 2025 of more than DKK 300,000.

Key Requirements

The Bookkeeping Act mandates several key requirements for businesses:

1. Digital Bookkeeping: All accounting records must be recorded and stored on approved accounting or ERP systems.
2. Structured E-Invoices: Businesses must send and receive structured e-invoices.
3. Certification: Main package and ERP providers must certify their offerings with the Danish Business Authority.
4. Archiving: Invoices must be archived for a minimum of 5 years.

Technical Details

The digital invoicing and bookkeeping requirements are based on the OECD model, similar to the UK’s Making Tax Digital plan. This ensures that the entire order-to-reporting path is digitized, reducing manual processes. The invoices must be in either the Peppol BIS 3.0 (EN16931-compliant) or the local OIOUBL format. The Peppol network and the NemHandel platform will be used for transmitting e-invoices.

Impact on Businesses

The new law has significant implications for businesses, service providers, and software developers. For businesses, it means a transition from traditional paper-based invoicing to digital invoicing. This change can be challenging, especially for smaller companies that may not have the resources to invest in certified digital bookkeeping solutions.

Service providers and software developers must adapt their offerings to meet the new requirements. This includes ensuring that their solutions are certified by the Danish Business Authority. The law may also lead to a reduction in the granularity of accounting solutions available to companies, forcing them to choose between comprehensive solutions that handle all accounting processes or building their own solutions at a higher cost.

Impact on Service Providers

The new law has a substantial impact on service providers, as it almost closes the Danish market to those who cannot find a partnership with a bookkeeping software editor. This could lead to a lack of competition and possibly a drop in the quality of accounting solutions on the Danish market.

EU Review of Digital Reporting Requirements

The EU is also reviewing its e-invoicing options as part of its VAT in the Digital Age reforms, published in December 2022. This review aims to ensure that the entire order-to-reporting path is digitized and manual processes are eliminated.

Conclusion

Denmark’s move to digital invoicing and bookkeeping is a significant step towards modernizing accounting practices. The phased implementation will ensure that businesses have sufficient time to adapt to the new requirements. While there may be challenges in the transition, the benefits of digitalization, including reduced manual errors and improved efficiency, will ultimately outweigh the initial difficulties.

Future Developments

The EU’s review of digital reporting requirements and the ongoing developments in e-invoicing will likely influence future changes in Denmark’s accounting landscape. As the country continues to lead the way in digital invoicing, it will be interesting to see how other countries adapt and implement similar reforms.

Additional Resources

• The Invoicing Hub: For detailed information on e-invoicing compliance in Denmark.
• VAT Update: For updates on the implementation of digital invoicing and bookkeeping in Denmark.
• VATCalc: For comprehensive guides on VAT and digital invoicing in Denmark.

By embracing digital invoicing and bookkeeping, Denmark is setting a precedent for other countries to follow. The phased implementation will ensure a smooth transition, and the benefits of digitalization will be felt across the business landscape.