Denmark is known for its transparent business environment, efficient public administration, and advanced digital infrastructure. For many entrepreneurs, especially those coming from abroad, bookkeeping in Denmark can initially seem complex. To make things clearer, we’ve compiled answers to the ten most frequently asked questions about Danish bookkeeping.
1. Do all businesses in Denmark need bookkeeping?
Yes. Every registered business in Denmark is required to keep records of its financial transactions. The extent of bookkeeping obligations depends on the business form. Sole proprietorships (Enkeltmandsvirksomhed) may use simplified accounting, while private limited companies (ApS) and public limited companies (A/S) must follow full bookkeeping rules and prepare annual financial statements.
2. What is the VAT (Moms) rate in Denmark?
Denmark applies a standard VAT rate of 25%, one of the highest in Europe. Businesses must register for VAT once their annual turnover exceeds 50,000 DKK. VAT returns are submitted electronically, usually on a quarterly basis, though larger companies may need to file monthly.
3. How are corporate taxes handled?
Companies in Denmark pay a flat corporate income tax (CIT) of 22%. Taxable income is calculated based on the company’s financial records, adjusted for tax rules. Danish bookkeeping ensures that expenses, depreciation, and revenues are correctly reported to the Danish Tax Agency (SKAT).
4. Do sole proprietors and companies have the same reporting obligations?
No. Sole proprietors submit an annual tax return through the TastSelv system, which integrates personal and business income. Limited companies (ApS, A/S), however, must prepare and submit annual financial statements to the Danish Business Authority (Erhvervsstyrelsen), in addition to corporate tax returns.
5. What is TastSelv?
TastSelv is the online platform provided by SKAT for managing taxes. Through it, business owners can:
- register for VAT,
- submit VAT returns,
- file annual tax reports,
- view and adjust preliminary tax assessments.
Access requires MitID, Denmark’s secure digital ID used across public services.
6. Are financial statements public in Denmark?
Yes. One of the hallmarks of Danish business culture is transparency. Companies such as ApS and A/S must file annual reports with the Business Authority, and these documents are publicly accessible. This provides credibility and helps build trust but can surprise entrepreneurs from countries with more privacy.
7. What happens if I miss a deadline?
Denmark has a strict penalty system. Late VAT returns, unpaid taxes, or missing annual reports can result in automatic fines. In severe cases, the Business Authority may even dissolve a company that fails to submit financial statements. Timely bookkeeping is therefore critical.
8. Can I do bookkeeping myself as a foreigner?
Technically yes, but it is rarely recommended. While TastSelv has an English version, much of the official communication is in Danish. Many foreigners prefer to work with certified accountants who handle compliance, deadlines, and reporting. This reduces the risk of mistakes and penalties.
9. How long must I keep accounting records?
Businesses must keep accounting records for at least five years. This includes invoices, receipts, bank statements, and other financial documents. Most companies use digital bookkeeping systems, which are accepted by Danish authorities as long as records are secure and accessible.
10. Is bookkeeping expensive in Denmark?
The cost of bookkeeping depends on the size and complexity of the business. Professional accounting services are generally more expensive than in some other countries, but they provide valuable expertise and compliance assurance. For many entrepreneurs, outsourcing bookkeeping is an investment in security and efficiency.
Conclusion
Bookkeeping in Denmark is shaped by transparency, digitalization, and strict compliance standards. Whether you run a small sole proprietorship or a large corporation, you must keep accurate records, register for VAT if required, and file taxes on time.
For foreigners and newcomers, the system may seem demanding at first, but with the help of digital tools like TastSelv and the support of local accountants, managing Danish bookkeeping becomes much more straightforward. The key to success lies in staying organized, respecting deadlines, and embracing Denmark’s culture of financial transparency.
(DISCLAIMER: The information in this article does not necessarily reflect the views of The Global Hues. We make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information in this article.)
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