Compliance Alert - The new Bookkeeping Act makes e-invoicing mandatory

Update: Compliance Alert - The new Bookkeeping Act makes e-invoicing mandatory
Date: 2022-06-13

On 19 May 2022, the Danish Parliament passed a new Bookkeeping Act, requiring businesses to exchange and archive invoices electronically. The implementation timeline is based on company turnover.

Software providers of corresponding services should register themselves with the Danish Business Authority or ERST (Dan.: Erhvervsstyrelsen) and obtain the status of a "digital bookkeeping system". ERST will, during 2022, but not later than January 2023, establish requirements and specifications for the software providers to become classified as "digital bookkeeping systems".

All companies, regardless of size, are obliged to submit an annual report to ERST and fall within the scope of application of the new requirements.

In addition, other companies subject to bookkeeping, incl. sole proprietors, associations, branches, etc., that are not obliged to submit an annual report to ERST but have a turnover DKK > 300 000 (ca. EUR 40 500,00) during two consecutive years are covered by these rules.

Further clarifications of the scope

The new Bookkeeping Act does not change who is subject to the bookkeeping obligation. If your company is covered by the current Bookkeeping Act (before 1 July 2022), you will also be liable to post according to the new Bookkeeping Act after 1 July 2022.

This means that all commercial companies in Denmark, regardless of ownership or liability, are subject to the bookkeeping obligation. Moreover, Danish branches or permanent establishments of foreign companies are also included.

The Act does not apply to the Faroe Islands and Greenland.

What are the implementation timelines?

The new Bookkeeping Act enters into force on 1 July 2022. However, the digital obligations will start applying at a later point in time, depending on the size of the company:

  • 1 January 2024: companies obliged to submit annual reports to ERST (class B, C, D) 

          Entities using in-house developed bookkeeping software will have to comply starting 1 July 2024;

  • 1 January 2026: companies not obliged to submit annual reports to ERST but having turnover DKK > 300 000 during two consecutive years (class A)

          Entities using in-house bookkeeping software will have to comply starting 1 July 2026.

What requirements apply to e-invoicing and CTC?

No specifications have been published at this point, but we expect details to be clarified by ERST once they have established requirements for the digital bookkeeping systems. With that said, Denmark is expected to leverage the existing infrastructures of Peppol and/or Nemhandel.

Moreover, under the new Bookkeeping Act, ERTS and the Danish tax administration are given the right to introduce the CTC/e-reporting requirement atop the mandatory e-invoicing schema.

EU derogation

What is unclear at this point is whether this obligation, as designed, will require Denmark to apply for a derogation (from the VAT Directive) by the European Commission or whether they have already discussed this new framework at the EU level.

Pagero closely follows the developments in Denmark and remains ready to support businesses and software providers with the upcoming obligations in the country and outside. We have been operational in Denmark for many years, offering VAT, e-invoicing and e-archiving compliance, connectivity to Nemhandel, and fulfilling the local Peppol requirements.

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