Financial compliance for enterprises in Denmark


Introduction to Danish business accounting


Danish accounting focuses on the sphere of activity of an individual entrepreneur who runs his own business in Denmark. It involves a variety of topics, the in-depth understanding and proper completion of which has significant importance in order to avoid serious criminal financial consequences. Here is a summary of key accounting issues in the country here:


Accounting laws and regulations in Denmark


Denmark, a country that is one of the most welfare-oriented in the Scandinavian region, is distinguished by its significant influence on social policy, the flexible nature of the labor market, favorable social support and significant tax burden.

For entrepreneurs who choose to start their own business in Denmark, it is important to familiarize themselves in advance with the country's accounting regulations, as well as the laws governing the keeping of financial books and accounting records.

Here is a set of acts related to accounting in Denmark:

  1. Accounting Law of 1998 - containing rules for accounting, financial record keeping and business records. The key role in the given context is played by the chart of accounts, which includes the layout of the profit and loss account (the first group of accounts includes sales revenue and 6 categories of expenses), as well as the layout of the balance sheet account (assets, liabilities, capitals).

  2. The Financial Reporting Law of 2001 (DFSA updated in 2015) - includes provisions for the preparation of financial statements. The law distinguishes between two forms of income statement - comparative and calculation - and the income statement schedules in Denmark do not include a net profit reduction schedule. Financial reports are assigned to the categories into which Danish companies fall:

    • Category A, comprising companies owned by individuals; these companies do not have to create financial statements, relying mainly on tax returns.
    • Category B, comprising Danish public companies, limited liability companies and limited partnerships (with up to 50 employees and assets of up to DKK 36 million).
    • Category C, covering Danish public companies, limited liability companies and limited partnerships (with more than 50 employees and assets of DKK 36 million and above).
    • Category D, comprising Danish joint stock companies. In their case, accounting is more extensive, involving the creation of balance sheets, management reports, profit and loss statements, financial flows and all information regarding changes in capital and other aspects.


Additional important regulations related to company accounting in Denmark include:

Financial reporting requirements for Danish companies are based on European Union acts and directives, which are then transformed into national law. An example is the EU Accounting Directive of 2015, which is implemented into national law as the Financial Reporting Act.

Oversight of areas related to financial accounting, auditing and accounting standards in Denmark rests in the hands of two government institutions:

  1. DFSA, or Danish Financial Supervisory Authority.
  2. Over the years, the function of the DBA, or Danish Business Authority (formerly the Danish Trade and Companies Agency until 2012), functioning as part of the Ministry of Economic Affairs and Development, has taken over oversight of the financial reporting of businesses that are not financial institutions. Since 2007, however, the right to set accounting standards in Denmark has passed to the Danish Accounting Standards Committee (DASC), part of the Danish Auditors' Committee (FSR). Despite the lack of an official legal mandate, the DASC's guidelines and technical manuals play an important role in shaping high accounting standards in Denmark. The committee sets guidelines for companies of various sizes, including small, medium and large Danish companies in categories B and C.


Accounting chart of accounts in Denmark


In Denmark, the structure of the accounting chart of accounts refers to the special organization of accounts that is adopted in a particular company in order to maintain transparency in keeping records of the company's operations.

Here are the main categories of accounts in the accounting chart of accounts in Denmark, which are related to the layout of the profit and loss account:

  1. Accounts related to sales revenue:
    Account code: 1100, Account name: product sales.

  2. Accounts related to production costs:
    Account code: 2100, Account name: production costs.

  3. Accounts covering various external costs:
    Account code: 3100, Account name: advertising costs.
    Account code: 3200, Account name: local costs.
    Account code: 3300, Account name: cash deficit.
    Account code: 3400, Account name: vehicle export costs.
    Account code: 3900, Account name: other expenses.

  4. Accounts covering the employer's expenses:
    Account code: 4100, Account name: payroll.
    Account code: 4200, Account name: retirement allowances.

  5. Depreciation accounts:
    Account code: 5100, Account name: vehicle depreciation.
    Account code: 5200, Account name: equipment depreciation.

  6. Accounts relating to interest:
    Account code: 6100, Account name: interest (income).
    Account code: 7100, Account name: interest (expenses).

  7. Accounts covering extraordinary events:
    Account code: 8100, Account name: unexpected earnings.
    Account code: 8200, Account name: unforeseen losses.

  8. Accounts involving taxes:
    Account code: 9000, Account name: corporate tax.

Arrangement of accounts in the balance sheet:

  1. ​Fixed Asset Accounts:
    Account code: 112, Account name: fixed assets.
    Account code: 11120, Account name: vehicles.
    Account code: 11121, Account name: depreciation allowances for vehicles.
    Account code: 11130, Account name: furniture.
    Account code: 11131, Account name: depreciation allowances for furniture.

  2. Current asset accounts:
    Account code: 121, Account name: inventories.
    Account code: 12110, Account name: warehouse.
    Account code: 122, Account name: accounts receivable.
    Account code: 12210, Account name: receivables from customers.
    Account code: 12220, Account name: accruals.
    Account code: 123, Account name: cash.
    Account code: 12310, Account name: cash.
    Account code: 12320, Account name: bank account.
    Account code: 1230, Account name: savings account.

  3. Capital Accounts:
    Account code: 121, Account name: Share capital.
    Account code: 134, Account name: capital reserve.
    Account code: 135, Account name: financial result.

  4. Accounts payable:
    Account code: 141, Account name: long-term liabilities.
    Account code: 14110, Account name: mortgages.
    Account code: 142, Account name: short-term liabilities.
    Account code: 14210, Account name: short-term loans.
    Account code: 14220, Account name: receivables.
    Account code: 14230, Account name: pension contributions.
    Account code: 14240, Account name: labor market contributions.
    Account code: 14250, Account name: taxes.
    Account code: 14250, Account name: tax settlements.
    Account code: 14290, Account name: other liabilities.
    Account code 21000, Account name: income statement.
    Account code 22000, Account name: balance sheet.


An overview of the categories and requirements of financial reports in Denmark

In the context of company accounting in Denmark, an important point is the creation of financial reports, the foundations of which are defined in the Financial Reporting Act. This regulation classifies all business activities in Denmark into four categories (A, B, C and D), based on the following criteria:

If the company's situation is subject to financial reporting regulations, such a report should include the following:

Class A - includes any private organization in Denmark, regardless of size, with no more than 10 employees (working full time). The total assets of these companies do not exceed 7 million Danish kroner, and the annual net turnover does not exceed 14 million Danish kroner. The preparation of financial reports for companies in this category is not required by Danish law (except for established provisions in the company's articles of association), except for reports used for tax purposes.

Class B - includes both public and private limited partnerships, commercial foundations and other organizations. Requirements include:

  1. ​Employment of up to 10 full-time employees, total assets not exceeding DKK 2.7 million, and annual net turnover not exceeding DKK 5.4 million,
  2. Employment of up to 50 full-time employees, the value of assets reaches DKK 44 million, and the value of net turnover does not exceed DKK 89 million.

Financial reports for Class B organizations should include:

Danish organizations in Class B can use the overplanned directives issued by DASC in 2013 or IFRS. Some guidance, especially on valuation and presentation of information, is optional for companies in this category, but necessary for Class C organizations.

Class C - includes large and medium-sized companies, both public and private limited liability companies, limited partnerships and commercial foundations. Conditions include:

  1.  up to 250 full-time employees, total assets of DKK 156 million, and annual net turnover of no more than DKK 313 million,
  2. more than 250 full-time employees, the value of assets exceeds DKK 156 million, and the annual net turnover exceeds DKK 313 million.

Financial reports for Class C companies should include:

Class D - includes any state-owned joint stock companies that are required to prepare consolidated financial statements in accordance with IFRS guidelines (the statute of limitations is May 1 after 4 or 6 years). In addition, listed companies are required to prepare individual financial statements.

The reports of such companies should include:


Rules for hiring and posting employees in Denmark


In the context of doing business in Denmark, entrepreneurs who decide to hire employees should first look at the Employment Contract Act (Ansættelsesbevisloven). These regulations deal with the obligation to provide employees with a document containing relevant information about their employment. Individuals employed by Danish companies are often protected by collective bargaining agreements, meaning that working conditions are determined by agreements reached between employees and employers through professional organizations or employee representation.

Regulations for employers in Denmark require compliance with the country's labor laws and occupational health and safety regulations, available on the Danish Labor Inspection Authority's (UIP) website.

Business owners operating in Denmark and employing workers should:

Entrepreneurs from European Union countries who plan to post their employees to work in Denmark are obliged to comply with the regulations on posting workers contained in the following documents:

  1. EU Directive 96/71 of December 16, 1996 on the retail provision of services and the posting of workers abroad (essential provisions on working conditions, equal pay, prohibition of labor market discrimination and gender equality).
  2. Danish Posting of Workers Act No. 993 of December 15, 1999.


In addition, employees from Poland who are tasked with working in Denmark should receive an A-1 form before the start of the posting. This document confirms the payment of workers' social security contributions and specifies the Polish regulations governing this insurance. The A-1 form is issued by the Social Insurance Institution (ZUS).

Any company doing business in Denmark must be registered with the Danish Commerce and Companies Agency (www.erhvervsstyrelsen.dk), which assigns a Central Company Register number (CVR, www.datacvr.virk.dk). In addition, companies that post foreign workers are required to report any changes regarding their activities to the Register of Foreign Service Providers - RUT.


Registration, accounting and taxes for single-person companies in Denmark  

Accounting considerations in the context of single companies in Denmark are relatively accessible. Such businesses, according to the provisions of the local law governing financial reporting, are assigned to Category A.

Enkeltmandsvirksomhed, or sole proprietorships, rely primarily on tax returns performed at the local Tax Office (SKAT, www.skat.dk). As for the annual reports, which include balance sheets, profit and loss statements, additional data, accounting policies and a summary of management activities, they are not required to be submitted.

In the context of accounting for this type of business in Denmark, it is also important to create a Forretningsplan, a detailed description of the company's planned activities. This plan should include an idea and business strategy, area of operations, responsibilities and financial capabilities of the entrepreneur.

It is necessary to register a sole proprietorship with the Danish Erhvervsstyrelsen (via the platform www.virk.dk). Those choosing this solution should have an individual CPR registration number. Managing the accounts of this type of company is relatively simple; no share capital is required, and registration costs are about DKK 10,000 (PLN 5,000). Taxation is based on a single tax form, and income is taxed only once. The owner also has the option to delegate power of attorney to others to act on behalf of the company, without having to register the company as a VAT payer, if the annual income does not exceed DKK 50 thousand.

As for Enkeltmandsvirksomhed, the owner is personally liable for the company's debts and has a choice of three taxation options:

  1. ​The first is taxation under the Share Capital Act (Kapitalafkastordning), allowing a portion of a company's profit to be transferred to personal income and capital.

  2. The second is to tax profit as personal income, on a par with full-time employees.

  3. The last option is taxation according to the Enterprise Act (Virksomhedsordning), allowing interest expenses on loans to be deducted and company profits to be retained in a savings account, which can be beneficial.

Those running a sole proprietorship and paying taxes and insurance premiums are entitled to health and pension benefits, on a par with employees working in Denmark. Quarterly or every six months, using the SKAT (Danish Tax Authority) platform through the LetLøn system, you must file a tax return (income taxation and VAT). Advance income tax payments must be made on March 20 and November 20.



Accounting for Danish companies  


Currently more advanced is the issue of accounting for Danish companies in categories B, C and D, such as:


  1. General partnerships (I/S - Interessentskab).  
  2. Limited liability companies (ApS - Anpartsselskab).
  3. Limited partnerships (K/S - Kommanditselskab).
  4. Joint stock companies (A/S - Aktieselskab).


Under the provisions of the Danish Financial Reporting Act, these organizations are required to produce reports that include a management report, a cash flow analysis, a profit and loss statement, a balance sheet, information on changes in capital and other additional details.

All Danish companies listed on the regulated stock market must apply IFRS standards when preparing their financial reports.

Below are key aspects of accounting for Danish companies:



These recommendations allow companies to adjust management according to the "comply or explain" principle. Failure to follow them is therefore not against the guidelines, but is due to other strategies chosen by companies.


Essential documents needed when running a company in Denmark


The website of Erhvervsstyrelsen, or the Danish Economic Activity Authority, provides various information on registering a business, keeping accounts and operating companies in Denmark.

The platform https://www.virk.dk provides relevant data relating to companies operating in Denmark. The following information is cited there:

Among the relevant documents for business in Denmark are:

  1. A tax return form, formerly called "oplysningsskema" and now "selvangivelse," issued by the Danish Tax Authority (SKAT). This document is sent to the address that was provided during registration (in both Danish and Polish) and to the taxpayer's electronic mailbox. This document is especially important for those who are self-employed and must be completed before September 1 of the following tax year. Årsopgørelse is prepared based on this form.

  2. Årsopgørelsen, is a document prepared by SKAT on March 15, containing the preliminary decision on taxes (the amount to be refunded or paid). In case of errors or entitlement to relief, this document can be amended electronically through the TastSelv platform and sent back to the office as a corrected return by May 1. For entrepreneurs, this document is prepared later, based on the completed oplysningsskema. The final tax amount, calculated in the final årsopgørelsen, must be paid to the office by July 1. For tax exceeding DKK 21,798, the amount is divided into three installments, payable in August, September and October.

  3. Oplysningsseddel is a document that summarizes an employee's income. Every employer in Denmark is obliged to provide this document to employees upon termination.

  4. Business owners in Denmark are required to keep employees' documents (after the end of cooperation) for five years.



Expenses associated with doing business in Denmark

In the accounting of Danish companies, expenses and settlement operations are an important point, as well as balance sheet assets.

Nowadays, the balance sheet of Danish companies shows assets arranged according to the criterion of liquidity - from the least liquid (Tangible Assets) to the most liquid (cash). Liabilities, on the other hand, are divided into equity and debt capital. The layout of the balance sheet presents itself in this way:

In the fixed assets section:

In current assets:

As for the liabilities section:

Companies in Denmark are audited by authorized auditors, who must act independently and externally. There are several types of audits, such as financial, compliance and management audits. Companies in Denmark choose the appropriate auditing service according to their needs.


Verification of financial statements in Denmark


The values contained in the provisions of the Danish Financial Reporting Act also include issues concerning the verification of financial statements prepared by companies in Denmark. The audit process in Denmark involves registered (or authorized) public auditors, who are required to maintain independence and external standing.

We distinguish between the following types of reviews:

  1. ​Financial audit - a full audit of financial statements by a certified public accountant. This type of financial audit is designed to detect whether the financial and asset information provided by the business owner is reliable and whether the financial statements comply with applicable Danish or international accounting principles.
  2. Compliance audit - assessing whether the companies' financial activities and systems comply with the law.
  3. Management audit - analysis of the efficiency and effectiveness of financial resource management in Danish companies.
  4. Quality Assurance (QA) audit - a system of quality control in Denmark covering, among other things, financial statements.

Two options are available for Class B companies in Denmark:


  1. Performing a full audit of financial statements.  
  2. Choosing audit-light, a new form of audit introduced for financial statements since 2013.

Auditing of companies in Classes A and B is not mandatory and depends on the annual turnover achieved by the company. These companies can choose the type of audit and cooperation with auditors to determine the best certification service for them (e.g., accounting assistance, auditing of financial statements or auditing).

Internal auditing must be included in the planning and modification of Danish companies' accounting systems.

Good auditing practices are defined in the Auditor Act, ensuring that the internal audit unit is not subordinate to the head of the entity in planning, organization and execution, and that internal auditors are given access to the necessary information. The Danish Ministry of Finance has the authority to designate areas within the company to be tested in detail. The Danish Financial Supervisory Authority (FSR) follows the International Standards on Auditing (ISA).

In 2011, the FSR, a professional accounting organization, was established, bringing together three Danish institutions: FSR (Danish Statutory Auditors), FRR (Danish Institute of Certified Public Accountants) and REVIFORA (association for young accountants and trainees). The FSR focuses on auditing, auditing of financial statements, and accounting and tax issues for companies in Denmark.

Danish auditors, state authorized public accountants (SPA, or State Authorized Public Accountant) acting as auditors, and audit firms are subject to regular inspections every six years by the DSAA, or the Audit Oversight Authority (established by the DBA).


Denmark's trade with Poland and the European Union


European Union countries, particularly Germany, Sweden, the United Kingdom and the Netherlands, play important roles in Denmark's trade. Poland ranks 13th on this list. Denmark's main exports are foodstuffs, live animals, chemical products and chemicals, while the country in turn imports mainly machinery, equipment, processed products and chemicals.

Eksportrådet, known as the Danish Trade Council, is tasked with strengthening Denmark's international relations with other countries. In 1995, Danish and Polish investors founded the Danish-Polish Chamber of Commerce, which facilitates bilateral cooperation.

The 1991 Europe Agreement regulates trade between Poland and the European Union, introducing a free trade zone for industrial goods as early as 1999. Most products enjoy preferential tariffs, usually equal to 0%, but for most products it is necessary to provide a EUR1 certificate of origin to customs officials.

The 25% value-added tax (VAT), known as MOMS in Denmark, covers most industrial goods, agricultural goods and services. The variety of excise duties includes categories such as ice cream, coffee, videotapes, tobacco products, alcohol, chocolate products, light bulbs, beer, wine, tea, cars, fuel and disposable packaging.

Fødevarestyrelsen, or the Danish Food and Veterinary Inspectorate, issues permits and licenses for food imports into Denmark. Food products must be labeled in Danish and meet standards for ingredients and preservatives.

The Ministry of the Environment oversees the entry of cosmetics, cleaning products and detergents into the Danish market, and entrepreneurs wishing to import chemicals must meet the ministry's requirements. Chemicals outside the EINECS list must be notified to the Department of Chemical Products.

Under the New Approach, many industrial products, such as toys, machinery and gas appliances, must comply with the directives and carry the CE mark.

Denmark has entered into a number of important agreements, including agreements on economic cooperation, energy and environmental protection, and has adopted the UN Convention on the International Sale of Goods.


Frequently asked questions

  1. What regulations treat the accounting system in Denmark?
    The accounting system in Denmark is based on the EU Regulation 1606/2002 on International Accounting Standards (IAS). This regulation requires the use of IFRS standards that have been accepted by the EU. These regulations apply to European companies listed on a regulated securities market. However, for companies whose shares are not listed on a regulated market, EU countries may also require the application of IFRS standards in their separate financial statements. According to the IAS, Denmark can also optionally use IFRS standards in the consolidated and separate accounts of Danish companies that do not operate on a regulated market. It is worth mentioning that EU law does not apply in Denmark's two autonomous territories, the Faroe Islands and Greenland.

  2. What is a-kasse?
    In Denmark, there is such a thing as a-kasse. It's a type of insurance fund that works in case you lose your job. Although unemployment insurance is not mandatory, in order to receive benefits after losing your job, you must be a member of a-kasse.

  3. Is there an option to settle electronically with the Tax Authority in Denmark?
    There is an option for electronic settlement in Denmark, which is done using the 8-digit code TastSelv. This code can be obtained online at www.skat.dk. It can be found on Årsopgørelsen or Forskudsopgørelsen.

  4. What does Skat til udbetaling mean?
    The expression Skat til udbetaling appears on the tax decision and indicates the amount of tax refund.

  5. What is Restskat til betaling?
    The term Restskat til betaling in a tax decision indicates the need to pay additional tax.

  6. What is a NemKonto?
    NemKonto is the employee's bank account into which tax refunds and salary are transferred.

  7. What is Feriepenge and who is entitled to it?
    Feriepenge is a vacation pay that all legal workers in Denmark are entitled to. Each month of work provides 2.08 days of vacation, which adds up to a total vacation of 25 days (5 weeks). Application for Feriepenge payment can be made within 6 months of leaving work in Denmark, but it is necessary to deregister from the Folkeregister (municipal office) before leaving the country. Feriepenge is paid into a NemKonto account for the first 3 months for the previous fiscal year, which runs from September 1 to August 31 of the following year, and can be used from May 1 to April 30 of the following year.

  8. What is Feriekonto?
    Feriekonto is a special fund into which employers in Denmark pay employees' vacation contributions (from 12% of gross salary after deducting 8% for social purposes).

  9. How long does it take to get a tax refund in Denmark?
    Typically, the tax refund process from the Danish Tax Authority takes about 6 months.

  10. What is Årsopgørelsen?
    Årsopgørelsen is a tax decision that can be found on the Danish Tax Authority's website.

  11. What is Personfradrag?
    Personfradrag is a personal tax credit that is available to Danish residents who have worked there for 12 months.

  12. What tax credits are available in Denmark?
    Available reliefs include, for example, relief for commuting expenses, relief for housing or relief for food.

  13. What is a pension?
    A pension is a private pension in Denmark, accumulated in private pension funds (PFA Pension, Danica Pension, Industriens Pension, Pensiondanmark).

  14. What is folkepension?
    Folkepension is a state pension in Denmark, available to citizens upon reaching the age of 65.

  15. What is ATP?
    ATP is the employee programs in Denmark, part of the second pillar of the pension system, aimed at all citizens from the age of 16.

  16. What is the Sundhedskortet health card?
    Sundhedskortet is a yellow health card, necessary for those who plan to stay in Denmark for more than 3 months. It provides free medical care (except dentistry) and is issued together with a CPR number.