Regulatory updates - Denmark

As previously reported by Pagero, Denmark is in the progress of implementing a new Bookkeeping law that includes stricter requirements on providers of accounting software. One of the pillars of these new requirements is the mandatory capabilities for accounting software to issue, receive, process, and archive electronic invoices. This change puts e-invoicing in a position to become the de facto new norm for B2B invoicing in Denmark.

The Danish Business Authority (Erhvervsstyrelsen or ERST) announced on 13 December 2022 that a number of new digital bookkeeping rules are being postponed due to awaiting approval by the new Danish Government which is yet to be formed.

ERST will release a new timeline and guidance on the new digital requirements after the new government takes office.

Stay tuned with Pagero for the latest news about e-invoicing in Denmark.

On 15 May 2022, Denmark made updates to the OIOUBL version 2.1 and Schematrons version 1.12. The functionality to use digital sustainability labels and other product certificates is now in effect. This provides an additional opportunity for companies to showcase the sale of sustainability-labeled products.

From the perspective of both public and private purchasers, this also provides useful data used to measure whether they meet internal and/or external targets regarding the purchase of sustainable products.

The update also addressed several minor and major bugs with the previous version of the OIOUBL Schematrons, as well as ensuring support for UBL 2.1. This makes certain that the new OIOUBL standard converges with current Peppol document standards.

The new Danish Bookkeeping Act brings many novelties, of which the most significant is the requirement to issue, exchange, receive, process and archive invoices electronically. At the same time, 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".

Who is covered by the digital rules of the new Bookkeeping Act?

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)

Those 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 are the digital bookkeeping systems?

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".

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 since many years, offering VAT, e-invoicing and e-archiving compliance, connectivity to Nemhandel, and fulfilling the local Peppol requirements.

As we reported earlier, the Danish government planned to oblige public administrations to make part of their purchases electronically by creating e-orders from e-catalogues for certain categories of goods and services by 2023.

On 14 September 2021, the Danish Ministry of Finance announced that the mandate would not enter into force as intended.

However, it will still be mandatory for some state institutions to use e-orders and e-catalogues as part of purchasing agreements in the Government Procurement Program.

Denmark has long-term plans of enhancing the buying and selling process for businesses towards public authorities through their involvement with Peppol. Denmark is taking the next step in digitalising the purchasing process by rolling out the mandatory use of electronic catalogs (e-catalogs) and electronic orders (e-orders) through the Peppol Network.

From 1 January 2023, public administrations will be required to make part of their purchases electronically, by creating e-orders via e-catalogs, for certain categories of goods and services. The requirements for e-catalogues and e-orders will comply with and be based on the Peppol standard. This means that suppliers will have to be able to receive these document types electronically via an accredited Peppol Service Provider.

E-documents are to be sent through the NemHandel platform. Nemhandel began integration with the Peppol network in 2017. Peppol is an open network which makes e-procurement between suppliers of goods and services and public authorities easy, efficient and secure.

Since 18 April 2020, Danish public authorities have been able to receive Peppol e-invoices via the Peppol Network. All public authorities must be affiliated with the Peppol Network via Nemhandel’s Business Register. Peppol-based e-catalogues and e-orders will be mandatory for public entities from 2023.

Suppliers must be able to receive e-orders and have e-catalogs on the covered purchasing categories. The purchasing categories are already e-commerce mature. Once suppliers have received an e-order, they can convert it to an e-Invoice. Order placement and invoicing will take place electronically and automatically without the need for manual intervention. This will lead to a more efficient process with a higher degree of automation, reducing errors, costs and burdens for both the public authorities and businesses.