Accounting in Denmark – Your Step-by-Step Guide to Staying Compliant

Denmark consistently ranks among the top countries for ease of doing business in Europe. A transparent legal system, efficient public administration, and strong digital infrastructure make it an attractive destination for entrepreneurs. However, to operate successfully, you must understand the country’s accounting and tax obligations. This guide takes you through the essentials, from registration to ongoing compliance. This guide, written in collaboration with a Danish accounting firm – atrum.dk, takes you through the essentials, from registration to ongoing compliance.

Step 1 – Registering your Business and Understanding your Obligations

All companies operating in Denmark must register with the Central Business Register (CVR). Registration is completed online through the Erhvervsstyrelsen website and requires a Danish personal identification number (CPR) and a secure login via MitID.

Once registered, you will:

• receive a unique CVR number,
• decide whether to register for VAT (mandatory if annual turnover is expected to exceed 50,000 DKK),
• choose an accounting method and set up a system for tracking transactions.

From day one, you are responsible for keeping accurate, chronological records of all income and expenses.

Step 2 – Knowing the Core Rules Under the Bookkeeping Act

The Bogføringsloven (Bookkeeping Act) sets out the main principles of accounting in Denmark:

• all business transactions must be documented with valid supporting evidence (invoices, receipts, bank statements),
• records must be stored for at least five years,
• bookkeeping must be complete, accurate, and chronological,
• companies meeting certain size thresholds must prepare and publish annual financial statements.

Digital recordkeeping is fully accepted, provided the files are accessible and secure.

Step 3 – VAT, Corporate Tax, and Reporting Cycles

Denmark applies a standard VAT (moms) rate of 25% on most goods and services. Filing frequency depends on your company’s turnover:

• Half-yearly – turnover under 5 million DKK,
• Quarterly – turnover between 5 and 50 million DKK,
• Monthly – turnover over 50 million DKK.

Corporate income tax is 22%. Sole traders are taxed under the progressive personal income tax system, which includes state and municipal tax.

All tax returns and VAT filings are submitted via TastSelv Erhverv, an online platform managed by the Danish Tax Agency (SKAT).

Step 4 – Choosing the Right Accounting Tools

Most Danish businesses rely on cloud-based accounting software, which integrates with online banking and automates VAT reporting. Popular options include:

• Billy – simple, cost-effective, ideal for small businesses,
• Dinero – user-friendly for freelancers and startups,
• e-conomic – scalable for medium-sized and large companies,
• Visma eAccounting – advanced features for complex operations.

Using the right tool from the start will save you time and reduce the risk of errors.

Step 5 – Audits and Tax Inspections

Audits are mandatory only for companies that exceed at least two of the following three thresholds for two consecutive years:

• total assets above 44 million DKK,
• net revenue above 89 million DKK,
• more than 50 full-time employees on average.

Tax inspections are often conducted remotely. The tax authority may request specific documents, which you must provide electronically.

Step 6 – Avoiding Common Mistakes

Foreign entrepreneurs sometimes face difficulties due to:

• late VAT registration,
• missing or incomplete transaction documentation,
• failing to meet reporting deadlines,
• incorrect VAT treatment of cross-border sales within the EU,
• choosing software that doesn’t match the company’s needs.

Step 7 – Most Practices for Smooth Operations

1. Automate your bookkeeping with reliable software.
2. Reconcile accounts weekly to keep records accurate.
3. Use cloud storage for backups and secure access.
4. Integrate invoicing with payment systems to speed up cash flow.
5. Consult a local accountant if your operations grow or become more complex.

Accounting in Denmark is efficient and highly digitalized, which benefits businesses of all sizes. By understanding the rules, using the right tools, and keeping your records up to date, you can stay compliant with minimal stress and focus on expanding your business in one of Europe’s most entrepreneur-friendly environments.