Bookkeeping Denmark – What Foreign Entrepreneurs Must Keep in Mind

BySylvia K. Kelly Hours
bookkeeping

Denmark is one of Europe’s most attractive destinations for entrepreneurs. Its stable economy, transparent regulations, and digital-first administration make it easier to start and run a company compared to many other countries. However, for foreigners entering the Danish market, understanding bookkeeping rules is critical. Bookkeeping Denmark is not only about compliance – it is about integrating into a system that values trust, efficiency, and transparency.

Below are the key points every foreign entrepreneur should remember when setting up a business in Denmark.

1. Choose the right business structure

The type of company you establish determines your bookkeeping responsibilities:

  • Sole proprietorship (Enkeltmandsvirksomhed) – requires simplified accounting, but the owner is personally liable for debts.
  • Private limited company (ApS) – requires 40,000 DKK in share capital and full bookkeeping, including annual reports.
  • Public limited company (A/S) – requires 400,000 DKK capital and strict reporting obligations.
  • Branch of a foreign company – allows international businesses to operate locally but still requires Danish bookkeeping compliance.

Choosing the right form helps align your bookkeeping with your business goals.

2. VAT registration and compliance

Foreign entrepreneurs often underestimate the importance of VAT (Moms):

  • The standard VAT rate is 25%.
  • Registration is mandatory once annual turnover exceeds 50,000 DKK.
  • VAT returns are usually filed quarterly, though larger companies may need monthly reporting.

Failing to register or file VAT on time results in automatic penalties, making VAT compliance one of the top priorities for newcomers.

3. Obtain MitID and use TastSelv

All bookkeeping and tax obligations in Denmark are digital. To access systems, you need MitID, the national digital ID. With it, you can log into TastSelv, the Danish Tax Agency’s online portal.

Through TastSelv you can:

  • File VAT returns,
  • Submit annual tax reports,
  • Pay taxes electronically,
  • Adjust preliminary income assessments.

Without MitID, it is impossible to manage tax obligations efficiently.

4. Annual reporting obligations

If you establish a limited company (ApS or A/S), you must prepare and publish annual financial statements with the Danish Business Authority (Erhvervsstyrelsen).

These reports include:

  • balance sheet,
  • profit and loss statement,
  • explanatory notes.

They are made publicly available, which supports transparency but can surprise foreign entrepreneurs used to more private systems.

5. Keep records for five years

Denmark requires businesses to store all invoices, receipts, and supporting documents for at least five years. This applies whether documents are digital or physical.

Foreign business owners sometimes underestimate this rule, but proper record-keeping is crucial in case of audits.

6. Embrace digital tools

Cloud-based accounting platforms such as e-conomic, Dinero, or Billy are widely used in Denmark. They integrate directly with banks and tax systems, making it easier to handle:

  • invoicing,
  • VAT calculations,
  • payroll,
  • financial reporting.

For foreigners, these tools are particularly useful, as many offer English interfaces.

7. Work with local accountants

Even though Denmark’s bookkeeping system is digital and efficient, language barriers and strict deadlines make professional support highly valuable. Certified accountants:

  • ensure VAT and tax compliance,
  • prepare financial statements,
  • provide payroll services,
  • represent businesses in communication with authorities.

For foreigners, this partnership is often the difference between smooth operations and costly mistakes.

8. Be aware of cultural differences

In Denmark, transparency is part of the business culture. Public access to company reports, strict adherence to deadlines, and high standards of compliance reflect this approach. Foreign entrepreneurs should view bookkeeping not as a burden but as a sign of credibility and professionalism.

9. Plan for taxes and cash flow

Denmark’s tax rates are higher than in many countries. Personal income tax is progressive, while companies pay 22% CIT. Accurate bookkeeping helps forecast cash flow, ensuring taxes can be paid on time and avoiding liquidity problems.

For foreigners starting a business, Bookkeeping Denmark means adapting to a system that is highly digital, transparent, and rule-driven. To succeed, entrepreneurs must register for VAT on time, obtain MitID, use digital tools, prepare annual reports when required, and store records for five years.

With careful planning and the support of professional accountants, foreign businesses can thrive in Denmark’s efficient system. Ultimately, mastering Danish bookkeeping is not just about compliance – it is about building trust and long-term success in one of Europe’s most reliable markets.

Similar Posts