Denmark is one of Europe’s most attractive destinations for business. With a robust economy, transparent laws, and digital public services, it offers a welcoming environment for entrepreneurs and freelancers. However, understanding accounting in Denmark is crucial to avoid legal pitfalls and ensure financial success.
Setting Up a Business in Denmark: Accounting Comes First
Before launching a company in Denmark, it’s essential to understand how the local accounting system works. Proper bookkeeping is not only a legal requirement, but also the foundation of a healthy business.
Key first steps include:
- Registering your business (CVR number)
- Choosing the right legal structure (e.g. sole proprietorship, ApS, or branch office)
- Opening a business bank account
- Setting up accounting software or hiring an accountant
Accounting starts from day one—even if your revenue is zero at the beginning.
Danish Accounting Standards and Digitalization
Denmark is a global leader in digital governance. Most accounting-related tasks are performed online through integrated platforms connected to tax and public registers.
Core principles of Danish accounting include:
- Transparency and traceability of every financial transaction
- Digital bookkeeping systems, often cloud-based
- Real-time tax data reporting (e.g. via eIndkomst and SKAT.dk)
- Standardized formats for financial statements (XBRL)
Companies are expected to keep detailed records of:
- Invoices (sales and purchases)
- Payroll and tax withholdings
- VAT transactions
- Business expenses and depreciation
All documents must be stored securely for at least 5 years and be accessible for audits at any time.
Do Freelancers in Denmark Need an Accountant?
Yes—especially if they are not familiar with Danish tax law or speak limited Danish. Even if you’re a sole trader (enkeltmandsvirksomhed), you still need to:
- Report income and expenses accurately
- Pay VAT if your revenue exceeds DKK 50,000 per year
- Make quarterly advance tax payments
- Submit your tax return on time
An accountant can help you:
- Choose the right expense deductions
- Avoid common reporting errors
- Optimize your tax payments
- Track your financial performance
Many freelancers in Denmark use a combination of online accounting software (e.g. Billy, Dinero, or e-conomic) and a part-time accountant like accountants.dk to handle annual reports and tax submissions.
VAT Rules and Reporting in Denmark
VAT (Moms) is one of the most important aspects of accounting in Denmark. The standard VAT rate is 25%, and businesses must collect it on most goods and services sold in Denmark.
Key rules:
- Mandatory VAT registration once your annual turnover exceeds DKK 50,000
- VAT returns submitted monthly, quarterly, or semi-annually depending on company size
- Reverse charge mechanisms apply to some cross-border B2B transactions
- Digital submission through TastSelv Erhverv or accounting software
Incorrect VAT handling is one of the most common reasons for audits in Denmark. Always keep sales and purchase invoices organized, and track VAT on a line-by-line basis.
Payroll and Employment Accounting in Denmark
Hiring staff? Your accounting responsibilities expand. Employers in Denmark are responsible for:
- Registering as an employer via the E-income system
- Withholding income tax (A-skat) and labour market contributions (AM-bidrag)
- Paying ATP pension contributions and other social fees
- Calculating and reporting holiday pay (feriepenge)
Mistakes in payroll accounting can lead to employee disputes, penalties, and loss of trust. Many companies use payroll services or integrate HR and accounting platforms (like Danløn or Dataløn).
Auditing and Financial Reporting Obligations
Not all businesses in Denmark are subject to mandatory audits. However, larger entities must file an audited annual report.
Audit requirements generally apply to companies that meet two of the following criteria for two consecutive years:
- Turnover exceeds DKK 5.6 million
- Total assets exceed DKK 3 million
- More than 12 full-time employees
Annual financial statements must be submitted electronically to the Danish Business Authority (Erhvervsstyrelsen) and include:
- Balance sheet
- Profit and loss statement
- Notes and disclosures
- Auditor’s report (if applicable)
Failure to submit on time can lead to fines and even company dissolution.
International Companies: Accounting Challenges in Denmark
Foreign companies doing business in Denmark—either through subsidiaries or branches—must adapt to Danish standards.
Common issues include:
- Adapting existing ERP/accounting systems to Danish requirements
- Translating financial documents
- Understanding local payroll and VAT law
- Reporting cross-border intra-EU transactions
- Managing transfer pricing documentation
Working with a Danish accounting firm familiar with international operations is highly recommended. Many offer bilingual support and can coordinate with HQ finance teams abroad.
Recommended Accounting Tools in Denmark
Whether you’re a freelancer or a midsize company, the right tools can automate your compliance tasks.
Popular accounting software:
- Billy.dk – Ideal for small businesses and freelancers
- Dinero – Easy to use and integrates with the Danish tax office
- e-conomic – Suitable for growing companies and accountants
- Fortnox – Used by Nordic companies with cross-border needs
Many platforms offer bank integrations, VAT reporting, invoice generation, and payroll features. They also comply with Danish data protection and recordkeeping laws.
How to Choose an Accountant in Denmark
If you decide to hire an accountant, look for someone who:
- Is registered with FSR – danske revisorer or FDR
- Has experience in your industry or business size
- Offers digital services (cloud accounting, online reporting)
- Speaks English or your native language
- Understands international tax structures if you’re a foreign entity
Accountants in Denmark typically charge fixed monthly fees or hourly rates. Many offer packages tailored to startups, freelancers, or SMEs.
Key Deadlines for Danish Accounting
| Reporting Obligation | Deadline |
| VAT return (monthly/quarterly) | By the 1st of the second month after period end |
| Payroll tax report | By the 10th of each month |
| Annual report filing | Within 5 months after the end of the fiscal year |
| Corporate income tax return | Within 6 months after fiscal year end |
