Accounting in Denmark

Setting up your own business in Denmark is inextricably linked to the need for company accounting. Depending on the type of company, the requirements for bookkeeping vary with regard to the degree of difficulty, documents required, deadlines for their delivery, amount and type of taxes and regulations. Therefore, once you have decided to set up a company in Denmark, you need to think carefully about bookkeeping. In Denmark, you can do your own bookkeeping, you can use an accounting software or you can use the services of certified accounting firm which can professionally complete your bookkeeping and advise you on the laws governing bookkeeping in Denmark, the bank accounts offered and the rights and obligations of an entrepreneur operating in Denmark. Find out about the accounting in Denmark with this comprehensive article. Accounting is an issue that is a concern for every business owner, including those operating in Denmark. It is extremely important to be thoroughly familiar with all the legal regulations and to complete all the formalities because, if you do not, you may expose your company to fines. The most relevant matters related to bookkeeping in Denmark have been collected in the infographic below. Denmark is a country belonging to the Scandinavian countries with a particular emphasis on social policy development. The country is also characterised by a free labour market and high taxes.

An entrepreneur running his or her own business in Denmark should become very familiar with all legal regulations and obligations, so that he or she can avoid possible financial penalties. Among the acts that condition the company's accounting in Denmark are:

• The Accounting Act (1998) - provides information for the proper organisation of a company's accounts and the proper preparation of business records and documentation. Accounting in Denmark is linked to a specific chart of accounts describing the company's profit and loss statement and summary balance sheet.
• Financial Reporting Act (2001 with amendment in 2015) - contains the information necessary for the execution of budget reports. The act describes two types of profit and loss - comparative and imputed. The reports should be performed according to the classification into which Danish companies are divided, which is presented in the infographic below.

Information on the classification of Danish firms will be further developed later in the article.

• Act on approved auditors and audit firms (2008),
• Act on public and private limited liability companies (2009),
• Financial Activities Act (2011),
• Securities Trading Act (2012).

Institutions in Denmark, overseeing the correctness of accounting, granted authority by the Danish Parliament, include the Danish Financial Supervisory Authority (DFSA), the Danish Business Authority (DBA) and the Danish Accounting Standards Committee (DASC). As mentioned in the previous paragraph, the financial reporting of companies varies according to the type of business activity, the number of employees, the value of the annual net turnover, the size of the company and the size of the asset base. Due to these differences, economic activities have been divided into four classes.

Class A comprises small and large companies with no more than 10 full-time employees. In addition, these companies have asset resources of no more than DKK 7 million, while the annual net turnover of these companies is less than DKK 14 million. Class A companies do not have to prepare financial statements (unless the company's articles of association state that they must do so), but are only required to file tax returns. Where the company's articles of association contain information regarding the preparation of financial statements, then these statements usually include a certificate of the company's board of directors, an annual balance sheet, a profit and loss statement and other information.

Class A:

• small and large companies,
• no more than 10 full-time employees,
• assets < DKK 7 million,
• annual net turnover <14 million Danish kroner.

No financial statements required.

Class B includes public and private limited liability companies, limited partnerships, commercial foundations and other companies where the number of employees does not exceed 10 persons, the size of the asset base is less than DKK 2.7 million and the annual net turnover is not greater than DKK 5.4 million or the number of employees does not exceed 50 persons, the size of the asset base is less than DKK 44 million and the annual net turnover is not greater than DKK 89 million. The financial statements of a company included in Class B include an overview of the activities of the board of directors of the specified company, an annual balance sheet, a profit and loss statement, an assessment of changes in equity and other information.

Class B:

• Public and private limited liability companies, limited partnerships, commercial foundations and other companies,
• no more than 10 employees or no more than 50 employees,
• assets < DKK 2.7 million or assets < DKK 44 million,
• Annual net turnover < DKK 5.4 million or Annual net turnover < DKK 89 million.

Class C includes medium-sized and large companies, public and private limited liability companies, limited partnerships, commercial foundations and other companies with no more than 250 employees, assets < DKK 156 million and annual net turnover < DKK 313 million. This group also includes companies where the number of employees exceeds 250 persons, the size of the asset base is greater than DKK 156 million and the annual net turnover is greater than DKK 313 million. The financial statements of companies in class C must include an overview of the activities of the board of directors of the specified company, an annual balance sheet, a profit and loss statement, a cash flow statement (the flow of finances in the company), an assessment of changes in equity and other information.

Class C:

• Medium and large companies, public and private limited liability companies, limited partnerships, commercial foundations and other companies,
• no more than 250 employees or more than 50 employees,
• assets < DKK 156 million or assets > DKK 156 million,
• annual net turnover < DKK 313 million or annual net turnover > DKK 313 million.

Class D comprises public limited companies and listed companies. Danish companies whose securities are traded on a regulated market must report on a consolidated basis according to the guidelines in the International Financial Reporting Standards, while listed companies must prepare separate budget reports. The reports of Class D companies contain similar elements to those of Class C companies, but the documentation is more extensive.

Class D:

• State-owned joint stock companies, listed companies.

The most extensive form of financial reporting. Sole proprietorships are classified as Class A according to the reporting classification and, therefore, are not required to file financial statements. Accounting for sole proprietorships in Denmark is therefore, first and foremost, tax settlements with the tax office (in Denmark referred to as SKAT). In addition, accountants are also helpful at the very beginning of setting up a new company - they support the entrepreneur in drawing up an accurate description of the company, the so-called Forretningsplan. This is a document that should contain basic information about the start-up company, including the entrepreneur's plan for the development of the business, as well as the profile of the business and the expected budget.

Registering a sole proprietorship in Denmark involves registering it with the Danish Business Authority (Erhvervsstyrelsen) via the website. It is important that those seeking to set up this type of business must have a registration number (CPR). Another important piece of information for the budding entrepreneur will be the fact that setting up a company in Denmark does not require share capital and the estimated costs are set at DKK 10 000, or approximately PLN 5 000. Generally, accounting for a one-person company is not complicated, as tax on income is payable on the basis of a single tax return only, and the business owner does not have to register as a VAT payer if revenues are not higher than DKK 50 000.

The budding entrepreneur should also know that, as the owner of the company, he is liable for its obligations with all his assets. In addition, it is necessary to choose one of three taxation options:

• taxation on the basis of the Share Capital Act (Kapitalafkastordning) - according to this, part of the company's income can be transferred as personal income,
• taxation of the company's income as personal income (as for employees),
• taxation on the basis of the Enterprise Act (Virksomhedsordning) - according to this, it is possible to write off costs arising from interest on a loan in the tax return.

Entrepreneurs who pay all the required contributions and bookkeeping can benefit, as can persons working in Denmark, from health and pension benefits. A tax return is filed quarterly or semi-annually in Denmark, while advance income tax payments are due by 20 March and 20 November. In the realm of financial reporting classifications, companies falling within the B, C, and D classes are confronted with accounting requirements of a more intricate nature compared to sole proprietorships. The Danish business landscape offers four distinct avenues for company registration, namely: general partnership (Interessentskab), limited liability company (Anpartsselskab), limited partnership (Kommanditselskab), and joint-stock company (Aktieselskab). Each of these business forms entails a specific set of requirements and procedures for registration, involving the submission of certain documents. A comprehensive elucidation of these prerequisites is provided in the subsequent Division of Financial Reporting Obligations section.

Delving into the specifics of each business structure, a general partnership, or Interessentskab, involves a cooperative venture between individuals who share responsibilities, profits, and losses. The limited liability company, or Anpartsselskab, offers a structure where owners' liability is restricted to the amount invested, providing a safeguard against personal assets. On the other hand, a limited partnership, or Kommanditselskab, involves a partnership with both general and limited partners, with differing levels of liability. Lastly, a joint-stock company, or Aktieselskab, is characterized by its ownership through shares, allowing for a broader base of investors and a distinct corporate structure.

To initiate the registration process in any of these business forms, aspiring entrepreneurs must adhere to specific documentation requirements. The detailed breakdown of these prerequisites, encompassing the intricacies of financial reporting obligations, is expounded upon in the ensuing section. This ensures that prospective business entities are well-informed and equipped with the essential knowledge needed to navigate the regulatory landscape and establish their operations successfully. Within Denmark, every business activity is subject to recording, thanks to the so-called chart of accounts. It classifies individual accounts into classes, taking into account profits, losses and the total balance sheet. The most important groups of accounts are shown in the table below.

No.	Group descriptions
1.	Account group: net revenue from sales of goods	Account number: 1100 Account name: Sale of goods
2.	Account group: sales	Account number: 2100 Account name: sales
3.	Account group: other external accounts	Account number: 3100 Account name: Advertising costs
		Account number: 3200 Account name: local costs
		Account number: 3300 Account name: cash shortage
		Account number: 3400 Account name: costs of the exported vehicle
		Account number: 3900; Account name: other costs
4.	Account group: process costs	Account number: 4100 Account name: wages
		Account number: 4200 Account name: pension allowance
5.	Account group: depreciation	Account number: 5100 Account name: depreciation of means of transport
		Account number: 5200 Account name: Equipment depreciation
6.	Account group: interest	Account number: 6100 Account name: interest (income)
7.	Account group: interest	Account number: 7100 Account name: interest (costs)
8.	Account group: extraordinary items	Account number: 8100 Account name: extraordinary gains
		Account number: 8200 Account name: extraordinary losses
9.	Account Group: Accounting	Account number: 9000 Account name: corporate income tax
10.	Account group: Fixed assets	Account number: 112 Account name: tangible assets
		Account number: 11120 Account name: cars
		Account number: 11121 Name of the account: write-downs on cars
		Account number: 11130 Account name: furniture
		Account number: 11131 Account name: write-downs on furniture
11.	Account group: Current assets	Account number: 121 Account name: stocks
		Account number: 12110 Account name: composition
		122 Account name: receivables
		12210 Account name: Receivables from customers
		12220 Account name: accruals
		123 Account name: funds
		12310 Account name: checkout
		12320 Account name: bank account
		1230 Account name: savings account
12.	Account group: capitals	Account number: 121 Account name: share capital
		Account number: 134 Account name: reserve capital
		Account number: 135 Account name: financial result
13.	Account group: liabilities	Account number: 141 Account name: long-term liabilities
		Account number: 14110 Account name: mortgages
		Account number: 142 Account name: Current liabilities
		Account number: 14210 Account name: working capital loan
		Account number: 14220 Account name: receivables
		Account number: 14230 Account name: from pension supplement
		Account number: 14240 Account name: for labour market contributions
		Account number: 14250 Account name: for taxes
		Account number: 14250 Account name: tax settlements
		Account number: 14290 Account name: other liabilities
	Copies	Account number: 21000 Account name: profit and loss account
		Account number: 22000 Account name: balance

In Denmark, the auditing of companies, or so-called audit, is regulated in Denmark by the Financial Reporting Act. Checking the correctness of a company's accounts is carried out by danish statutory auditors who should have no connection with the company. The audit can vary in scope and, depending on this, the following types of audit are distinguished:

• financial audit - an overall assessment of the budget report to check that all the financial information provided by the company's authorised person is factually correct and that it meets all the requirements written in the Danish documents,
• compliance audit - an assessment of whether all systems and operations relating to finances comply with applicable legislation,
• management audit - assessing the degree of reasonableness in the financial management of a business activity,
• QA (quality assurance) - quality control of the financial statements maintained by Danish companies

The audit is not compulsory for companies belonging, according to the classification described above, to Classes A and B, unless they have reached a certain turnover per year. Moreover, these companies can benefit from a self-selected type of audit (financial audit, statement audit or accounting assistance), depending on which option is most beneficial for their company. In addition, companies in Class B can choose between a financial statement audit or an audit-light version of the audit covering reports from 2013 onwards.

Every entrepreneur should know that, in addition to the external audit, it is incumbent on every company to internally audit the company's finances. According to good audit practice, Danish entities performing such an audit should not be dependent on the manager of the company in question for the planning of its activities and their implementation.

Since 2011, Danish auditing standards have effectively aligned with the International Standards on Auditing (ISA) established by the International Auditing and Assurance Standards Board (IAASB) and translated by the FSR. Members of the FSR provide professional accounting assistance regarding the company's balance sheet analysis, auditing and tax checking. According to FSR reports, the translated standards maintain identical effective dates in Denmark as originally promulgated by IAASB.

The responsibilities of FSR (Financial Statements Council) include:
- Prescribing accounting and auditing standards.
- Establishing and enforcing ethical requirements.
- Collaborating with the Danish Business Authority (DBA) in the investigation and discipline of FSR members.
- Cooperating with the Danish Business Agency and the Danish Financial Supervisory Authority on the establishment of initial and continuing professional development requirements.

Under the existing legal framework in Denmark, danish auditors are subject to state-level regulation. The primary legislative instrument governing the auditing profession in Denmark is The Danish Consolidated Act on Approved Auditors and Audit Firms (commonly referred to as the Audit Act), specifically Consolidated Act No. 1287 dated November 20, 2018. Auditors in Denmark, i.e. national authorised public accountants (SPAs) acting as auditors and audit firms, are audited by the Audit Supervisory Authority (DSAA) every six years. Company accounting in Denmark includes an analysis of companies' expenses, income and financial balance sheets. The Danish balance sheet template shows asset resources ranked according to increasing liquidity and the sources of these resources including a split between equity and debt capital. A model for such a balance sheet is shown in the table below.

1.	Non-current assets	Intangible assets	Patents, concessions, trademarks held (from development projects)
			Patents, licences, trademarks held (acquired)
			Goodwill
			Development projects in progress
		Material values	Land and buildings
			Equipment and machinery owned
			Other
			Advances paid on fixed assets
		Financial assets	Shares in related companies
			Revenue from related companies
			Investment projects in associated companies
			Income from associated companies
			Other investment projects
			Other income
			Shares
			Managerial income
2.	Current assets	Stocks	Raw materials and supplies held
			Production processes under way
			Finished products
			Advances paid for certain goods
		Receivables	Trade-related receivables
			Production process contracts in progress
			Revenue from related companies
			Income from associated companies
			Other income
			Managerial income
			Settlements
		Investment projects	Investment projects in related companies
			Shares
			Other investment projects
		Cash	Liabilities
			Capital (initial capital, agio, reserve funds, profit/loss balance sheet)
			Reserves
			Commitments of short and long duration
			Settlement between accounting periods

You can find a lot of information about any company operating in Denmark on the website of the Danish Enterprise Authority (Erhvervsstyrelsen) regarding its registration, accounting and operations. The Danish Business Authority is also tasked with overseeing all developments and modifications within company law and accounting law in Denmark.

Information that can be found on the authority's website: Among the documents that an entrepreneur running a business in Denmark is bound to encounter are:

• the tax return form (Selvangivelse) issued by the Danish Tax Authority,
• the tax decision document (Arsopgorelse) sent out by the Tax Office every year after 2 July (with information about the surcharge or refund),
• a document issued at the end of the employment relationship containing the total earnings for the entire period of employment (Oplysningsseddel),
• a tax return document to be submitted within six months of the end of the tax year.

In Denmark, the issuance of a VAT invoice is essential for the eligibility to claim input tax credit. Businesses registered for VAT must furnish VAT invoices to their customers for all taxable supplies, as outlined by the VAT Act's Section 52(a). Failure to comply with this requirement may lead to fines.

It's important to note that VAT invoices are not obligatory for exempt supplies within Denmark or for exempt insurance and financial services provided within the EU.

A comprehensive VAT invoice should include the following details:
1. Invoice number (sequential)
2. Date of issue
3. Name and address of the supplier
4. Registration number of the supplier
5. Name and address of the customer
6. A detailed description of the goods or services provided
7. The applicable VAT rate and VAT base

Furthermore, the invoice is required to present the total value of Danish VAT, expressed in either Danish kroner or euros. While other amounts on the invoice can be denominated in any currency, it is crucial to specify when an exemption applies or when the customer is responsible for reporting the VAT. In such cases, the invoice must explicitly state whether the supply is VAT-exempt or subject to the reverse charge procedure.

Electronic and Simplified Invoicing in Denmark

Simplified Invoices

Denmark permits the use of simplified VAT invoices in certain scenarios. These instances include business-to-business (B2B) sales below 3,000 Danish kroner and sales by retailers predominantly or exclusively to consumers (B2C). In specific B2C sales situations, a till receipt might suffice. However, for services where the invoice amount equals or exceeds 5,000 Danish kroner, it is mandatory to issue a standard invoice.

A simplified invoice should contain the following information:
- unique sequential identifying number,
- date of issuance,
- supplier details, including name, physical address, and VAT registration number for businesses registered for VAT,
- description of the goods or services provided,
- total VAT charged or the percentage of the total amount representing VAT.

As per Article 66 of the VAT Order, electronic invoicing is generally not obligatory in Denmark. However, for business-to-government (B2G) transactions, it is mandatory, as specified in BEK no. 206 of March 11, 2011. Various options exist for sending electronic invoices to public entities, including utilizing the PEPPOL network, engaging a third-party invoicing provider, or using the Danish government's NemHandel platform.

For other recipients, electronic invoices can be transmitted through practical means without specific validation or reporting requirements. In Denmark, electronic invoicing is primarily voluntary, except for B2G transactions, where it is mandatory, and specific methods are in place for sending electronic invoices to public entities. Denmark is a country that imports and exports goods mainly with countries belonging to the European Union. Among the most frequently imported goods are, inter alia, machinery, processed products and products and chemicals, while among the exported goods are foodstuffs, animals and chemical products. The main institution dealing with the exchange of goods between Denmark and other countries is the Danish Export Council.

Customs duty is calculated in Denmark on the basis of the price of the goods on the invoice plus insurance and transport expenses, the so-called customs value of the product. Entrepreneurs should also be aware of the value added tax, which is 25 % and is included in the case of agricultural products, industrial products and services. The Danish Veterinary and Food Administration is responsible for issuing licences for importing and exporting food products. It is important to note that imported products, particularly food products, must be labelled with their ingredients translated into Danish and must also comply with Danish standards regarding preservative content.

When seeking permission to trade in cosmetics and household chemicals, the Department of Chemical Products of the Ministry of the Environment should be contacted, as this is the authority that deals with issuing permits in this area. Entrepreneurs should also bear in mind that the importation of chemicals that may be hazardous should be preceded by a check of the status of the substance on the national list of hazardous substances.

Another important mark with which certain products should be marked is the CE mark. This applies to toys, appliances, electrical products, construction products, freezers and refrigerators, diagnostic equipment, medical implants, gas appliances and boats and yachts, among others.

Any trader planning to transport goods with other countries should first familiarise themselves with the law that explains the rules of contracting - the Contact Law. Other documents relevant to this process are listed below:

1. United Nations Convention on Contracts for the Sale of Goods.
2. Agreement on industrial, scientific and technical cooperation - 11.1974.
3. Agreement on the development of economic cooperation - 05.1976.
4. Agreement on the prevention of double taxation - 04.1976, as amended in 1992.
5. Agreement on promotion and mutual protection of investments - 05.1990.
6. Agreement on mutual assistance in customs matters - 1992.
7. Agreement on cooperation in the field of energy - 1990.
8. Agreement on cooperation in the field of environmental protection - 1990.

Denmark, as a member of the European Union (EU), follows the EU VAT rules and operates within the EU single market economy. The EU issues VAT Directives that establish the principles of the VAT regime for member states, including Denmark. These Directives hold precedence over local legislation. Denmark implemented its VAT system, referred to as "moms," in 1967, and it is administered by SKAT, the Danish Customs and Tax Administration.

Foreign companies can register for VAT in Denmark without establishing a local entity, a practice known as non-resident VAT trading. There is no VAT threshold for foreign trader registration, and it is mandatory from the first day of conducting activities in Denmark. This obligation also extends to foreign businesses involved in intra-community acquisitions. In certain cases, non-EU companies may need to appoint a local fiscal representative.

The rules for permissible registration are strict, and common scenarios requiring Danish VAT registration include importing goods into the EU through Denmark, domestic buying and selling, warehousing goods in Denmark, selling goods from Denmark to other EU countries, acquiring goods from other EU countries into Denmark, and distance selling to private individuals in Denmark from another EU country (e.g., internet retailing). The registration process typically takes about three weeks from the date of application submission.

Detailed rules govern the recording and processing of Danish transactions, covering aspects such as Danish invoice requirements, foreign currency invoicing and reporting, correction of errors in previous returns, and record-keeping requirements.

Denmark has had a standard VAT rate of 25% since 1992, with no reduced rates in place. The only two rates are 25% and 0%, and there are also exempt supplies.

Companies with a Danish VAT number must submit periodic returns detailing taxable supplies and inputs. Filing frequency depends on annual revenue, with options for monthly, quarterly, or bi-yearly submissions. Deadlines vary accordingly. Electronic filing through the TastSelv Erhverv system (e-tax for businesses) is mandatory.

In addition to VAT returns, companies may need to provide additional statistical information. The Danish Intrastat system requires a monthly return listing all movements of goods between Denmark and other EU states, subject to annual thresholds. The EC Sales List includes information on VAT numbers of EU customers and sales values, filed monthly or quarterly.

Foreign companies not making taxable supplies in Denmark but incurring Danish VAT on local goods or services may reclaim Danish VAT. Any start-up entrepreneur with a company in Denmark should read the Employment Document Act before hiring employees. Every employee starting work in a Danish company should receive a document in which all the basic working conditions would be included. In addition, Danish employees are protected by so-called collective agreements - agreements between employers and employees through trade unions.

Employers should prepare the working conditions for employees in such a way that it is possible to comply with Danish labour law and the health and safety regulations published on the website of the Danish Labour Inspection Authority. Posting work in Denmark entails compliance with the guidelines of the European Union's Posting of Workers Directive of 16.12.1996 and the Danish Posting of Workers Act of 15.12.1999. The complexity of the Danish payroll system is well-known. Foreign companies engaging in hiring processes in Denmark may encounter difficulties in handling local payroll due to various taxation rules that must be taken into account when computing employee salaries. Aside from state and municipal taxes on employment income, there is also a general contribution to the labor market and an optional church tax that must be factored in.

It is crucial to pay special attention to available tax deductions for employees, as these do not apply uniformly to all the aforementioned tax obligations. Another distinctive feature of the Danish payroll system is its high level of digitization in comparison to other countries. Employers must, before initiating their payroll procedures, register for several online services.

Establishing a local legal entity is not a prerequisite for hiring employees and managing payroll in Denmark. Foreign companies can fulfill all payroll-related employer obligations without a permanent presence in Denmark. However, there are several registration processes that both resident and non-resident employers must complete before commencing payroll processing.

The initial step involves obtaining a commercial registration number, known as a CVR number, from the Danish Business Authority (DBA). This number, identifying the business, must be used in all interactions with local authorities. After acquiring a CVR number, companies need to register as employers for income tax through a dedicated online portal available only in Danish. The Danish Customs and Tax Administration (SKAT) serves as the local tax authority. Employers also need to register with the ATP (Arbejdsmarkedets Tillægspension), the mandatory pension fund covering all employees in Denmark.

Additional payroll-related requirements include establishing a mandatory industrial insurance scheme and obtaining a NemID, a special online signature/identification certificate necessary for accessing official online portals related to tax reporting and other functions. The NemID is also essential for accessing the digital mailbox (e-Boks), mandatory for communication with authorities, and for using the tax filing e-service.

While not legally obligatory, it is advisable to set up a local bank account to facilitate payments to authorities, particularly because a local bank account is a prerequisite for the Nets direct debit service widely used by Danish employers. Whether opting for a local or foreign account for payroll-related payments, employers must register one bank account as their official Nem Konto, designated for tax and social security payments.

The Danish tax system encompasses four distinct tax levies on employment income: state tax, municipal tax, labor market tax, and optional church tax. Social security contributions for both employees and employers are relatively low.

Tax considerations:
- State and municipal income tax: Individuals in Denmark are subject to state and municipal income taxes. Municipal taxes, varying between 22.8% and 26.3%, constitute a significant portion of the overall tax burden.
- Changes in tax rates: As of January 2022, the lower state tax rate is 12.10%, while the higher rate remains at 15%. The income threshold for the top rate is now DKK 552,500.
- Labor market contribution (AM-tax): A mandatory 8% labor market contribution is applied to employees, in addition to other payroll-related taxes.
- Church tax: Individuals affiliated with a religious institution may incur an additional church tax, ranging from 0.4% to 1.3%. When combined with state and municipal income taxes, the total employee tax burden can exceed 50%.
- Personal and employment allowances: There is a personal allowance of DKK 46,600, along with an employment allowance of 10.65% of the employee’s salary (up to DKK 41,600). Various deductions are available, including those for single parents, specific employment expenses, and pension contributions.

Tax residency:
- Residency criteria: Resident taxpayers are taxed on worldwide income, while non-residents are taxed only on income earned in Denmark. Residency is determined by factors such as permanent residence, more than 6 consecutive months in Denmark, or an extended stay for reasons other than vacation.
- Special tax regime: Highly qualified expatriates working in Denmark may benefit from a flat 32.84% income tax rate.

Tax withholding and reporting:
- A-tax (Income Tax Withholding): Employers withhold A-tax (income tax) from employee salaries, referred to as A-tax. Payments must be made to authorities by the 10th of the following month (for small and medium-sized businesses) or by the end of the same month (for large businesses). Monthly tax reports are filed using the SKAT e-filing system.
- Annual A-tax declaration: Employers are not required to file an annual A-tax withholding declaration. However, employees must submit an individual tax return by May 1 of the following year (extended deadline until July 1).

Social security contributions:
- Low contributions: Social security contributions in Denmark are relatively low compared to other European countries, primarily funded through regular tax revenue.
- Fixed amounts: Contributions are fixed amounts, not a percentage of the employee’s salary, and are invoiced quarterly through the e-Boks system.
- Employee and employer shares: The employee's share is DKK 1,135.80 per year, covering contributions to the mandatory ATP pension fund. The employer's share includes contributions to various funds, such as the ATP pension fund, maternity leave fund, state pension costs, vocational training fund, and a fund for work-related diseases. The total annual employer share is estimated to be between DKK 10,000 and DKK 12,000 but may reach up to DKK 15,000 depending on specific factors.

1. What are the guidelines for bookkeeping in Denmark?
   Danish accounting is subject to the European Union's 2002 regulation on the application of international accounting standards and as transposed into the Danish Financial Statements Act, according to which it is necessary to use the guidelines set out by IFRS. International Financial Reporting Standards (IFRS) encompass standards, interpretations, and the framework adopted by the International Accounting Standards Board (IASB). Being a member of the European Union (EU), Denmark is obligated to adhere to the accounting, auditing, and financial reporting standards outlined in EU regulations and accounting directives. These requirements are implemented through the transposition of EU regulations into national laws and regulations. Denmark has harmonized its legal framework with the EU acquis communitaire concerning accounting and auditing, ensuring full alignment with the broader European standards and regulations in these domains. The Danish Ministry of Finance, accountable for adopting public sector accounting standards, has not embraced the International Public Sector Accounting Standards (IPSAS) in Denmark. Furthermore, there is currently no specified timeline for the adoption of IPSAS in the country.
   
   
2. What is the term a-kasse?
   A-kasse is an unemployment insurance fund. Such insurance is not compulsory in order to receive benefits after unemployment, but one must then become a member of a-kasse.
   
   
3. How do I translate the statements Skat til udbetaling and Restskat til betaling?
   Skat til udbetaling is the wording on the tax decision from the office, meaning the amount of the tax refund, while Restskat til betaling means the amount of the SKAT surcharge.
   
   
4. What is NemKonto?
   NemKonto is an employee bank account into which SKAT tax refunds and work pay are transferred.
   
   
5. What is Feriepenge and who is entitled to it?
   Feriepenge is a holiday benefit to which all persons legally working in Denmark are entitled. A Danish worker is entitled to 2.08 days' holiday for each month worked, i.e. 5 weeks, but the requirement is that a minimum of 3 weeks of the 5 weeks' holiday must be taken during the holiday period, i.e. between 1 May and 30 September. Feriepenge is paid into a NemKonto.
   
   
6. What is Feriekonto?
   Feriekonto is a special fund into which employers must pay their employees' holiday contributions (12% of gross salary less 8% allocated for social purposes).
   
   
7. What is the waiting period for receiving a tax refund?
   You have to wait approximately 6 months to receive your tax refund from the Tax Office in Denmark.
   
   
8. What are Årsopgørelsen?
   Årsopgørelsen are tax decisions that can be found on the Danish Tax Administration's website.
   
   
9. What are the Danish tax allowances?
   
   • Allowance for commuting from accommodation and residence to work,
   • relief on accommodation,
   • relief on meals.
10. What is a pension? What is a folkepension?
    Pension is the Danish private pension accumulated in private pension funds, while folkepension is the Danish state pension to which all Danish citizens over 65 are entitled.
    
    
11. What is ATM?
    ATM is the Danish occupational scheme that is part of the second pension pillar and covers all o Danish citizens over the age of 16.
    
    
12. What is the health card - DK?
    The Danish health card, the so-called yellow card, is compulsory and must be set up by anyone planning to stay in Denmark for more than 3 months.
    
    
13. What is a Personfradrag?
    Personfradrag refers to a personal tax allowance that Danish residents, who have been employed in Denmark for a minimum of 12 months, are eligible to claim.