New accounting law: Are you forced to upgrade?

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New law may force users of older ERP systems in Denmark to upgrade

In May 2022, the Danish Parliament passed a new law on digital bookkeeping that may force companies using old ERP systems to upgrade their existing solution or alternatively invest in a completely new solution. They have until 2025.

With the new bookkeeping act, Danish companies i are obliged to use a digital bookkeeping system. This means that companies in Denmark must ensure that their business records transactions and stores purchase and sales invoices using a digital accounting system.

Even for companies that already use a digital bookkeeping system, it is important to find out whether it meets the requirements of the new accounting law.

Does the new bookkeeping act affect my company?

With the new Bookkeeping Act, companies in Denmark are now obliged to use a digital bookkeeping system, which specifically means that it is now necessary to ensure that your company:

• Records transactions using a digital accounting system.
• Stores purchase and sales invoices within the framework of a digital accounting system.

The requirements in the new bookkeeping act for companies using large ERP systems come into force on 1 January 2025.

Standard systems approved by the Danish Business Authority (Erhvervsstyrelsen)

Your company has the option of choosing a standard system that has already been approved by the Danish Business Authority (Erhvervsstyrelsen), but you should be aware that this list does not include special systems such as the large ERP systems (including Dynamics 365 Finance and SAP).

Specially developed accounting systems

It is also permitted to use a specially developed bookkeeping system, but then you yourself are responsible for ensuring that the system meets the requirements of the new Bookkeeping Act.

However, it can be a problem if your company uses older ERP solutions such as Navision or Microsoft C5, as these systems most likely do not meet the requirements for the storage and bookkeeping of attachments, which must be kept for five years.

Upgrade to Business Central

If your company uses Navision or C5, it may be a good idea to upgrade to Business Central. By upgrading to Dynamics 365 Business Central, you also gain a wide range of benefits, including a modernized user interface, mobility, better collaboration across Microsoft's many business apps, advanced analysis tools and the possibility of automating a wide range of business processes.

Questions and answers about the new accounting law

If you have questions about the new bookkeeping act or the costs of upgrading or migrating to a new ERP system, you are very welcome to contact us.

I use a digital accounting system, do I need to do anything?

If you already use a digital bookkeeping system, you should check whether your system is registered with the Danish Business Authority (Erhvervsstyrelsen) as a standard bookkeeping system or whether it is a specially developed system.

If your system falls under the standard system category, you basically do not have to do anything to comply with the new rules.

If you use a specially developed bookkeeping system, you must either upgrade your solution or acquire a completely new system.

What if I do the accounting manually in Excel?

The rules in the new Danish Bookkeeping Act mean that it is no longer legal to do your bookkeeping manually.

If you are now doing your bookkeeping manually and are covered by the new rules, you must therefore acquire a digital bookkeeping system or alternatively use a bookkeeping company.

What if I use an accounting firm?

If you have entered into an agreement with a bookkeeping company, such as a bookkeeper or an accountant, to carry out the bookkeeping for you, there is no requirement for you to use a digital bookkeeping system yourself. Here, it is the bookkeeping company that is obliged to comply with the requirements for digital bookkeeping.

What is the penalty for not complying with the Bookkeeping Act?

If the Danish Business Authority (Erhvervsstyrelsen) finds that your company does not comply with the new rules in the Bookkeeping Act, it is initially the company's management that receives an order to submit a statement with documentation that the requirements are actually met.

If the company's management does not submit documentation that the requirements are met, the persons responsible for the bookkeeping may receive a fine.