DO YOU NEED ACCOUNTING?
NEED A QUOTE:
All rights reserved © 2024
If you're planning to start your own business in Denmark, it's a good idea to first think about your options for managing its accounting. You can handle it yourself, or you can use the services of qualified accountants who will take care of all the necessary issues - they will help you understand Danish accounting regulations, accounting, reporting and the chart of accounts in Denmark. In addition, they will point out your rights and obligations in connection with Danish company accounting.
In Denmark, accounting applies to all available forms of business, from sole proprietorships to a variety of companies. The level of difficulty, laws, taxation, required documents and deadlines vary greatly depending on the type of business. Accounting for each type of business has its own specific requirements.
If you are running a business in Denmark or planning to establish one, use our professional accounting services to help you understand and meet all legal requirements. Our team of specialists will ensure the accuracy of your accounting, help with tax issues, and advise on reporting and e-invoicing. With us, your company will operate in accordance with Danish regulations, and you will be able to focus on growing your business.
In Denmark, bookkeeping covers every individual and legal entity that owns its own business, and a lack of knowledge and failure to do so can result in serious financial penalties. The most important issues related to accounting in Denmark are:
- danish accounting rules,
- danish accounting chart of accounts,
- danish business registration,
- registration and required permits,
- accounting for sole proprietorships in Denmark,
- accounting for companies in Denmark,
- classification of reporting obligations,
- taxes, insurance, benefits,
- accounting laws in Denmark,
- deadlines, documentation, costs and rates for different legal forms,
- obligations of employers in Denmark,
- auditing in Danish companies,
- Nemkonto, Tastselv, Pension, CPR, A-kasse and DK health card systems,
- SKAT-related settlements and adjustments.
Knowledge of Danish accounting rules is essential to the smooth management of a company in Denmark. Focusing on registration requirements, taxes and reporting obligations will help you run your business in Denmark properly.
In the Danish accounting system, a chart of accounts is a specific layout that has been implemented in a given company to clearly maintain financial records. The structure of this plan reflects the layout of the classes, which is consistent with the balance sheet and income statement. With a detailed list of accounts, this plan ensures order in the ledger.
Here is an overview of the most important account groups in the Danish accounting plan, which correspond to the structure of the income statement:
I. Net revenue from sales of goods: account name: sales of goods, account number 1100.
II. Production costs: account name: sales, account number 2100.
III. Other external costs:
- account name: advertising cost, account number 3100,
- account name: cost of maintenance of premises resources, account number 3200,
- account name: cash shortage, account number 3300,
- account name: exported vehicle costs, account number 3400,
- account name: other costs, account number 3900.
IV. Employer costs:
- account name: wages, account number 4100,
- account name: pension allowance, account number 4200.
V. Depreciation:
- account name: depreciation of equipment, account number 5200,
- account name: depreciation of transportation equipment, account number 5100.
VI. Interest:
- account name: interest (income), account number 6100,
- account name: interest (expenses), account number 7100.
VII. Extraordinary items:
- account name: extraordinary gains, account number 8100,
- account name: extraordinary losses, account number 8200.
VIII. Taxes
- Account name: corporate income tax, account number 9000.
Here is an overview of the layout of account classes in relation to the balance sheet:
IX. Fixed assets:
- account name: tangible assets, account number 112,
- account name: cars, account number 11120,
- account name: depreciation allowances for cars, account number 11121,
- account name: furniture, account number 11130,
- account name: depreciation allowances for furniture, account number 11131.
X. Current assets:
- account name: inventory, account number 121,
- account name: warehouse, account number 12110,
- account name: accounts receivable, account number 122,
- account name: receivables from customers, account number 12210,
- account name: accruals, account number 12220,
- account name: cash, account number 123,
- account name: cash, account number 12310,
- account name: bank account, account number 12320,
- account name: savings account, account number 12330.
XI. Capitals:
- account name: share capital, account number 121,
- account name: reserve capital, account number 134,
- account name: financial result, account number 135.
XII. Liabilities:
- account name: long-term liabilities, account number 141,
- account name: mortgage loans, account number 14110,
- account name: current liabilities, account number 142,
- account name: working capital loan, account number 14210,
- account name: receivables, account number 14220,
- account name: pension supplement liabilities, account number 14230,
- account name: labor market contribution liabilities, account number 14240,
- account name: tax liabilities, account number 14250,
- account name: other liabilities, account number 14290.
XIII. Write-offs:
- account name: profit and loss account, account number 21000,
- account name: balance sheet, account number 22000.
In Denmark, according to the Danish Financial Reporting Act, sole proprietorships have been assigned to Class A. Accounting for this legal form is relatively straightforward and is mainly based on settlements with the Danish Tax Authority (SKAT, www.skat.dk). Enkeltmandsvirksomhed's accounting focuses on tax issues, and no 12-monthly reports, which include profit and loss statements, balance sheets, a description of accounting principles and a summary of management activities with additional information, are required.
Registration of a sole proprietorship in Denmark should be done at the Danish Erhvervsstyrelsen, using www.virk.dk. Those opting for this type of business must use a personal CPR registration number. The minimum cost of starting this type of business is estimated to be around DKK 10,000 (PLN 5,000), with no share capital required.
As part of running a Danish sole proprietorship, it is also necessary to prepare a Forretningsplan, or a detailed description of the planned company. Such a document should include the vision and idea for the business, as well as specify the exact scope of the entrepreneur's activities, responsibilities and financial capabilities.
In the case of Enkeltmandsvirksomhed, the owner is fully responsible for the company's obligations with his own assets. He must choose one of three possible taxation methods:
I. Taxation of profits as personal income - this is treated similarly to income earned by employed persons.
II. Taxation according to the Enterprise Act (Virksomhedsordning) - this allows credit interest expenses to be deducted from tax and allows profits to accumulate in the form of bank savings, which can be beneficial to the business owner.
III. Taxation under the Enterprise Capital Act (Kapitalafkastordning) - this allows part of the profits to be transferred to personal income and the rest to capital income.
The tax return, which includes income tax and VAT, must be submitted via the LetLøn system on the SKAT (Danish Tax Authority) website on a quarterly or semi-annual basis. For this type of business, tax is settled on one tax return, which means that income is taxed only once. A company does not have to be registered for VAT if its annual income does not exceed DKK 50,000, and the owner has the option to grant power of attorney to other persons to represent the business. Advance income tax payments are made on March 20 and November 20.
Sole proprietors in Denmark who pay taxes and contributions are entitled to pension and health benefits equal to those received by salaried employees.
Accounting for Danish Class B, C and D companies, such as a limited liability company (Anpartsselskab - ApS), limited partnership (Kommanditselskab - K/S), joint stock company (Aktieselskab - A/S) and general partnership (Interessentskab - I/S), is much more complicated. According to the Danish Financial Reporting Act, these types of companies must prepare financial statements, which include a balance sheet, a cash flow statement, a statement of changes in equity, a profit and loss account, a description of management activities and other supplementary information.
The Danish Accounting Standards Committee (DASC), established by the FSR, develops non-mandatory technical standards and guidelines for the preparation of financial statements (Regnskabsvejledninger) for non-exchange-related entities. Since 2004, the DASC has focused on analyzing and preparing draft comment letters from EFRAG and the IASB Board, discussion papers, comments on exposure drafts, and providing technical information on conducting information activities and current accounting issues. All changes in accounting law and also in company law are supervised by the Danish Enterprise Authority.
Established by the International Accounting Standards Board (IASB), the International Financial Reporting Standards (IFRS) are a set of principles, interpretations and frameworks. As principles-based standards, IFRS offer specific guidance for reporting in Denmark. They enable companies to adjust management according to the “comply or explain” principle. As a result, failure to follow the recommendations is not considered a violation of the rules, but rather a company's choice of an alternative approach.
Corporate income tax, known as CIT, is 22% for companies incorporated and operated in Denmark. However, if a Danish company's annual turnover exceeds DKK 20,000, the company becomes liable to pay VAT, the rate of which is 25%.
Companies incorporated in Denmark whose securities are listed on a regulated market must apply IFRS standards adopted by the European Union in their consolidated financial statements. Thus, compliance with these rules is mandatory for companies trading their securities on such markets.
Danish accounting focuses heavily on the preparation of financial statements, and the rules for this process are set forth in the Financial Reporting Act. This act divides all Danish companies into four classes (A, B, C and D) based on criteria such as legal form, amount of assets, annual net turnover, company size or number of employees.
Class A:
- For companies in Class A, Danish regulations do not require the preparation of financial statements, except for documents needed for tax purposes, which may be specified in the company's articles of association.
- This category includes all private companies in Denmark, both small and large.
- The assets of these companies do not exceed DKK 7 million and the annual net turnover does not exceed DKK 14 million.
- These companies have a maximum of 10 full-time employees.
Class B:
- Class B includes limited liability companies, all public and private limited partnerships, commercial foundations and other companies.
- These companies can have up to 50 full-time employees and have assets of up to DKK 44 million, while annual net turnover should not exceed DKK 89 million.
- On the other hand, for smaller companies in this class, with up to 10 employees, total assets are up to DKK 2.7 million, while net turnover should not exceed DKK 5.4 million.
- Class B companies have the option of using the over-plan guidelines that were developed by DASC in 2013 and IFRS.
- It is worth noting that certain recommendations on valuation, information presentation and data recognition are optional for companies in this class, while they are mandatory for Class C companies.
Class C:
- This class includes all medium and large enterprises, including commercial foundations, limited partnerships, public and private limited liability companies and other companies.
- These companies may have up to 250 full-time employees, an annual net turnover of up to DKK 313 million and assets of up to DKK 156 million.
- This class also includes companies that have more than 250 full-time employees, have a net turnover of more than 313 million kroner and exceed total assets of 156 million kroner.
- Class C companies are required to prepare detailed financial statements, which should include a profit and loss statement, a cash flow statement, an annual balance sheet, a statement of changes in equity, a summary of management's activities and additional required information.
Class D:
- Class D includes all state-owned joint stock companies that are required to prepare consolidated financial statements in accordance with IFRS rules. This obligation is time-barred after 4 or 6 years, and the deadline for compliance is May 1.
- This class also includes listed companies, which must prepare separate financial statements. The reports of such companies must include a statement of financial flows, income statement, annual balance sheet, statement of changes in equity, summary of management activities and other additional information.
If the rules for financial reporting are set forth in the company's articles of incorporation, then the report should include such elements as the Danish company's management statement, annual balance sheet, income statement, and additional information.
It may also be necessary to submit Intrastat declarations if the company engages in trade of goods with other EU member states. The Intrastat report covers both imports and exports and the obligation applies to companies exceeding the established trade thresholds. Ensuring timely compliance with this requirement is essential to avoid penalties and sanctions.
Corporate income tax, as its name suggests, is based on charging income earned by companies. Although it resembles the tax system applied to individuals, its rules apply only to companies operating in Denmark. Not all companies are required to pay corporate income tax - the obligation mainly applies to limited liability companies, such as joint stock companies (aktieselskaber) and limited liability companies (anpartsselskaber). This tax is only applied to those companies that take the form of kapitalselskaber.
In 2024, the company tax rate in Denmark is 22%, but this figure may change in future tax years. Entrepreneurs doing business in Denmark should constantly monitor possible changes in the tax rate, as it may depend on current tax regulations.
Expenses related to a company's operations, known as operating expenses, are expenditures incurred during the year to generate and maintain the company's revenue. In general, companies are entitled to deduct these expenses from their taxes, as long as they are directly related to their operations. For example, if a company wants the costs associated with a business phone to be considered deductible, it must be used exclusively for professional purposes. For this reason, employees usually have to sign a statement that confirms their knowledge of and compliance with the rules for using business equipment before receiving it. The operating expense tax credit is available to both self-employed and salaried employees.
Documentation confirming the relationship of the expense to the business is essential. When dealing with operating expenses such as salaries, office rent or maintenance of production equipment, documentation requirements are usually less stringent. On the other hand, for costs related to private consumption, such as the purchase of work clothes or the maintenance of an office in a private apartment, documentation must be more detailed. It is necessary to document exactly how such an expense affects the source of income earned.
Expenses may be tax-deductible as long as they are business-related. Examples of such expenses are:
- business travel expenses,
- advertising expenses,
- professional literature,
- computer and telecommunications equipment,
- fees for attending courses and conferences,
- costs related to the organization of receptions.
Expenses that are usually not tax-deductible unless they meet certain conditions include:
- gifts,
- work clothes,
- costs related to the organization of special events,
- health care expenses, unless they relate to addiction treatment.
Deductibility depends on the specific circumstances and nature of the business. The above list is for illustrative purposes only and is intended only to illustrate the different types of expenses that can potentially be deducted. Final decisions on this issue depend on individual cases.
Tax benefits can also be obtained for operating losses. Operating losses occur when the value of assets rapidly declines or decreases due to events beyond the employer's control, such as theft or fire.
When operating as a partnership (interessentskab), the owner is personally liable for all liabilities of the company. In practice, this means that profits generated by the business go directly to the owner's account and are taxed on personal income. In Denmark, the personal income tax rate is usually higher than the corporate tax rate, so the so-called “virksomhedsordningen” can be used. This arrangement makes it possible to separate the owner's personal finances from the company's finances, which consequently allows the company to pay only company tax.
It should be noted that although companies are subject to taxation on their income, this does not mean that their owners can cool off their tax liability by, for example, paying out the profits earned by the company in advance. In fact, when an owner decides to withdraw funds for himself, he is subject to taxation on an identical basis to the situation where labor income is taxed.
VAT is a value-added tax. If a company doing business in Denmark sells goods or services, or if its annual turnover exceeds DKK 50,000, it must register for VAT, file returns and pay this tax. Even if a business does not meet these conditions, voluntary registration for VAT is possible.
The person filing the return is responsible for the correct calculation of the VAT amount. Even if the business did not conduct any purchase or sale transactions during the accounting period, it is mandatory to report and pay the tax on time. In such situations, a so-called “null declaration” must be filed.
When a company does not file a VAT return in a specific accounting period, SKAT makes a provisional assessment, determining the amount of VAT based on estimates. Receipt of the so-called “preliminary assessment” requires later logging into the TastSelv Erhverv system to correct the provisional assessment and enter the appropriate VAT amount.
In order to avoid additional costs associated with late payments, which amount to 800 kroner in interest for each late period, it is advisable to pay on time. By using a Danish tax representation, you can ensure timely and accurate VAT reporting, helping you avoid costly errors and focus on growing your business.
Most entrepreneurs doing business in Denmark must pay VAT. However, there are some goods and services that are exempt from paying this tax. Companies that are not subject to VAT must instead pay turnover tax.
Any entrepreneur doing business in Denmark should be familiar with the following Danish documents:
I. The tax return form, known as Oplysningsskema (formerly selvangivelse), is issued by the Danish Tax Authority (SKAT). The document is then sent both to the address provided at registration (whether Danish or Polish) and to the taxpayer's email. The oplysningsskema is intended for self-employed individuals, among others, and must be completed by September 1 of the tax year. A årsopgørelse is then prepared based on the returned SKAT form.
II. The document, known as Årsopgørelsen, is issued by SKAT on March 15 and contains a preliminary tax decision indicating the amount to be refunded or surcharged. It is prepared on the basis of a completed oplysningsskema. If there is incorrect information in the årsopgørelse or the taxpayer is entitled to additional allowances, it is possible to correct the document electronically using TastSelv and send the corrected annual return back to the authorities by May 1. Note that the tax determined in the final årsopgørelsen must be paid to the official account by July 1. In situations where the tax amount exceeds DKK 21,798, it must be paid in three installments - in August, September and October.
III. Oplysningsseddel, on the other hand, is intended to summarize the income of an employee employed by a particular company. Every Danish employer is required to issue such a document to its employees upon official termination of their employment. It is worth remembering that after termination, employers in Denmark must keep employee records for five years.
All information on company registration, operations and accounting in Denmark can be found on the website of Erhvervsstyrelsen, the Danish Business Authority (www.erhvervsstyrelsen.dk).
The website https://www.virk.dk provides key information on Danish companies. It includes the following data:
- company name,
- contact information and business address,
- CVR registration number,
- details of owners, partners and management,
- type of business conducted,
- dates of establishment and liquidation of the company,
- accounting principles,
- number of employees employed,
- information on accounting, balance sheets, financial statements, and data on individuals and companies (including limited liability companies and joint stock companies),
- sectors and subsectors of activity,
- information on loans,
- related companies.
A person who plans to start a business in Denmark should familiarize himself with the Danish accounting laws, which regulate business records and the keeping of accounting records, before making a decision.
The Accounting Act was enacted in 1998, which sets out the rules for keeping accounting records and business records. A key element of Danish accounting is the chart of accounts, which includes both the income statement and balance sheet structure. The chart of accounts is divided into groups, the first of which includes sales revenue and six cost groups, while the balance sheet structure focuses on assets, capitals and liabilities.
The Financial Reporting Law of 2001, which was amended in 2015, regulates the preparation of financial statements. This document specifies the rules for two types of profit and loss - calculation and comparison. Income statement templates in Denmark do not include standard templates for net profit deductions. The rules apply to the various classes into which companies doing business in Denmark are divided:
- Class A includes Danish companies run by individuals. For these companies, accounting is mainly focused on tax settlements, and there is no obligation to prepare financial statements.
- Class B includes private limited liability companies, limited partnerships and public Danish companies with total assets not exceeding DKK 36 million and no more than 50 employees.
- Class C includes all private limited liability companies, limited partnerships and public Danish companies with total assets of DKK 36 million or more and more than 50 employees.
- Class D includes all Danish joint stock companies. The most complex accounting applies to these companies, as it requires the creation of detailed balance sheets, profit and loss statements, and management reports. In addition, it is necessary to prepare statements of changes in equity and all supplementary information and analysis of financial flows.
Other laws are also useful in Danish accounting, such as:
- Law of 2009 concerning public and private limited liability companies,
- The 2008 law regulating approved auditors and audit firms,
- The Financial Activities Act of 2011,
- Act of 2012 relating to securities trading.
The Danish parliament was tasked with delegating oversight of Danish financial reporting, auditing and accounting standards to two key government institutions:
I. DFSA, known as the Danish Financial Supervisory Authority, which oversees the financial market.
II. The DBA, or Danish Business Authority (formerly the Danish Trade and Companies Agency), which operates under the Ministry of Economic Affairs and Development. The DBA is responsible for supervising the financial reporting of non-financial business entities.
Despite the lack of a legal mandate, the DASC (Danish Accounting Standards Committee), part of the FSR (Danish Auditors Committee), has played an important role in setting accounting standards in Denmark since 2007. The committee sets guidelines for Class B and C companies, ensuring a high level of accounting.
Financial reporting requirements for Danish companies are determined by European Union regulations and directives, which are then implemented into Danish law. For example, the EU Accounting Directive of 2015 has been incorporated into the Danish Financial Reporting Act.
Danish accounting includes asset management, balance sheets, expenses and accounts. The balance sheet formula used in Denmark shows assets arranged in ascending order of liquidity, starting with the least liquid (e.g., T&E) to the most liquid, such as cash. Liabilities, on the other hand, are classified into debt and equity.
Here is the balance sheet formula used for companies in Denmark:
I. Fixed Assets:
1. Intangible assets:
- goodwill,
- development projects in progress, and advances for intangible assets (IPE),
- acquired concessions, patents, licenses, trademarks and similar rights,
- completed development projects, including trademarks, concessions, patents and similar rights obtained from development projects.
2. Property, plant and equipment:
- plant and machinery,
- land and buildings,
- property, plant and equipment in progress and advances for fixed assets;
- other (e.g., equipment, furnishings);
3. Financial assets:
- shares,
- stocks or shares in affiliated companies,
- Investments in affiliated companies,
- other investments,
- receivables from owners and management,
- receivables from affiliates,
- receivables from affiliates,
- other receivables.
II. Current assets
1. Inventories:
- advances for goods,
- raw materials and consumables,
- work in progress,
- finished goods and merchandise;
2. Receivables
- settlements,
- contracts for work in progress,
- receivables from owners and management,
- trade receivables,
- receivables from affiliates,
- receivables from affiliates,
- other receivables;
3. Investments
- equities,
- Investments in affiliated companies,
- other investments;
4. Cash
- liabilities,
- accruals,
- capitals (contributed capital, profit/loss, revaluation reserve, agio, other reserves),
- short- and long-term liabilities (including loans, income tax, advances received from customers, mortgage debt, other liabilities related to bond issuance, profit sharing on debt instruments, trade payables, payables to affiliates, payables to associates, other liabilities)
- provisions (provision for income taxes, provision for pensions and similar obligations, other provisions).
E-invoicing, also known as electronic invoicing, is not just the transmission of PDF files via email, but a sophisticated process based on automation. Its goal is to efficiently transfer and process financial documents between customers and suppliers, using a structured electronic format. This approach makes the exchange of business information much simpler and more efficient.
Having an EAN number, which is the electronic identification of a public institution's customer, is necessary for the effective transmission of an e-invoice. It should also be taken into account that some institutions can receive invoices using their CVR identification number. E-invoices can be received by any private company, but this requires the right identifier, such as a registration number (SE) or tax identification number (CVR). Companies that operate in different markets or have multiple branches can use the option to purchase EAN numbers. If you need to obtain CVR or EAN numbers, it is recommended that you contact the relevant institutions that can provide support and the necessary information for e-invoicing.
Public institutions only accept invoices in electronic form, which means that when issuing invoices to entities such as medical institutions, educational institutions or government offices, it is necessary to use the appropriate document format. Failure to do so may result in the recipient rejecting the invoice. In the case of business relationships with private companies, you can choose between traditional and electronic invoices. E-invoicing is also used as a promotional tool by suppliers offering products with green labels. This makes it possible to increase competitiveness in the market and build a positive brand image. By including appropriate eco-labels in e-invoices, suppliers have the opportunity to emphasize their commitment to environmental protection. In this way, they can also increase customer awareness of the green features of their offerings.
E-invoicing technology brings a number of benefits to private companies, which significantly affect the efficiency and liquidity of financial operations.
- With e-invoicing, companies gain greater security in the invoicing process, as the risk of lost or misdelivered documents is significantly reduced. This ensures that invoices reach the right recipients directly, minimizing potential risks of fraud or abuse.
- The use of e-invoices allows for faster delivery, processing and settlement of invoices, making the entire process more automated. This reduces the time required for manual operations, which in turn allows for much more efficient management of company funds.
- By automating data entry, the quality of information is improved, and the risk of errors, such as data entry mistakes or lost invoices, is significantly reduced. As a result, accounting processes become more reliable, and the need to correct errors is reduced.
Entrepreneurs in Denmark who plan to hire employees should first familiarize themselves with the Employment Document Act (Ansættelsesbevisloven). According to this law, employees hired by a company in Denmark are entitled to a document that contains all the key information about working conditions.
Business owners in Denmark who hire employees are required to:
- provide appropriate working conditions and fair wages,
- provide employees with the necessary personal protective equipment,
- insure employees against accidents and occupational diseases,
- ensure compliance with safety rules in the performance of work,
- avoid discrimination in the workplace,
- instruct employees on the rules of occupational safety and health,
- organize at least annual health and safety training,
- cooperate with the Danish OSH system on an ongoing basis,
- take measures to prevent injuries during work.
Employers in Denmark are required to comply with labor laws and health and safety standards, which can be found on the Danish Labor Inspection Authority (UIP) website. Often Danish employees are protected by so-called collective bargaining agreements. Such agreements, concerning working conditions, are concluded between employers and employees in cooperation with trade unions or labor organizations.
In order for employers from the European Union to post their employees to work in Denmark, they must comply with the rules set forth in the following documents:
- Before going to work in Denmark, Polish workers posted to Denmark should receive a form A-1. This document, prepared by the Social Insurance Institution (ZUS), confirms the payment of social security contributions and refers to the regulations in force in Poland regarding this insurance.
- EU Directive 96/71 of December 16, 1996 regulates the posting of workers to work abroad. This includes laws such as the Law Prohibiting Discrimination in the Labor Market, the Labor Environment Law, the Law on Equal Pay, the Law on Legal Relations, and the Law on Equal Treatment of Women and Men in Employment and Parental Leave.
- Act No. 993 of December 15, 1999, known as the Act Concerning Posting of Workers, regulates the posting of workers in Denmark.
It is the employer's responsibility to create an employment contract that covers all relevant aspects of employment. There should be 15 key points in the contract, which must be described in detail. Precise inclusion of these is essential to ensure clarity and certainty of employment rules for both parties - employer and employee.
The employment contract should include the following information:
1. The name and address of both the employer and the employee.
2. The employee's job description or job category, possibly title, rank or responsibilities.
3. The date of commencement of employment.
4. The expected duration of the contract, if it is not an indefinite employment.
5. The location of the workplace and, if there is no permanent place of work, the location of the main place of performance of duties, along with information on possible flexibility of the workplace.
6. Terms and duration of any probationary period.
7. Termination period for both parties.
8. The duration of paid vacation.
9. Details of daily or weekly working hours, as well as overtime rules and their compensation.
10. The amount of remuneration.
11. Key information on flexibility of work schedule and related consequences.
12. Information on social security contributions.
13. Indication of applicable collective contracts or agreements governing labor relations.
14. The right to training and knowledge acquisition.
When an employment contract is concluded, the employment relationship becomes effective, even if the contract has not yet been formally documented in writing. However, it is worth remembering that the terms of employment can be established both verbally and in writing when signing a contract with a new employee, which also applies to other types of contracts. Nevertheless, employees are usually entitled to receive written documentation of the terms and conditions of employment. This applies to all employees for whom the agreed or actual working hours average more than three hours per week for a period of four weeks in a row, or if a guaranteed number of hours of paid work is not specified in advance.
It is important that the employee receive in writing the information on points 1 through 6 and 9 through 11 within a maximum of seven calendar days of the start of work. In contrast, documents relating to points 7 through 8 and 12 through 14 must be provided in writing no later than one month from the date of employment. Ensuring that the employee has access to full information about working conditions and his or her rights after the end of the established probationary period is crucial.
Current regulations on certificates of employment impose several key requirements on any employment. Among them are:
- Irregular working hours, which may require the employee to be flexible in terms of availability and working hours.
- Determining the length of any probationary period to assess the employee's skills and fit for the position during the initial stages of employment.
- The employee's rights after the probationary period, including rights to full-time employment and employee benefits.
- Flexible on-call employment, which means that the employee will be available to work at certain times according to the employer's needs.
- The ability to work for another employer at the same time, which may affect the employee's responsibilities and availability.
- The right to education, which includes the opportunity to participate in training and professional development, in accordance with domestic Danish law, applicable collective agreements and EU laws.
Regulations on specific conditions can be found in §§ 6-11 of the Act. Details of specific conditions are included in these regulations.
An employer's compliance with all legal regulations regarding dismissal is an obligation that goes beyond formal requirements, becoming an ethical and social issue as well. Before planning to terminate an employee, it is crucial to have all information regarding the basis of employment. This may include various legal regulations, such as the individual employment contract provisions of the White-collar Workers Act or provisions of collective bargaining agreements.
It is also important to consider the employee's obligation to provide adequate notice, which may be based on legislation or industry standards. If the employee serves as an officer, the applicable laws grant a certain period of notice, and the decision to terminate must be justified in accordance with requirements that are considered appropriate and reasonable. The Law on the Status of Officers precisely defines the length of this period, which should not be longer than 6 months. Compliance with these regulations is crucial both from the perspective of the employee's rights and from the point of view of compliance with legal and social norms in the business.
The applicable notice periods vary depending on the length of employment and when the notice is given. Here are the specific rules:
- If the trial contract lasted 3 months, the notice period is at least 14 days.
- If the employment lasted from 3 to 6 months, the notice period is 1 month.
- For employees with employment from 6 months to 3 years, a 3-month notice period applies.
- Employees with a length of employment of 3 to 6 years should observe a 4-month notice period.
- For those working from 6 to 9 years, the notice period is 5 months.
- For employment of more than 9 years, the notice period is 6 months.
It is also worth considering potential special regulations for protection against dismissal that may apply to union representatives. Such provisions often arise from collective bargaining agreements. In addition, health and safety representatives may be covered by separate regulations governing health and safety-related protections.
During the hiring and potential firing process, it is crucial to adhere to the principle of equality and non-discrimination. All forms of discrimination, both direct and indirect, are unacceptable and can lead to serious legal consequences for the employer. Equality and anti-discrimination laws impose an obligation to treat employees fairly, regardless of their race, gender, age, sexual orientation, religion, ethnicity, disability or political beliefs.
Denmark primarily imports equipment, machinery, chemicals and chemical products and processed products. Exports, on the other hand, are led by foodstuffs, chemicals and chemical products and live animals. Denmark's most important trading partners are European Union countries, particularly Germany, Sweden, the United Kingdom and the Netherlands, while Poland ranks 13th in terms of trade cooperation. Responsibility for coordinating trade between Denmark and other countries rests with the Danish Board of Trade (Eksportrådet), and in 1995 the Danish-Polish Chamber of Commerce was established through the cooperation of Polish and Danish investors.
On December 16, 1991, the Europe Agreement was signed, which regulates trade between Poland and the European Union. As a result of this agreement, a free trade zone for industrial goods was established, which has been in effect since 1999. As a result, preferential duty rates, usually 0%, were introduced for all members of the European Union, with the exception of foodstuffs, agricultural goods and processed agricultural products. Customs duty is calculated on the basis of the customs value of the goods, i.e. the invoice price plus transportation and insurance costs. In order to take advantage of the preferential rates, it is necessary to present customs officials in Denmark with a EUR1 document, which is a certificate of origin for the products.
A law known as the Contact Law regulates the conclusion of contracts. The UN Convention on the International Sale of Goods also applies in Poland and Denmark. Key contracts include:
- May 1976 agreement, which deals with the development of economic cooperation.
- An agreement on environmental cooperation, signed in 1990.
- An agreement from the same year, concerning cooperation in the field of energy.
- A 1995 agreement between the former Ministry of Spatial Planning and Construction of the Republic of Poland and the Ministry of Environment and Energy of the Kingdom of Denmark, concerning support for the energy and environmental sector.
- Agreement of June 18, 1999, between the Ministry of Economy of the Republic of Poland and the Ministry of Trade and Industry of the Kingdom of Denmark to develop the private sector in Poland, which extends the 1994 Memorandum until the end of 2001.
- Agreement on Technical Assistance and Cooperation, signed on June 25, 1999, between the Ministry of Agriculture and Food of the Republic of Poland and the Ministry of Food, Agriculture and Fisheries of the Kingdom of Denmark.
The Danish Veterinary and Food Inspectorate (Fødevarestyrelsen) is responsible for issuing licenses and permits for companies planning to import food. All food items must be labeled with a description of the composition in Danish and meet standards for the use of preservatives. In addition, packaging for products that may pose a risk to health and life, such as chemicals or medicines, must contain appropriate warnings.
Entrepreneurs planning to introduce cosmetics, cleaning products and detergents into the Danish market are supervised by the Ministry of the Environment, specifically the Department of Chemical Products. Each year on February 1, the department requires a report on the activities of such companies to be sent. Before chemicals can enter the Danish market, it is necessary to assign them to the appropriate category, whether for private or commercial use. Businesses operating in Denmark intending to import chemicals or products with hazardous chemicals should first make sure that specific substances are on the EINECS list of hazardous substances. The Ministry of the Environment must also be informed of any chemical that is not on the list.
The 25% value-added tax (VAT), known as MOMS, covers almost all services, as well as industrial and agricultural products.
Excise taxes of varying amounts apply to a variety of goods, including coffee, tea, chocolate products, ice cream, beer, wine, alcoholic beverages, disposable packaging, tobacco products, automobiles, fuel, light bulbs and videotapes.
The list below shows the industrial products that must be CE marked in accordance with the New Approach Directives:
- building Products,
- toys,
- machinery,
- personal protective equipment,
- cranes,
- gas appliances,
- recreational yachts and boats,
- diagnostic equipment (in vitro),
- simple pressure vessels,
- low-voltage electrical products,
- active medical implants,
- rope systems for transporting people,
- electromagnetic compatibility,
- explosives (civilian use),
- energy efficiency of refrigerators and freezers,
- terminal telecommunications equipment,
- energy efficiency of water boilers,
- equipment used in potential explosive atmospheres,
- non-automatic weighing devices.
Information regarding the audit of financial statements prepared by Danish companies is included in the Danish Financial Reporting Act. In Denmark, the audit of these reports is carried out by registered or authorized public auditors, who must be both external and independent.
Here are the different types of audits that can be distinguished:
I. QA, or Danish quality control, includes auditing financial statements, among other things.
II. The management audit, also known as the efficiency audit, assesses how effectively and economically Danish companies manage their finances.
III. The compliance audit focuses on verifying that companies' financial systems and operations comply with applicable laws and regulations.
IV. A financial audit, also known as a financial review, involves a comprehensive examination of financial statements by a certified public accountant. The purpose of such an audit is to determine whether the financial and asset information provided by the business owner is true and whether the financial statements comply with accounting rules, both Danish and international.
Here is the key information about the audit of Danish companies:
- In 2011, a merger of three Danish organizations: FSR (Danish Statutory Auditors), FRR (Danish Institute of Certified Public Accountants) and REVIFORA (association of young accountants and trainees), led to the formation of FSR, the Danish professional accounting organization. FSR deals with accounting auditing, auditing of financial statements, accounting and taxation in Danish companies.
- According to the International Standards on Auditing (ISA), which are applied by the Danish Financial Supervisory Authority (FSB), financial auditing in Denmark must meet certain standards.
- The Auditor General's Act defines good auditing practices, noting that the internal audit department should not depend on the head of the entity to plan, execute and organize its activities, and that internal auditors must have access to all necessary information.
- The Ministry of Finance in Denmark has the authority to determine which subject areas within companies will be subject to detailed scrutiny.
- In the process of planning and modifying Danish companies' accounting systems, internal audit should be an integral part of the company's strategy.
The audit of Danish auditors, including state authorized public accountants (SPA, or State Authorized Public Accountant) and auditing firms, takes place every six years by the DSAA, the Audit Supervision Authority, which was established by the DBA.
Mandatory auditing for Danish Class A and B companies depends on the annual level of turnover they have achieved. These companies have the option to choose the type of audit from among the available attestation services, such as accounting assistance, auditing of financial statements or auditing, and can agree with the auditors on which option will be most beneficial to them.
Danish Class B companies can choose from two options:
1. Full audit of financial statements.
2. Audit-light - a modified version of the audit that covers financial statements and was introduced as of January 1, 2013.
1. What are the applicable accounting standards in Denmark and what are the exceptions to the application of the EU rules in this regard?
In Denmark, accounting rules are determined by EU Regulation 1606/2002 on International Accounting Standards (IAS), which since 2005 has required the application of IFRS standards to the consolidated financial statements of European companies listed on regulated securities markets. In addition, the regulation allows European Union member states to require the application of IFRS in separate financial statements and reports of companies whose securities are not traded on such markets. Accordingly, within Denmark, IFRS standards can optionally be applied to both consolidated and separate financial statements of Danish companies that do not operate on a regulated market. It is worth noting that the Kingdom of Denmark also includes two autonomous territories, the Faroe Islands and Greenland, where EU regulations do not apply.
2. Is it possible to settle my tax return in Denmark electronically?
Yes, it is possible to settle online in Denmark using a special 8-digit code called TastSelv. This code can be ordered through www.skat.dk and can be found on documents such as Årsopgørelsen (annual settlement) or Forskudsopgørelsen (tax card).
3. What is a NemKonto?
NemKonto is a bank account into which both SKAT tax refunds and an employee's salary go.
4. What is a-kasse?
A-kasse is an insurance fund for unemployment situations. Although it is not mandatory to join this insurance, it is necessary to be a member of a-kasse in order to receive benefits after job loss.
5. What is Feriepenge and who is entitled to it?
Feriepenge is a vacation benefit that all persons legally employed in Denmark are entitled to. This benefit is paid to NemKonto within 3 months for the previous fiscal year, which runs from September 1 to August 31 of the following calendar year. The Feriepenge cannot be used until the following vacation year, which runs from May 1 to April 30. Employees earn 2.08 days of vacation for each month worked, which is equivalent to 25 days (5 weeks) per year. It is also possible to apply for Feriepenge up to 6 months after the end of work in Denmark, provided that you check out of the Folkeregister (municipal office) before leaving the country.
6. What is Feriekonto?
Feriekonto is a special fund into which Danish employers are required to pay vacation contributions for their employees. 12% is deducted from employees' gross wages, with 8% of this amount going to social welfare.
7. What is Personfradrag?
Personfradrag is a tax credit granted individually to Danish residents who have worked in Denmark for 12 months. This relief is legally available to those who meet this condition.
8. What tax breaks are applicable in Denmark?
In Denmark, you can take advantage of various tax breaks, such as the commuting allowance between your place of residence and work, the allowance for housing costs and the allowance for food expenses.
9. What is the Sundhedskortet health card?
Sundhedskortet, also known as a yellow card, is a document that must be obtained by anyone planning to stay in Denmark for an extended period of more than 3 months. The health card is issued along with a CPR number and provides access to free medical care, except for dental services.
10. What is Årsopgørelsen?
Årsopgørelsen are tax documents available on the Danish Tax Authority's website. These are tax decisions that can be found on this platform.
11. How long does it take to wait for a tax refund in Denmark?
The wait for a tax refund from the Danish Tax Authority is usually about 6 months.
12. What is Skat til udbetaling?
Skat til udbetaling is the term that appears on the tax decision issued by the authority, which indicates the amount of tax refund.
13. What is Restskat til betaling?
The term Restskat til betaling appears on the tax decision issued by the authority and indicates the amount that must be paid in addition to the SKAT.
14. What is folkepension?
Folkepension is the state pension in Denmark, which every citizen is entitled to upon reaching the age of 65.
15. What is a pension?
Pension is a private pension in Denmark, which is accumulated in pension funds such as PFA Pension, Danica Pension, Industriens Pension or Pensiondanmark.
16. What is the ATP?
The ATP is a pension scheme in Denmark that is part of the second pension pillar, which covers all citizens from the age of 16. The programs are part of occupational pension security schemes in Denmark.