Digital Archiving of Documents in Denmark: Rules and Important Start Dates

With the introduction of new rules for digital archiving of documents in Denmark, it has become more crucial than ever for companies to ensure that their accounting material is correctly and legally stored. These rules, which are part of the updated bookkeeping law, have different start dates depending on the size of the company and the accounting period. Here is an overview of the most important rules and the relevant dates you should be aware of.

Legal Requirements for Storage

As stipulated in the bookkeeping law, Danish companies must retain their accounting material, including documents, for a minimum of 5 years from the end of the financial year to which the material relates. This applies regardless of whether the documents are stored physically or digitally. The digital accounting material must be readable throughout the retention period.

Start Dates for the Digital Document Archiving Requirements

The new digital document archiving requirements in Denmark take effect at different times, depending on the size of the company and the accounting period. These staggered dates are designed to give companies sufficient time to adapt their systems and processes to the new rules. Here is a detailed overview of the key start dates:

a) January 1, 2024: Large and Medium-sized Companies

For companies already subject to the bookkeeping law’s requirements for digital storage of accounting material, the new requirements will take effect on January 1, 2024. This primarily applies to larger companies, which typically have more complex accounting systems and a more extensive use of digital tools.

• Which companies does this apply to?
• Companies with more than 50 employees.
• Companies with a turnover exceeding DKK 89 million or a balance sheet total exceeding DKK 44 million.

These companies are expected to have already implemented some forms of digital solutions, so the timeframe for meeting the new requirements is relatively tight.

b) July 1, 2024: Medium-sized Companies with a Shifted Financial Year

For companies with a shifted financial year (i.e., a financial year starting at a time other than January 1), the digital document archiving requirements will take effect from the beginning of their next financial year starting between January 1 and June 30, 2024. This means that these companies must be ready to comply with the new requirements by July 1, 2024.

• Which companies does this apply to?
• Typically medium-sized companies with shifted financial years.
• Companies nearing the thresholds for larger companies but not yet subject to stricter requirements.

These companies have a bit more time to adapt to the new requirements, which may be necessary if they need more time to update their systems and processes.

c) January 1, 2025: Small Companies

For smaller companies that are not yet subject to the existing requirements for digital storage of accounting material, the new rules take effect from January 1, 2025. This gives the smallest companies more time to plan and implement the necessary changes.

• Which companies does this apply to?
• Companies with fewer than 50 employees.
• Companies with a turnover below DKK 89 million and a balance sheet total below DKK 44 million.

For these companies, the implementation of digital document archiving may be a more significant transition, and therefore the longer timeframe allows for a more gradual transition.

What Does This Mean for Companies?

The different start dates mean that companies need to be aware of when they need to have implemented the necessary changes to comply with the law. For the largest companies already working with digital solutions, the deadline is short, and they should already be working to ensure that their systems are ready to handle the new requirements.

Medium-sized companies with shifted financial years have a bit more time, but they should still begin preparing now. Small companies, which have the most time to implement the changes, should use this time for careful planning and possibly seek advice to ensure a smooth transition.

It is important to understand that although the deadlines are different, the requirements are the same for all companies. Digital document archiving must ensure that all accounting materials are correctly stored, easily accessible, and protected against changes and loss. Failure to comply with these requirements can lead to serious legal and tax consequences, regardless of the size of the company.

Requirements for Digital Document Archiving

When it comes to digital document archiving, there are several specific requirements that companies must meet:

• Format and Accessibility: All documents must be stored digitally in a format that ensures readability, printability, and the possibility of electronic transfer throughout the retention period. This includes formats such as PDF, JPEG, or similar, where the quality must be high enough for all essential information to be clear.
• System Documentation: If the company uses a digital system for archiving documents, documentation for the system must be available. This includes a description of the system's functionality, security, access control, and backup routines. The documentation must be available and presented during a potential inspection.
• Immutability: The documents must be stored in a way that ensures they cannot be altered without the change being recorded. This can be ensured either by using a tamper-proof format or by implementing an audit log that documents all changes.
• Accessibility and Security: The company must be able to make the documents available to tax authorities upon request. This means that the documents must be retrievable in their original form and in context with other relevant data. Additionally, security measures must be established to protect the documents from unauthorized access, loss, or destruction.
  
  

Backup and Security Copies

Regular backup of digital accounting material is required. The backup must be stored securely, preferably at multiple geographically separate locations, to minimize the risk of loss due to unforeseen events such as fire or natural disasters. This ensures that the documents can be restored if necessary.

Foreign Storage Locations

If a company wishes to store its digital documents outside Denmark, this must be approved by the Danish tax authorities (SKAT). It must be guaranteed that SKAT can access the documents at any time and that the storage complies with Danish regulations. This is especially relevant for companies using cloud services with servers located abroad.

Requirements for Digitizing Physical Documents

When physical documents are digitized (e.g., scanned), the company must ensure that the digital copies are accurate and complete reproductions of the originals. The digital copies must then be stored in accordance with the digital archiving requirements, while the physical documents can be destroyed if desired. However, it is crucial that digitized documents meet all requirements for immutability and security.

Responsibility and Sanctions

It is the company’s responsibility to ensure compliance with the rules for digital document archiving. Non-compliance can result in fines, and in serious cases, criminal liability may be imposed. Additionally, incomplete or inadequate document storage can result in the company’s accounts not being recognized as valid, which can have severe tax consequences.

Conclusion

Complying with the rules for digital document archiving is not only a legal requirement but also an important part of good business practice. With the new deadlines quickly approaching, it is crucial that companies ensure their accounting systems and processes are updated and compliant.

If your company needs advice or assistance in implementing a digital document archiving solution, we are ready to help you ensure that you comply with all requirements before the relevant deadlines. Proper storage of accounting material is not just a legal obligation—it is also necessary to protect your company against future risks.