In Denmark, e-invoicing has been compulsory for B2G transactions since 2005, and will soon apply to B2B transactions. The new Bookkeeping law requires businesses to exchange and archive invoices electronically. The implementation timeline is January 2024 for some companies and January 2026 for others.
Countries across Europe and the world are rolling out mandatory electronic invoicing to reap benefits, which include time savings, cost reduction, better invoice tracking, etc.
With the new Danish Bookkeeping Act, Denmark is moving towards country-wide mandatory electronic invoicing.
E-invoicing regulation provides standards for seamless cross-border transactions and the exchange of payment documents. That is, whatever the e-invoicing standard in your country, you can send compliant electronic invoices to business clients in Denmark.
However, the implementation of the e-invoicing regulation affects businesses differently. How so? This “Denmark e-invoicing guide” will answer this question.
Specifically, the guide will cover the following:
- What are the current e-invoicing rules in Denmark
- What is NemHandel?
- How does the NemHandel network work?
- How to send compliant e-invoices in Denmark
- Characteristics of the electronic invoice in Denmark
- What should businesses do to comply with e-invoice regulations in Denmark
What are the current e-invoicing rules in Denmark?
Denmark is not new to electronic invoicing. Since 2005, businesses having Danish government agencies as clients have had to issue and receive electronic invoices. This is because e-invoicing is mandatory for B2G transactions in Denmark.
The government has seen that electronic invoicing makes it possible to exchange business documents through the internet with high security and reliability. Having seen the benefits of e-invoicing in the public space, Denmark is moving to mandate electronic invoices country-wide.
The Danish parliament passed a new Bookkeeping Act on May 19, 2022. Among other things, this law requires that companies book digitally and prepare a description of their bookkeeping procedure.
The new law’s requirements for digital bookkeeping systems mean businesses must exchange and archive invoices electronically.
The bookkeeping obligation covers all commercial enterprises in Denmark, regardless of ownership or liability. Specifically, the requirement of the mandatory electronic invoicing of the new Bookkeeping Act applies to:
- All companies obliged to keep records and submit an annual report to the Danish Business Authority (ERST).
- All companies
- Associations that have commercial operations
- Organizations that are liable to pay (or pay) taxes to Denmark
- Companies that receive public subsidies
- Other companies and associations not obliged to submit an annual report to ERST, but have a turnover of DKK 300,000 or more (about EUR 40,300) during two consecutive years
The new Bookkeeping Act and its requirement for digital bookkeeping systems (which includes electronic invoicing) does not apply to associations that exclusively have a social, cultural, or humanitarian purpose and do not earn money for this through business operations.
The implementation timeline of the new Bookkeeping law depends on company turnover (and reporting obligation) as follows:
- January 1, 2024. All companies obliged to submit annual reports to ERST (class B, C, D) must be compliant with e-invoicing by January 1, 2024. Those using in-house developed bookkeeping software have until July 1, 2024.
- January 1, 2026. Companies not obliged to submit annual reports to the Danish Business Authority but have a turnover of over DKK 300,000 in two consecutive years (class A) must be compliant with e-invoicing by January 1, 2026. However, those using in-house developed bookkeeping software have until July 1, 2026.
What is NemHandel?
NemHandel is the Danish e-invoicing infrastructure. The Danish government mandates the platform for exchanging electronic invoices in B2G transactions.
NemHandel was developed by the National IT and Telecom Agency as part of a Danish government globalization initiative in 2005. It is based on open standards, including the Universal Business Language (UBL).
NemHandel enables companies to submit electronic invoices securely over the internet.
How does the NemHandel network work?
To send and receive digital business documents through NemHandel, you must be registered on the platform and connect your account system to an access point.
The NemHandel network is based on the same architectural principles as the PEPPOL network. This means NemHandel works according to the four-corner telecommunications network.
The four parties of the system are:
- The sender
- The sender’s access point
- The recipient’s access point
- The recipient
When you send e-invoices, it first goes to your access point provider. Your access point ensures that the data you feed into the NemHandel platform complies with the mandatory standards. Then it is delivered to your recipient via their access point provider.
Currently, there is a Danish PEPPOL connection to NemHandel. This gives Danish economic operators using the NemHandel network access to PEPPOL for doing business across Europe.
How to send compliant electronic invoices in Denmark?
When sending electronic invoices in Denmark, ensure the receiver is registered in the NemHandelRegistry (NHR). This is because you’ll need an e-invoice recipient number (GLN/EAN), and an entity has to be registered in the NHR to have the number.
Then proceed to submit your e-invoice. Economic operators have three tools for submitting e-invoices:
- Fully integrated e-invoice-enabled Enterprise Resource Planning (ERP) solutions
- ERP solutions in combination with an open-source software provided by the Danish Business Authority
- The self-service web-based invoicing portal
Importantly, you need to find an access point provider. This is your connection to the e-invoicing infrastructure.
The access point provider will ensure that the electronic documents you are sending comply with all relevant standards and then sends them to your recipient through their access point provider.
Characteristics of the electronic invoice in Denmark
The Danish government mandates electronic invoicing for transactions between the public sector and their suppliers, using the NemHandel network. The national network gives users access to the PEPPOL network for seamless cross-border electronic trade.
The new Accounting Act requires companies to use a digital bookkeeping system and make their bookings electronically. It lays the foundation for future mandatory B2B electronic invoicing.
There are no explicit requirements for e-invoicing in B2B transactions. So, the buyer’s consent is required before issuing an electronic invoice in these situations.
The NemHandel network supports the PEPPOL BIS and OIOUBL e-invoice formats.
The OIOUBL (Offentlig Information Online - Universal Business Language) is a structured XML file based on the UBL standard version 2.0. It is one of the standards used in Denmark to exchange documents with the public and private sectors, meaning it coexists with the PEPPOL standard.
Denmark does not require e-signatures on electronic invoices. Also, e-invoices must be archived for 5 or 10 years, depending on the property (5 years for moveable property and 10 years for immovable property).
Summarily, the characteristics of the electronic invoice in Denmark are as follows:
What should businesses do to comply with e-invoice regulations in Denmark?
To comply with the e-invoice regulations in Denmark, you must understand the applicable standard, ensure your system supports the standard, and partner with a reliable access point provider.
The first step to complying with the e-invoice regulation in Demark is to understand the standards. This calls for understanding the e-invoicing platform and the implementation timeline (to know when you must be compliant).
The second step is adapting your system to the standard. That is, create an Enterprise Resource Planning (ERP) system that can support the e-invoicing standard.
Lastly, you need to partner with an access point provider to connect you to the e-invoicing network.
Takeaway - Partner with Storecove to be fully compliant with all Danish e-invoicing requirements
Denmark is not new to electronic invoicing as it has been compulsory for B2G transactions since 2005. With the new Bookkeeping Act, Denmark is laying the foundation for mandatory B2B e-invoicing.
The Act mandates all companies to issue, receive, process, and archive invoices electronically.
Companies in accounting classes B, C, and D must comply with mandatory e-invoicing in Denmark by January 2026, while companies in accounting class A must comply by January 2026.
Denmark processes electronic invoices on the NemHandel network, which supports the PEPPOL system.
Sending compliant electronic invoices on the e-invoicing network requires partnering with a reliable access point provider.
More information about Countrywide E-invoice Mandate in Denmark?