Danish reporting requirements: A deep dive on financial iXBRL reporting to the Danish Business Authority
Financial reporting in Denmark adheres to the principles outlined in the Danish Financial Statements Act (in Danish Årsregnskabsloven). According to the Act, companies in Denmark must employ the appropriate accounting standards, either GAAP or IFRS, for their annual reporting.
Who must comply with the Danish Financial Statements Act?
In Denmark, commercial companies are covered by the Danish Financial Statements Act and are required to send a copy of their annual report to the Erhvervsstyrelsen, the Danish Business Authority. Companies within the financial sector, e.g. banks and insurance companies are excluded from the Danish Financial Statements Act and follow other regulations.
But when preparing their financial records, companies in Denmark must choose between applying:
- Danish Generally Accepted Accounting Principles referred to as DK GAAP, or
- International Financial Reporting Standards referred to as IFRS.
Generally, choosing to apply one over the other depends on whether the company is publicly traded or not.
Non-public traded companies
In Denmark, non-publicly traded companies can choose to apply either DK GAAP or IFRS standards, based on their size and level of international exposure.
Publicly traded companies
Publicly traded companies in Denmark are obligated to prepare their financial reports in compliance with the IFRS. This is to ensure consistency and comparability across companies and industries, while aligning financial reporting of Danish companies with international standards.
Financial iXBRL reporting in Denmark
Danish GAAP overview
DK GAAP is the national accounting framework for Denmark, generally used for non-publicly traded companies, derived from the Danish Financial Statements Act. It provides a structured approach for preparing financial statements, emphasizing transparency and comparability. The framework ensures financial statements meet legal requirements while catering to the various company sizes and records.
Using DK GAAP for financial reporting in Denmark
As outlined in the Danish Financial Statements Act (Årsregnskabsloven), companies which apply the DK GAAP for their financial reporting are divided into different accounting classes: B, C (medium or large) and D (listed companies).
Overview of different accounting classes and their respective size limits:
| Size limits * | |
|---|---|
| Accounting class B | |
| Number of employees | max 50 employees |
| Annual net turnover | DKK 111 million |
| Balance sheet total | DKK 55 million |
| Accounting class C – medium | |
| Number of employees | max 250 employees |
| Annual net turnover | DKK 391 million |
| Balance sheet total | DKK 195 million |
| Accounting class C – large | |
| Number of employees | more than 250 employees |
| Annual net turnover | above DKK 391 million |
| Balance sheet total | above DKK 195 million |
| Accounting class D – Publicly Listed Companies | |
| Entities | Companies listed on stock exchanges |
| Criteria | Not solely based on size but on public listing status |
| Reporting requirements | Adherence to International Financial Reporting Standards (IFRS) |
*As of 1st of January, 2023
Businesses falling under the Category A companies of the Danish Financial Statements Act are not required to submit their annual reports to the Danish Business Authority.
What is IFRS?
The IFRS stands for International Financial Reporting Standards, which are developed by the International Accounting Standards Board (IASB). These standards are developed to enhance transparency, comparability, and the quality of financial reporting globally.
Adopted by more than 140 jurisdictions, the IFRS helps to ensure the standardisation and comparability of financial statements across companies regardless of their geographic location.
Using IFRS for financial reporting in Denmark
In Denmark, publicly traded companies, accounting class D, are required to apply the IFRS when preparing their financial statements to the Danish Business Authority.
Non-publicly traded companies of lower accounting class can apply the IFRS in their financial reporting if they choose so. There can be various reasons for choosing to prepare an annual report according to IFRS, e.g. for a subsidiary in a larger group. In general, however, the company should consider the following:
- Adopting IFRS generally entails higher costs than Danish GAAP because of its extensive scope and reporting requirements.
- IFRS is an evolving framework with regular updates and revisions. Staying up to date with the latter may require additional resources and training.
DK GAAP vs. IFRS for financial reporting to Erhvervsstyrelsen
DK GAAP and IFRS share the common objective of ensuring accurate and reliable financial reporting. However, they differ significantly in scope and application.
While DK GAAP is generally applied for non-publicly traded companies, IFRS on the other hand is required for publicly traded companies in Denmark.
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Regulatory updates on the financial reporting in Denmark
Transitioning from XBRL to iXBRL
In an update from November 2023, the Erhvervsstyrelsen announced that companies with a balance sheet date January 1st, 2025 or later will be required to use only one format when submitting their annual report – inline XBRL.
Previously, companies prepared their annual reports (årsrapport) in two separate formats:
- One designed for stakeholders, investors, and general readers, in the form of PDF
- Another exclusively for digital use, in the XBRL format
For the 2025 annual report, companies will be required to use only one format when submitting their annual report. And that is the inline XBRL format, iXBRL format. This new requirement ensures a higher quality of reported accounting information with increased transparency between structured and readable data.
Social responsibility statements in the annual report
In an update from October 2024, the Danish Business Authority stated that companies covered by the Danish Financial Statements Act must continue to report on social responsibility under Section 99a until the new sustainability reporting requirements (CSRD) take effect. The CSRD rules will be phased in based on company size and listing status. Therefore, all companies must comply with the rules in Section 99a until the transition is complete.
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