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Audit requirements in Denmark for annual reports

Audits of annual reports are not mandatory for most companies in Denmark. In general, larger limited liability companies need to be audited, and smaller companies do not need to be audited. The difference between “smaller” and “larger” is defined by thresholds for revenue, amount of employees and balance sum. However, new audit rules will be introduced in 2022.

Audit requirements in Denmark for annual reports


Audit requirements in Denmark for annual reports

Audits of annual reports are not mandatory for most companies in Denmark.

In general, larger limited liability companies need to be audited, and smaller companies do not need to be audited.

The difference between “smaller” and “larger” is defined by thresholds for revenue, amount of employees and balance sum.

However, new audit rules will be introduced in 2022.


New rules from 1.7.2022

From 1.7.2022, the rules will be extended to include smaller companies in 11 so-called “risk industries”.

The 11 risk industries are:

Road freight transport
Moving companies
Restaurants
Pizzerias, grill bars, ice cream bars, etc.
Event catering
Other restaurant business
Cafes, pubs, discotheques, etc.
Data processing, web hosting and similar services
Web portals
Wholesale trade in cars, vans and minibuses
Retail trade in cars, vans and minibuses

If a company operates in one of these industries with a revenue of between 5 and 8 million DKK, it will need a statement from an auditor in the annual report.

A statement from an auditor does not mean a full audit.

But it must be expected that additional costs for the auditor’s statement will occur.

Furthermore, companies with assets above 50 million DKK will be required to have an audit or a review done by an auditor regardless of revenue and amount of employees.


Audit requirements for sole proprietorships

Audit of annual reports is not necessary for sole proprietorships regardless of revenue, amount of employees and balance sum.


Audit requirements for limited liability companies (ApS and A/S)

To avoid an audit requirement, a limited liability company must meet two out of three of the below requirements during the first fiscal year of operation:

1) The company must have a balance sum of a maximum of 4 million DKK (the sum of assets);
2) The company must have a revenue of a maximum of 8 million DKK, without VAT;
3) The company must have an average amount of a maximum of 12 full-time employees.

From the second fiscal year and later, the company cannot exceed two out of these three requirements during the last two consequent fiscal years if it wants to avoid an audit requirement.


Remember to de-select the audit when you incorporate a new company

When you incorporate a new company, you can de-select the audit to avoid it in your first fiscal year by writing it into the articles of incorporation and articles of association.

This has to be done actively.

If you forget to de-select the audit, the company will be required to be audited regardless of thresholds.

It is always good to ask the lawyer or accountant helping you to incorporate the company if they remembered to de-select the audit requirement.


De-selecting the audit of an already operating company

If your limited liability company was established years ago with an annual audit requirement, but the company does not exceed the threshold for having a mandatory audit, you can de-select the audit during your annual general meeting for the coming fiscal year.

This is the meeting where you approve the annual report from the previous year.


Audit for holding companies

Special rules apply for holding companies that have a controlling amount of shares in other companies.

A ‘controlling amount’ of shares is defined as 20% ownership or more.

If you have a holding company, the rules for avoiding the audit are initially the same as those that govern limited liability companies.

But you must combine 100% of the values from all the companies the holding company owns shares in.

Even if the holding company only own 20%, you must add the total balance sum, revenue, and employees from all the companies.


(This blog was updated last time: 30.8.2022)




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