Rules and requirements for reporting class A

En bog og et par briller der symboliserer nærlæsning af regler for virksomheder i regnskabsklasse A

What is reporting class A?

Danish businesses are divided into four reporting classes, each with its own specific rules and requirements. These requirements concern financial reporting, and the higher the reporting class, the stricter the requirements for the financial statements.

In this post, we will help you understand reporting class A. If you don't find the answers to all your questions, you can contact us via the chat in the bottom right corner of this page.

Businesses in reporting class A

All businesses and companies in Denmark are categorized into reporting classes A, B, C, and D. Generally, it is the size of the business or company that determines which reporting class it belongs to and, consequently, which requirements apply.

Reporting class A is the first in the series and is somewhat unique. Typically, one might say that reporting class A is for the smallest businesses. However, experience has shown us that many misunderstand this definition. Businesses in reporting class A are not defined by the number of employees or the amount of revenue, but rather by the fact that the business owners have personal liability.

This typically applies to:

Sole proprietorships and individual businesses
Small businesses with limited liability that are covered by the Act on Certain Commercial Enterprises
General partnerships

This means that your business belongs to reporting class A as long as only your own assets are involved in the business. In principle, it has nothing to do with the size or revenue of the business.
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regler regnskabsklasse a — A business in reporting class A must submit the tax return form to the Danish Tax Agency (Skattestyrelsen), but does not need to file an annual report with the Danish Business Authority (Erhvervsstyrelsen)

What are the financial reporting requirements for businesses in reporting class A?

If your business belongs to reporting class A, there is generally no requirement to prepare and submit a formal annual report directly to the Danish Business Authority. Instead, you must provide information about your financial figures when you submit your tax return to the Danish Tax Agency—what was previously known as the extended tax return.

This also means that even though there is no explicit requirement to prepare a formal annual report, it is still highly recommended. You may find yourself in a situation where your creditors, other stakeholders, or the tax authorities want to see your financial statements. If that happens, there will be an expectation that your accounts have been prepared according to well-known and comprehensive accounting principles.

Briefly about annual reports

An annual report provides an overview of your business's finances, including the expenses and income you have had.

Your annual accounts are prepared based on the bookkeeping performed throughout the past year. It is therefore essential that your bookkeeping is accurate and complete, as otherwise the figures in any potential annual report will be misleading.

It is therefore important that you are familiar with the requirements and rules that apply when the final annual accounts are to be submitted. The requirements and scope vary depending on which reporting class you belong to.

krav regnskabsklasse a — Even though there is no direct requirement to prepare annual accounts, we recommend that you do so if you have a business in reporting class A

Rules and requirements for annual accounts in reporting class A

If you choose to prepare formal annual accounts in reporting class A, they must at a minimum meet the following requirements.

The annual accounts for companies in reporting class A must provide a true and fair view

As previously mentioned, it is a requirement that the accounts you have maintained throughout the financial year are complete, so that the specific figures are not misleading.

The annual accounts for companies in reporting class A must include an income statement and a balance sheet

It is also a requirement that you prepare an overview of your assets and liabilities, as well as the financial position and the result for the year.

Tax in reporting class A

Most people use the company's annual accounts to report taxes. And when it comes to tax for companies in reporting class A, there are a few things to be aware of.

Taxation method

If you run a business in reporting class A, there are three different ways you can choose to be taxed.

The first is according to the standard personal tax rules, where the profit in your business is taxed as personal income. You can also choose to be taxed under the Business Tax Scheme or the Capital Return Scheme. Here, you are taxed like a corporation, which can offer you certain advantages.

Revenue

The Danish Tax Agency has issued a requirement that companies in reporting class A must submit an expanded financial statement if their revenue exceeds DKK 300,000.

This means there are a number of increased requirements for reporting the company's finances, and therefore fields 320-380 must be completed.

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