• Digital storage
Article:

Digital storage of accounting records

06 March 2018

Gunhild Kveine , Partner, Audit and assurance |

Digital storage of accounting records is gradually becoming more and more common. However, there are some requirements that entities that have a statutory obligation to maintain accounting records, should be aware of when they decide to store accounting records digitally.

Principal requirement: Records must be kept for at least five years after the end of the accounting period.

The principal requirement according to Section 13, second paragraph, of the Norwegian Bookkeeping Act, is that the necessary accounting records must be stored in Norway for at least five years after the end of the accounting period. The accounting records must be stored in an organised manner and be adequately protected against destruction, loss or alteration. There is no requirement to store had copies. The records can be transferred to other media (e.g. by scanning to PDF or similar). Throughout the storage period, it must be possible to present the records to the supervisory authorities in a form that permits checking. his means that the accounting records must be available in readable form, and it is also required that it is possible to print the records throughout the storage period.

Note also that accounting journals that is stored electronically must be kept electronically available for three and a half years after the end of the accounting year. This does not apply for accounting documentation.

The principal requirement related to location, is that the accounting records must be stored in Norway. This means that accounting records that are stored electronically, must be stored on servers that are physically located in Norway. While Section 7-5 of the Bookkeeping Regulations admits the storage of electronic accounting records in other EEA states, the Norwegian Directorate of Taxes has been authorised to determine which EEA states satisfy the requirements for electronic storage at any given time.

Storage outside Norway, but within the Nordic region

In a regulation, the Norwegian Directorate of Taxes has stipulated that companies that have a statutory obligation to maintain accounting records may store electronic accounting records in the Nordic countries (Denmark, Sweden, Finland and Iceland) without having to apply for approval. Nevertheless, a written notification must be submitted to the Directorate of Taxes, specifying the following:

Which parts of the electronic accounting records are stored outside Norway, the specifications (journals and ledgers), the type of documentation, etc.

The company name and the address of the location abroad where the accounting records are to be stored, i.e. the physical location of the server. Any later changes in the storage location must be similarly notified to the Directorate of Taxes.

How the supervisory authorities can gain access to the accounting records at any time. This could be information about a relevant business address in Norway where a terminal and the password required can be found.

Requirement for application for storage outside the Nordic region

Entities that have a statutory obligation to maintain accounting records and wish to store accounting records in countries outside the Nordic region must apply for approval in accordance with Section 13, fifth paragraph, of the Norwegian Bookkeeping Act. In this article, the Norwegian Directorate of Taxes has specified that such an application for approval must include the following information:

  •   The name and business registration number of the entity that has the statutory obligation to maintain accounting records
  •   A reason for the application
  •   A brief description of the accounting records for which dispensation is being applied
  •   Information about the parent company or other companies involved in the storage of the accounting records abroad
  •   The entity name and address of the location abroad where the accounting records are to be stored (the server location)
  •   An address and contact person abroad whom the tax authorities can contact to gain access to the necessary password to log in to an online solution
  •   Information regarding the language used in specifications of mandatory accounting reporting (journals and ledgers) and documentation of the audit trail, if applicable

Summary

Entities with a statutory obligation to maintain accounting records must comply with specific requirements when storing accounting records. This means that if you decide to store accounting records electronically, you must check where the servers used for storage are physically located. If the servers are located in the Nordic region, notification must be sent to the Norwegian Directorate of Taxes, whereas if the servers are located outside the Nordic region, an application for approval must be submitted to the Directorate of Taxes. It is important to note that even if the entity with the statutory obligation to maintain accounting records chooses to use an external accountant, it is still necessary to check the physical location of the server on which the accounting records are stored, and if necessary, apply for approval or notify the Directorate of Taxes if the server is not physically located in Norway.