Limitation period
The statute of limitations is the time limit that most financial claims have, after which the claim can no longer be claimed.
As a creditor, it is therefore important to be aware of the different limitation periods so that you can react in time and take necessary steps, such as debt collection, before it is too late and your claim is time-barred.
Obsolescence and limitation periods in general are regulated in the Executive Order of the Act on the Limitation of Claims - also known colloquially as the Limitation Act.
Please note that there are also other types of limitation periods, including in criminal law and other legal contexts. In this article, we'll focus on statutes of limitations related to financial claims, including the statute of limitations for invoice claims and the like.
The statute of limitations
As a general rule, a financial claim or outstanding balance between a debtor and a creditor is time-barred after 3 years. However, there are a number of exceptions, which are regulated in sections 4 to 14 of the Limitation Act.
The different requirements are as follows:
- Invoice claims expire after 3 years.
- Wage claims expire after 10 years.
- Written and acknowledged claims expire after 10 years.
- Claims established by judicial or voluntary settlements are time-barred after 10 years.
- Claims established by judgment are time-barred after 10 years.
- Claims established by a payment demand endorsed by the bailiff court are time-barred after 10 years.
- Money loans expire after 10 years.
- Deposits expire after 20 years.
- Claims on pensions, annuities or similar expire after 10 years.
Interruption of the statute of limitations
Most Danish companies' financial dealings with their customers are typically invoice claims.
These expire after 3 years if the claim has not been submitted to the bailiff's court, a promissory note has not been issued, or the debtor has not otherwise signed documentation in which the debtor acknowledges the debt and its amount.
This basically means that after 3 years, the claim can no longer be pursued and the creditor can no longer demand payment.
But if your invoice claim is about to expire, fortunately, you can take action to interrupt the limitation, giving you a new limitation period of 10 years instead of the original 3 years.
Interruption of the statute of limitations is done through the bailiff court or by getting the debtor to acknowledge the claim in writing.
You can get help from your debt collection agency or a lawyer to interrupt the statute of limitations, or you can do it yourself.
However, make sure to be out in good time, preferably 6 months or more, as there is often administration time associated with interrupting a limitation period.
When is the start of the limitation period?
When does the limitation period start to run? Whether your claim is time-barred after 3 or 10 years, there is often confusion about when the time period starts.
According to the Limitation Act, "the limitation period is calculated from the earliest time when the creditor could claim to have the claim satisfied."
In practice, this means that the invoice date will be considered the start date.
Men lad os antage, at en håndværker udfører et stykke arbejde og først sender fakturaen 6 måneder efter afsluttet arbejde – så vil forældelsesfristen teoretisk (jf. forældelsesloven) regnes fra det tidspunkt, arbejdet blev afsluttet, og ikke fra fakturadatoen. I dette tilfælde vil forældelse derfor ske efter 2,5 år (3 år – 6 måneder).
If, like most companies, you choose to send the invoice immediately after the work has been completed, the invoice date will in practice always be the start date.
