Copenhagen GMT +1
EY
Dirch Passers Allé 36 DK-2000 Frederiksberg Copenhagen Denmark
Indirect tax contacts
Mick Jørgensen +45 51-22-16-43 mick.joergensen@dk.ey.com
Anne-Mette Høiriis +45 51-58-25-59 anne-mette.hoeiriis@dk.ey.com
Aarhus GMT +1
EY
Værkmestergade 25 DK-8000 Aarhus Denmark
Indirect tax contact
Asger Engvang + 45 40-40-22-60 asger.engvang@dk.ey.com
Odense GMT +1
EY
Englandsgade 25 DK-5000 Odense Denmark
Indirect tax contact
Heidi Lundsgaard +45 25-29-40-48 heidi.lundsgaard@dk.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name Merværdiafgift (Moms)
Date introduced 3 July 1967
Trading bloc membership European Union (EU)
Administered by Danish Tax Agency (www.skat.dk)
VAT rates
Standard 25%
Other
Zero-rated (0%) and exempt
VAT number format DK 12 34 56 78
VAT return periods
Monthly, quarterly and half-yearly
Thresholds Registration
Established DKK50,000 (approx. EUR6,700)
Non-established No threshold Distance selling EUR10,000 (approx. DKK75,000) Intra-Community acquisitions DKK80,000 (approx. EUR10,700) Electronically supplied EUR10,000 (approx. DKK75,000) services
Recovery of VAT by non-established businesses Yes
B. Scope of the tax
VAT applies to the following transactions:
• The supply of goods or services made in Denmark by a taxable person
• The intra-Community acquisition of goods from another EU Member State by a taxable person (see the chapter on the EU)
• Reverse-charge services received by a taxable person in Denmark
• The importation of goods from outside the EU, regardless of the status of the importer
Quick Fixes. Pending introduction of a “definitive” system for the VAT treatment of intra-Community supplies of goods to taxable persons, the EU has adopted Quick Fixes for intra-Commu nity trade in goods. For an overview of the Quick Fixes rules, see the chapter on the EU.
Quick Fixes have been implemented in Denmark since 1 January 2020. In general, the imple mentation follows the EU Directive; however, the Danish requirements regarding documentation for transport of goods to another Member State in connection with EU supplies have not been increased and are somewhat more lenient than the Quick Fixes EU Directive rules.
Effective use and enjoyment. To avoid instances of nontaxation or double taxation, EU Member States can apply use and enjoy rules that allow a service that is “used and enjoyed” in the EU to be taxed or prevent a service that is “used and enjoyed” outside the EU from being taxed. If a service is taxed in the EU under the use and enjoyment provisions, a non-EU supplier of the service may be required to register for VAT in every Member State where it has customers that are not taxable persons. For the information regarding the rules relating to VAT registration, see the chapters on the respective countries of the EU.
In Denmark, the following services are subject to the use and enjoyment provisions:
• Transfers and assignments of copyrights, patents, licenses, trademarks and similar rights
• Advertising services
• Services of consultants, engineers, consultancy firms, lawyers, accountants and other similar services, as well as data processing and the provision of information
• Obligations to refrain from pursuing or exercising, in whole or in part, a business activity or a right referred to in this list
• Banking, financial and insurance transactions, including reinsurance, with the exception of the hire of safes
• The supply of staff
• The letting of movable tangible property, with the exception of all means of transport
• The provision of access to a natural gas system situated within the territory of the Community or to any network connected to such a system, to the electricity system or to heating or cooling networks, or the transmission or distribution through these systems or networks, and the provi sion of other services directly linked thereto
• Telecommunications services
• Radio and television broadcast services
Transfer of a going concern. The Danish VAT Act stipulates that the transfer of a going concern (TOGC) is not a taxable transaction for VAT purposes. To qualify as a TOGC, the following conditions should be met:
• The transferred assets need to be a full or partial transfer of a business that can be run by itself (transfer of shares does not qualify, nor does stand-alone transfer of inventory)
• The transferring party will stop carrying out activities like those transferred
• The receiving party must be or become registered for VAT in Denmark (this last condition will in practice only apply if a VAT registration is required to operate the transferred activities)
C. Who is liable
The term “taxable person” means any entity or individual that makes taxable supplies of goods or services, intra-Community acquisitions, or distance sales in the course of a business.
The VAT registration threshold is turnover of DKK50,000 a year for a business resident in Denmark. No registration threshold applies for a non-established business. Consequently, VAT registration is required as soon as a non-established business begins making supplies subject to VAT in Denmark.
Exemption from registration. If a business only makes supplies that are exempt from VAT, then it does not have to register for VAT. However, the business is often liable to register for salary duty. It is a duty, which some businesses must pay, when they deliver VAT exempt goods and services. For example, businesses that supply education, medical services, financial services, cultural services, etc., will have an obligation to register for salary duty. On the other hand, businesses that supply passenger transport to or from other countries or supplies made by writers, compos ers and performing artists are not obliged to register for salary duty.
If a business delivers supplies that are not exempt from VAT, the VAT law in Denmark does not contain any provision for exemption for registration.
Voluntary registration and small businesses. The VAT law in Denmark does not contain any provision for voluntary VAT registration for foreign entities, as there is no registration threshold for businesses established outside of Denmark. Therefore, all foreign entities that make taxable sup plies are obliged to register for VAT unless the business is registered for VAT via the One-Stop Shop (OSS) and only makes supplies that are covered by the OSS. This also includes the Import One-Stop Shop (IOSS).
Foreign entities that supply goods or services in Denmark for which they are not obliged to settle the VAT (because the VAT must be settled by the buyer under the reverse-charge regime) may not opt to register for VAT in Denmark.
Danish entities that are not required to register for VAT because their turnover does not exceed the threshold may choose to voluntarily register.
Both Danish and foreign businesses that lease out real estate can register voluntarily for the letting of real estate, which would lead to the letting becoming subject to VAT rather than exempt.
In certain cases where the sale of real estate would be exempt, it is also possible to voluntarily register for the sale of real estate to a VAT-registered business. In this case the sale would still be exempt, but the VAT incurred may be deducted and transferred as a VAT adjustment obligation under certain conditions.
It is also possible for certain businesses to register voluntarily for sale of investment gold.
Group registration. Groups of companies or related entities may request registration as a single taxable person (VAT group). If a company with exempt activities (partly or fully) wishes to be part of a VAT group, the parent company must be included in the VAT group. In this case, all group members must be 100% owned by the parent company and established in Denmark.
There is no minimum time period required for the duration of a VAT group.
The effect of VAT grouping is that no VAT is charged on supplies between group members. However, if any member of the group has exempt activities, the group must deduct input tax on a pro rata basis.
All members of a VAT group are jointly and severally liable for VAT debts and penalties.
Holding companies. In Denmark, a pure holding company may be part of a VAT group but only with fully owned group companies (similar to companies with exempt activities).
Cost-sharing exemption. The VAT cost-sharing exemption (in accordance with VAT Directive 2006/112/EEC Article 132(1)(f) has been implemented in Denmark. This provides an option to exempt support services that the cost-sharing group supplies to its members, providing certain conditions are met (in accordance with specific requirements laid out in Danish VAT law).
It is possible for companies that have exempt activities to set up a cost-sharing group that can supply certain services to the members of the group under a VAT exemption. The services must be specific for the exempt activities of the members, the VAT exemption must not lead to distor tion of competition, and only members whose activities are exempt under art. 132 of the EU VAT Directive can use the exemption. The payment from each member must exactly match the costs related to the services supplied to that member.
Fixed establishment. In Denmark there is no legal definition of when a fixed establishment will exist for VAT purposes. However, according to EU and local case law, a fixed establishment is assumed to have been established when the entity has the necessary presence of a sufficiently permanent character of the appropriate human and technical resources.
Non-established businesses. A non-established business must register for Danish VAT if it makes any of the following supplies:
• Goods that are located in Denmark at the time of supply
• Intra-Community acquisitions in Denmark
• Distance sales greater than the annual threshold (the registration may be under the OSS)
• Business-to-consumer (B2C) e-services, broadcasting and telecommunications to individuals with Danish residence (except if such EU sales do not exceed the threshold) (the registration may be under the OSS)
• Services that are not subject to the tax under the “reverse-charge” mechanism (for example, services related to real estate that are supplied to private persons) (the registration may in many cases be under the OSS). Most services supplied to taxable persons in Denmark are covered by the Danish reverse-charge regime
For details on how a non-established business registers for VAT in Denmark, see the subsection Registration procedures below.
Tax representatives. Businesses established in the following countries are not required to appoint a tax representative to register for Danish VAT:
Aland Islands Faroe Islands Iceland United Kingdom (UK)
EU Member States Greenland Norway
However, businesses established in the above countries may choose to appoint a tax representa tive to register for VAT. If a business established in a country, which is not an EU Member State, imports goods into Denmark, there will be an obligation to appoint a fiscal representative who is jointly and severally liable for any VAT or customs duty payments due (also applies to the nonEU countries mentioned above).
VAT registration for non-established taxable persons from the Aland Islands, EU Member States, the Faroe Islands, Greenland, Iceland, Norway and the UK without a fiscal representative will mean that the Danish tax authorities will contact the business directly at their address in their home country.
Businesses established in other countries must appoint a Danish resident (either a business or a natural person) as tax representative to register for VAT. The representative and the nonresident business are jointly and severally liable for VAT liabilities.
The Danish tax authorities may require a non-established taxable person to provide security equal to its expected VAT liability for a three-month period. This may occur if the tax authorities believe a risk exists that the non-established business may not pay its indirect tax obligations.
Reverse charge. If a non-established business supplies services to a taxable person in Denmark the taxable person may be required to account for the VAT due under reverse-charge accounting. This means that the taxable person charges itself VAT. The self-assessed VAT may be deducted as input tax.
In case of digital services, telecom services or broadcasting services supplied in a B2B context, the place of supply is the place where the recipient is established. No Danish VAT should be charged, and reverse charge applies unless supplier and customer are established in Denmark.
In case of digital services, telecom services or broadcasting services supplied in a B2C context, Danish VAT is always due in case of supply to customers established in Denmark, disregarding whether the supplier is established inside or outside the EU (except for EU businesses whose B2C supplies do not exceed the threshold of EUR10,000).
The authorities can require banks, credit card companies and others handling transfer of payments to inform them of payments involving distance sales of goods made to Danish customers and electronic services supplied to nontaxable persons in Denmark.
Domestic reverse charge. The domestic reverse charge is applicable in Denmark for a limited num ber of supplies. The domestic reverse charge works the same way as the normal reverse charge, but domestically within country territory.
The mechanism applies to sales to taxable persons of metal scrap, mobile phones, computer chips, gaming devices, tablet-PCs, laptops, CO2 quotas, CO2 credits, and gas and electricity certificates.
For mobile phones, computer chips, gaming devices, tablet-PCs and laptops, the reverse-charge mechanism does not apply if the vendor’s supply of products subject to domestic reverse charge (high-value goods) are made exclusively or predominantly to private consumers. If more than 50% of the sales of high-value goods are made to private consumers, the general rule applies, i.e., the Danish supplier must charge DK VAT on local sales.
The domestic reverse charge also applies to sales of investment gold to VAT registered busi nesses.
Finally, the reverse charge applies to sales of gas or electricity to a taxable person who is a reseller of the gas or electricity.
Digital economy. Specific VAT rules apply to cross-border supplies of goods and services sold via the internet (e-commerce) in all EU Member States with effect from 1 July 2021. These new rules apply to all direct sales to nontaxable persons (in practice these are mostly private individuals), but we refer to these rules as e-commerce VAT rules because most of these transactions are con ducted via the internet. In general, the place of supply is in the country of consumption, i.e., where the goods are shipped to or where the buyer of the goods or services resides, subject to
any “use and enjoyment” provisions that may override this rule (see Section B, Effective use and enjoyment subsection above). Therefore:
• For supplies of services made by a nonresident supplier to a to a business customer (B2B), the business customer is responsible for accounting for the VAT due, using the reverse charge.
• For supplies of goods made by a nonresident supplier to a business customer (B2B), where the goods are transported from another EU Member State, the business purchasing the goods is responsible for accounting for the VAT due, as an intra-Community acquisition. If the goods come from outside the EU, the purchaser may have to report an importation of goods.
• For supplies of goods or services made by a nonresident supplier to a final consumer (B2C), the supplier is generally responsible for charging and accounting for the VAT due at the rate applicable in the customer’s country (unless the supplier’s sales fall beneath the distance selling threshold of EUR10,000 with effect from 1 July 2021). This VAT can be reported using a single VAT registration, using a “One-Stop-Shop” mechanism.
For more details about intra-EU distance sales, please see the chapter on the EU.
Effective 1 July 2021, an e-commerce supplier may have a choice of how to account for VAT on its B2C supplies.
Local VAT registration. A nonresident supplier may choose to register for VAT in each Member State and account for VAT on all supplies made and recover input tax in accordance with local rules (see the Non-established businesses subsection above). Non-EU businesses may be required to appoint a fiscal representative for accounting for the VAT due on these transactions.
In Denmark there are no additional specific local rules that apply.
One-Stop Shop. Effective 1 July 2021, a supplier can choose to account for the VAT due under the EU One-Stop Shop (OSS), which can be used for intra-EU cross-border supplies of goods and all cross-border supplies of services made to final consumers in the EU. Unlike the previous Mini One-Stop-Shop (MOSS) scheme that applied until 30 June 2021, the OSS is not limited to cross-border supplies of electronic services, telecommunication services and broadcasting services. The OSS is an electronic portal that allows businesses to:
• Register for VAT electronically in a single Member State for all intra-EU distance sales of goods and for B2C supplies of services
• Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return
The OSS can be used by businesses established in the EU and outside the EU. If a supplier or a deemed supplier decides to register for the OSS, it must declare and pay VAT for all supplies (goods as well as services) that fall under the OSS.
In Denmark, taxable persons established outside EU can choose Denmark as the Member State of Identification, i.e., where the taxable person chooses to register for the OSS (only relevant where a taxable person uses the non-Union scheme, as the dispatch country is the Member State of Identification for the Union scheme). It is a two-step registration process. The non-established business must first register in Denmark with an administrative business number and hereafter register electronically in the OSS.
For more details about the operation of the OSS, please see the chapter on the EU.
Import One-Stop Shop. Effective 1 July 2021, the Import One-Stop-Shop (IOSS) scheme applies for B2C distance sales of goods from outside the EU.
Effective 1 July 2021, VAT is due on all commercial goods imported into the EU regardless of their value. The actual supply is subject to VAT in the country where the goods are imported (the country of destination). The IOSS facilitates the declaration and payment of VAT due on the sale of low-value goods (i.e., consignments valued at less than EUR150 per consignment). It allows
suppliers selling low-value goods dispatched or transported from a non-EU country to customers in the EU to collect, declare and pay the VAT due. If the IOSS is used, the importation into the EU is exempt from VAT. For more details about the IOSS, please see the chapter on the EU.
The use of the IOSS special scheme is not mandatory. If VAT is not collected via the IOSS scheme, the importation of goods into the EU is subject to import VAT in the country of final destination, and the Member State can decide freely who is liable to pay the import VAT, which could be the customer or the seller (or an electronic interface).
In Denmark, taxable persons established outside the EU must register with an intermediary in Denmark if the Member State of Identification is appointed to be Denmark.
Postal Services and Couriers Scheme. If the IOSS is not used and the customer is liable for the import VAT due on the supply (and importation) of consignments with a small intrinsic value (i.e., less than EUR150), the VAT can be collected using the special scheme for postal services and couriers.
In Denmark, there are no additional specific local rules that apply.
For more details about the special scheme for postal services and couriers, please see the chap ter on the EU.
Online marketplaces and platforms. Under the new EU VAT e-commerce rules, effective 1 July 2021 taxable persons that “facilitate” certain B2C sales of goods are deemed to have purchased and then supplied those goods themselves. This means that the single supply from the “underly ing” supplier to the final consumer is split into two deemed supplies:
• A supply from the supplier to the facilitator (deemed B2B supply)
• A supply from the facilitator to the final customer (deemed B2C supply). Any intermediation service provided by the facilitator is disregarded for VAT purposes
This provision does not cover all sales facilitated via the facilitator. It only covers distance sales of goods imported from non-EU jurisdictions in consignments with an intrinsic value not exceed ing EUR150. The jurisdiction of residence of the supplier using the facilitator is irrelevant. The supply to the facilitating platform is VAT exempt and the supplies made by that platform follow the e-commerce VAT rules as described above. In addition, the provision also covers sales within the EU, if the supplier is not established within the EU. This applies to both local ship ments within one Member State as well as intra-Community shipments. In both cases, the final customer must be a nontaxable person.
In Denmark, online marketplaces and platforms established outside the EU must register in the country of dispatch. For more details about the rules for online marketplaces, please see the chapter on the EU.
Vouchers. Denmark has implemented the EU Voucher Directive in the Danish VAT law with effect as of 1 July 2019. Prior to this implementation, no definition of the VAT treatment of vouchers was included in the Danish VAT law. Thus, any voucher issued on 1 July 2019 or later shall from a Danish VAT point of view be treated under the new definition of single-purpose vouchers (SPVs) and multipurpose vouchers (MPVs) set out in the Danish VAT law. The wording of the Danish Amendment Act implementing the EU Voucher Directive is very similar to the wording in the EU Voucher Directive.
Since there is only the standard VAT rate of 25% in Denmark (except for a 0% VAT rate on newspapers), any voucher that can only be redeemed in Denmark would in general be qualified as an SPV for VAT purposes, unless the voucher can also be used for exempt goods or services (or newspapers). According to the guidelines made by the Danish Tax Agency in connection with the implementation of the EU Voucher Directive, any SPV must be treated as if the issuer
supplied the goods and services (even if it is not so from a civil law point of view). The issuer must therefore pay the VAT when the voucher is transferred. It is the opinion of the Danish Tax Agency that it makes no difference if an SPV is issued in own name or if the issuer acts as provider of the voucher in its own name. The tax base for an SPV is the payment received.
For an MPV, VAT is not settled until the actual transfer of the underlying good or service to the bearer of the voucher. Thus, VAT is not due until the time of redemption, and no VAT is settled of the preceding transfers of an MPV. The VAT basis for an MPV is a starting point of the coun ter value paid for the voucher. If an MPV can be used multiple times, it is only the part of the voucher that is redeemed of which VAT should be calculated.
Registration procedures. For domestic businesses, the registration process is performed online and requires a digital signature/NemID (which could be that of a Danish advisor, e.g., an auditor or a lawyer).
For foreign businesses, the registration application can be submitted either electronically or in hard copy. It is often made by paper, as a foreign business will normally not have a Danish digi tal signature. However, if made electronically, it can be done by an advisor using their digital signature. Foreign businesses must register for VAT by filling out the following form: https:// virk.dk/myndigheder/stat/ERST/selvbetjening/Registration_of_Non-Danish_Company__Start__40112/.
For foreign businesses, the registration application must include documentation for the company registration number in the home country (normally certificate of incorporation and articles of association), documentation of VAT registration in the home country (if applicable) and a confirmation from the tax authorities in country of establishment that the company has no unpaid debts to the tax authorities. For both domestic and foreign businesses, the VAT registration appli cation must be submitted at the latest eight days before taxable activities are started in Denmark. If the application is not submitted or it is submitted late, or the information provided is not cor rect or insufficient, a penalty might be issued.
The registration process takes between 1 and 14 days. A certificate with the Danish VAT number can be downloaded at the e-tax platform. The business can login into the e-tax platform using its digital signature/NemID or a special code (TastSelv code) issued by the Danish Tax Agency.
Deregistration. A taxable person that ceases to be eligible for VAT registration must deregister within eight days. For Danish businesses with a Danish business identification number, the VAT number will be the same if taxable activities are resumed. For foreign businesses, it is not possible to receive the same VAT number if taxable activities are resumed.
Changes to VAT registration details. Businesses with a Danish VAT registration must notify the Danish Tax Agency when there are changes to their VAT registration details, such as name of company, address and type of business. The business should notify the authorities as soon as the change is known. It could trigger a new VAT registration for the business in case the business obtains a new company number, i.e., significant changes to the legal person. This could be the case if the business moves its establishment to another country.
Domestic businesses and non-established businesses with a Danish company number can notify the authorities about changes online. Non-established business without a Danish company num ber must submit a paper form to the authorities.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 25%
• Zero rate: 0%
The standard rate of VAT applies to all supplies of goods or services, unless specific measure provides for the zero rate or an exemption.
Examples of goods and services taxable at 0%
• Newspapers
• Supplies to ships
• Supplies of gold to the Danish National Bank
Some supplies are classified as “exempt-with-credit,” which means that no VAT is chargeable, but the supplier may recover related input tax. Exempt-with-credit supplies include exports of goods and related services, intra-Community supplies of goods and intangible services supplied to either another taxable person established in the EU or a recipient outside the EU (see the chapter on the EU).
The term “exempt supplies” refers to supplies of goods and services that are not liable to tax and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Medical services
• Education
• Financial services
• Insurance and reinsurance
• Supplies made by writers, composers and performing artists
• Cultural services
• Transport of passengers
• Investment gold
• Leasing of real estate
Option to tax for exempt supplies. It is possible to make a voluntary registration to tax letting and tenancy of real estate. The voluntary registration for letting of property must be at least two years. The two-year period starts when the first letting has commenced. In certain cases where the sale of real estate would be exempt, it may also be possible to obtain a voluntary registration for the sale to a taxable business.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.” The basic time of supply for goods is when they are delivered. The basic time of supply for services is when they are performed. However, if one of the other events described below occurs before the time of the actual supply, the VAT will become due at the time of that event.
If the invoice is issued prior to the actual supply, VAT is due when issuing the invoice. If the invoice is issued shortly after the actual supply, the invoice date is generally accepted as the “tax point.” If any prepayments are made earlier than the actual supply or before issuing the invoice, VAT is due at the time of the prepayment (see the Deposits and prepayments subsection below).
Deposits and prepayments. The time of supply for an advance payment is when the supplier receives the payment even if the supply has not yet been made. In this case, the VAT will be due for the prepaid amount at the time of prepayment. This also applies if an invoice is not issued at this point in time (in which case, however, the customer will not be able to deduct the VAT until they receive an invoice). A final time of supply occurs when the supply has been completed.
Continuous supplies of services. The time of supply of services where no final delivery has taken place is at the end of each VAT return period. When, as part of a continuous supply of goods, the delivery is taking more than one month and has not concluded, delivery is considered to have taken place on the last day of the month. If delivery is taking more than one year and has not concluded and no payment has been made, delivery is considered to have taken place on the last day of the calendar year.
Goods sent on approval for sale or return. When goods are supplied in consignment/commission (sale or return), it is possible to choose between two different time of supply rules:
• The time of supply
Or
• The time of the payment to the consignee
If the last possibility is chosen, the invoice must be issued at the time of payment.
If the goods are returned to the seller, the treatment that applies depends on which time of supply the seller and consignee have agreed upon. If they have chosen the time of supply, a credit note must be issued. If they have chosen the time of the payment to the consignee, no payment has taken place and the consignee can return the goods without further issues.
If the goods are not sold, the VAT treatment depends on the circumstances. It may be that no supply has taken place, or it may be that a supply for no consideration has taken place.
Denmark does not have a specific time of supply rule for any supplies sent on approval for sale or return that are not under the consignment/commission setup, as outlined above. As such, the normal time of supply rules apply.
Reverse-charge services. Certain services imported from outside Denmark by a taxable person are subject to the tax under the “reverse-charge” mechanism, which means that the recipient of the service must account for VAT. The time of supply for a reverse-charge service is the VAT period in which the service is supplied or the period in which the invoice is issued if the invoice is issued shortly after the supply.
Leased assets. There are no special time of supply rules in Denmark for supplies of leased assets. As such, the general time of supply rules apply (as outlined above).
Imported goods. The time of supply for imported goods is the date of the customs clearance or the date on which the goods leave a duty suspension regime.
Intra-Community acquisitions. The time of supply for an intra-Community acquisition of goods is the 15th day of the month following the month in which the acquisition occurred. If the sup plier issues an invoice before this date, the time of supply is when the invoice is issued.
Intra-Community supplies of goods. The time of supply for an intra-Community supply of goods is the 15th day of the month following the month in which the supply occurred. If the supplier issues an invoice before this date, the time of supply is when the invoice is issued.
Distance sales. There are no special time of supply rules in Denmark for supplies of distance sales. As such, the general time of supply rules apply (as outlined above) and is when the goods are delivered. For distance sales supplies, where the supplier is established outside the EU and the goods are supplied via an online marketplace and platform, the time of supply changes to the time of payment. The same applies for all supplies of goods under the import scheme.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for business purposes. Taxable persons generally recover input tax by deducting it from output tax, which is VAT charged on supplies made.
Input tax includes VAT charged on goods and services supplied in Denmark, VAT paid on imports of goods and VAT self-assessed on intra-Community acquisitions of goods and reverse-charge services.
A valid tax invoice or customs document must generally accompany a claim for input tax.
The time limit for a taxable person to reclaim input tax in Denmark is three years. If input tax has not been reclaimed (by error) in previous periods, the VAT return for the period in question may be adjusted to include the input tax until three years after the filing deadline for the VAT period where the input tax should have been reported.
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur). In addition, input tax may not be recovered for some items of business expenditure.
The following lists provide some examples of items of expenditure for which input tax is not deductible, and examples of items for which input tax is deductible if the expenditure is related to a taxable business use.
Examples of items for which input tax is nondeductible
• Business gifts with a value of more than DKK100
• Purchase, lease or hire of a passenger car
• Maintenance costs for a passenger car
• Employee meals and entertainment
Examples of items for which input tax is deductible (if related to a taxable business use)
• 100% of hotel accommodation, if strictly for business purposes
• 25% of restaurant services, if strictly for business purposes
• Books
• Long-term lease of cars used for a business (a proportion)
• Attendance at conferences, seminars and exhibitions
• 50% of home telephone bill (only applicable to landlines)
• Purchase and subscriptions connected with, e.g., mobile phones and laptops based on a split between business use and private use
Partial exemption. Input tax incurred that is directly related to making exempt supplies is not generally recoverable. Input tax wholly attributable to taxable supplies is recoverable in full. Only that portion of input tax attributable to exempt supplies is not recoverable. This situation is referred to as “partial exemption.” Exempt with credit supplies are treated as taxable supplies for these purposes.
The amount of input tax that may be recovered is calculated in the following two stages:
• The first stage is the direct allocation of VAT to exempt and taxable supplies. Input tax direct ly allocable to exempt supplies is not deductible.
• The second stage is to prorate the remaining input tax that relates to both taxable and exempt supplies (for example, VAT incurred on business overhead) based on the percentage of total turnover that is taxable. The pro rata calculation must be performed each year, and the recovery percentage is rounded up to the next whole number. For example, a recovery percentage of 77.2% is rounded up to 78%.
Approval from the tax authorities is not required to use the partial exemption standard method in Denmark.
Special methods are not allowed in Denmark, except for certain costs relating to real estate (where special methods are mandatory for certain types of costs).
For costs relating to both taxable activities and activities not related to taxable or exempt activi ties, deduction should be made based on an estimate of the use that entitles to VAT deduction.
Capital goods. Capital goods are items of capital expenditure that are used in a business over several years. Input tax is deducted in the VAT year in which the goods are acquired. The amount of input tax recovered depends on the taxable person’s partial exemption recovery position in the VAT year of acquisition. However, the amount of input tax recovered for capital goods must be adjusted over time if the taxable person’s partial exemption recovery percentage changes during the adjustment period.
In Denmark, the capital goods adjustment applies to the following assets for the number of years indicated:
• Land and buildings including additions and alterations: adjusted for a period of 10 years
• Repair, maintenance and renovation of land and buildings if annual cost exceeds DKK100,000: adjusted for a period of five years
• Items of machinery, equipment and furniture costing more than DKK100,000: adjusted for a period of five years
• Services that are comparable to physical capital goods, including software and rights, where such services have a purchase price exceeding DKK100,000: adjusted for a period of five years
The adjustment is applied each year following the year of acquisition to a fraction of the total input tax (1/10 for land and buildings and 1/5 for other capital goods). The adjustment may result in either an increase or a decrease of deductible input tax, depending on whether the ratio of taxable supplies made by the business increases or decreases compared with the year in which the capital goods were acquired.
Refunds. If the input tax exceeds the output tax in a specific filing period, the business registered for VAT in Denmark is in a VAT refundable position. The VAT refund is claimed via the submis sion of the VAT return and the VAT refund is usually transferred to the business within 21 days after the submission of the VAT return. All businesses registered for VAT in Denmark should register an “Easy Account” (a regular bank account) with the Digitalization Agency and all trans fers of funds from the Danish authorities will be transferred to this account.
Pre-registration costs. Pre-registration costs are refundable if they relate to the taxable activities of the business. Whether or not the costs qualify for a refund must be individually assessed. Where the business is not registered from the start of the activities, there is a time limit of three years for obtain ing a retroactive deduction (corresponding to the general statute of limitation for VAT).
Bad debts. To claim bad debt relief, the supplier must be able to demonstrate the loss by use of a court order. If a debtor is bankrupt, in liquidation, etc., or the debtor is dead, this is treated as the equivalent to a court order.
Regarding bad debts not related to bankruptcy and the like, it is sufficient that the supplier has made an effort to claim the amount through a debt collection agency or a lawyer or that the sup plier itself has tried in vain to collect the amount. The debt must be considered lost and minimum internal chasing procedure must be performed in order to render it probable that the debt cannot be recovered. The chasing procedure must be reasonable compared to the size of the debt and the costs related to the collection.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Denmark.
G. Recovery of VAT by non-established businesses
The Danish VAT authorities refund VAT incurred by businesses that are neither established nor registered for VAT in Denmark. Non-established businesses may claim Danish VAT to the same extent as a VAT-registered business
EU businesses. For businesses established in the EU, refunds are made under the terms of EU Directive 2008/9/EC. The VAT refund procedure under the EU Directive 2008/9 may be used only if the business did not perform any taxable supplies in Denmark during the refund period (excluding supplies covered by the reverse charge). For full details see the chapter on the EU.
Please find below specific rules for Denmark:
• Claims must be submitted in Danish, English, German or Swedish.
• The minimum claim for a period of less than a year is DKK3,000. For an annual claim, the minimum amount is DKK400.
Non-EU businesses. For businesses established outside the EU, refunds are made under the terms of the EU 13th VAT Directive. For full details see the chapter on the EU.
Reciprocity is not applicable in Denmark. This means that the refund scheme is open to any country, as long as the non-EU business meet the specific rules (as outlined below).
The VAT refund procedure under the EU 13th Directive may be used only if the business was not established within the EU during the refund period. Furthermore, the business shall declare that no business activities triggering a VAT registration obligation in Denmark have been performed during the refund period. Please find below specific rules for Denmark:
• The deadline for refund claims for non-EU businesses is 30 September of the year following the year in which the tax is incurred.
• The minimum claim period is three months, while the maximum period is one year. However, a claim for the remainder of a calendar year can be for less than three months. The minimum claim for a period of less than a year is DKK3,000. For an annual claim or a claim for a period for the remainder of a calendar year, the minimum amount is DKK400.
• The claimant shall provide documentation that business activities are performed in the non-EU jurisdiction of the business’ establishment.
• Claims must be submitted in Danish, English, German or Swedish.
• Applications for refunds of Danish VAT should, for businesses established outside the EU, be sent to the following office: Skattestyrelsen Nykøbingvej 76 Bygning 45 DK-4990 Sakskøbing Denmark
• The Danish tax authorities are obliged to decide on the refund application no later than eight months after the application was submitted.
Late payment interest. In case of late VAT refund payments (to both EU and non-EU nonestablished businesses), according to the Directive n° 2008/9/EC, implemented in the Denmark VAT law, Denmark must pay late payment interest at a variable rate as from the date the refund should have been made. The rate is 8%, plus the lending rate fixed by the Danish National Bank on 1 January and 1 July each year. At the time of preparing this chapter, the rate is currently 7.65%.
H. Invoicing
VAT invoices. A Danish taxable person must generally provide a VAT invoice for all taxable sup plies made, including exports and intra-Community supplies.
A VAT invoice is necessary to support a claim for input tax deduction or a refund under the EU Directive 2008/9/EC or the EU 13th Directive refund schemes (see the chapter on the EU).
Credit notes. A VAT credit note may be used to reduce the VAT charged and reclaimed on a supply. It must be cross-referenced to the original VAT invoice and contain the same information.
Electronic invoicing. Danish VAT law permits electronic invoicing in line with EU Directive 2010/45/EU (see the chapter on the EU).
Simplified VAT invoices. A simplified invoice can be issued if the total sales value does not exceed DKK3,000 ex VAT. The simplified invoices must contain the following data:
• Date of issue
• Sequential invoice number
• Supplier’s VAT number
• Supplier’s name and address
• Quantity and nature of the goods/services supplied
• Total payable amount, including VAT
• Payable VAT amount or the necessary information to calculate the VAT amount, e.g., by stating that the VAT amount is 20% of the total payable amount including VAT (equal to the Danish VAT rate of 25%)
Companies mainly or only selling to private consumers must issue a simplified invoice, unless they use a cash register system and provide a cash receipt to the customer. The cash receipt must contain the following data:
• Date of issue
• Supplier’s VAT number or supplier’s name and address
• Quantity and nature of the goods/services supplied
• Total payable amount including VAT
• Payable VAT amount or the necessary information to calculate the VAT amount, e.g., by stating that the VAT amount is 20% of the total payable amount including VAT
Self-billing. Self-billing is allowed in Denmark. It is possible to enter into an agreement where the customer issues the invoice to themselves on behalf of the supplier. The parties must enter into a written agreement to allow for self-billing. The agreement must include a description of the process, including how the supplier approves each invoice (may be by not opposing the invoice within a fixed number of days). The self-billing invoice must contain the same information as a regular invoice, plus the wording “selvfakturering” or “self-billing” and the customer’s VAT registration number.
Proof of exports and intra-Community supplies. VAT is not chargeable on supplies of exported goods or on intra-Community supplies of goods (see the chapter on the EU). However, to qual ify as VAT-free, exports and intra-Community supplies must be supported by evidence that proves the goods have left Denmark. Acceptable proof includes the following documentation:
• For an export, the seller must retain the signed customs documentation with a pro forma invoice and commercial evidence such as customer orders and contracts.
• For an intra-Community supply, the seller must indicate the customer’s VAT identification num ber (from a different EU country) and must retain commercial documentation, such as purchase orders, transport documentation and evidence of both payment and receipt of goods.
At the time of preparing this chapter, it was not expected that EU rules regarding maximum documentation requirements will lead to additional requirements in Denmark in the situation where the seller is responsible for transport.
Please notice that there are special documentation requirements for intra-Community supplies, when (1) the buyer picks up the goods at the seller’s place of business in Denmark (EXW) and (2) the buyer pays at the time of picking up the goods (no credit/deferred payment). In this case the seller must have a buyer statement confirming:
• The goods are sent or transported outside Denmark
• The destination of the goods
• Means of transport and registration number
• The goods are received at the delivery address
The buyer statement must be documented by other documents for the transportation, e.g., tickets from ferries, bridges or similar.
Foreign currency invoices. A Danish VAT invoice may be issued in the domestic currency, which is the Danish krone (DKK), or euros (EUR). If another currency is used, the amount of VAT must be converted into DKK, either by using the current daily exchange rate or the official monthly customs exchange rate published by the Danish tax authorities.
Supplies to nontaxable persons. Special rules apply to the place of supply for supplies of telecom munications, broadcasting and electronic services to nontaxable customers. Non-established busi nesses registered under the OSS scheme are exempt from the invoicing requirement when selling these services to Danish consumers.
Danish suppliers of these services are required to issue invoices to nontaxable customers.
Non-established businesses performing distance sales of goods to Danish consumers, registered via the OSS scheme, are exempt from issuing invoices.
Transactions between related parties. Denmark has rules for transactions between related parties. Related parties are:
• Parties closely related due to family or other personal relations
• Parties closely related due to legal, managerial or membership relations
• A party having economic interests in another party’s company or property
If certain conditions are fulfilled, the tax authorities may fix the taxable amount at the open market value for the goods and services supplied.
If there is no proper market value for the goods and services or alike, the taxable amount must be the cost price (except for a normal markup), and the seller must take all cost elements into consideration.
The Danish tax authorities can adjust the taxable amount when:
• The payment for a VAT-taxable supply is lower than the cost price, and the buyer does not have full right to VAT deduction.
• The payment for a VAT-exempt supply is lower than the cost price, and the supplier has a limited right to VAT deduction (turnover split).
• The payment for a VAT-taxable supply is higher than the open market value, and the supplier has a limited right to VAT deduction (turnover split).
Records. In Denmark, examples of records that must be held for VAT purposes include bookkeep ing materials (bookkeeping, financial statements, any documents that form the basis of the book keeping, etc.) and tax invoices. VAT registered businesses must in general comply with the Danish Bookkeeping Act.
Record retention period. VAT records must be kept for 5 years, and if the records concern immovable property covered by the capital goods scheme, they must be kept for 10 years.
The records should be kept in accordance with the Danish Bookkeeping Act. This means that they must be clear and transparent and make it possible for the tax authorities to audit that the VAT reporting is correct. The summarized information in the VAT return must be verifiable through the individual entries. Any invoices issued or received must be stored either physically or electronically, along with any supplementary records supporting these documents.
Taxable persons using the OSS schemes and the import scheme must keep the VAT records for 10 years.
Electronic archiving. VAT records may be kept electronically or on microfilm, and the company must provide the tax authorities a description of the method of storage in order to make it pos sible to locate the relevant records and print them out.
Electronically archived records may be stored outside of Denmark. Paper files may only be stored outside Denmark temporarily (for the month when the document is issued and the following month – to allow bookkeeping to take place outside of Denmark). Paper files can be stored in the Scandinavian countries if certain requirements are met.
I. Returns and payment
Periodic returns. A Danish taxable person whose turnover exceeds DKK50 million must submit VAT returns on a monthly basis. A taxable person with a turnover of between DKK5 million and DKK50 million generally submits returns on a quarterly basis (monthly returns are optional). A taxable person with turnover of less than DKK5 million must submit returns on a half-yearly basis.
Monthly VAT returns are due by the 25th day of the month following the return period. Quarterly VAT returns are due by the first day of the third month following the end of the return period. Half-yearly VAT returns are due by the first day of the third month following the end of the return period.
A summer VAT relief scheme allows filing for the June period to be made by 17 August.
Periodic payments. Returns must be completed, and liabilities must be paid in Danish kroner (DKK).
Monthly VAT payments are due by the 25th day of the month following the return period. Quarterly VAT payments are due by the first day of the third month following the end of the return period. Half-yearly VAT payments are due by the first day of the third month following the end of the return period.
A summer VAT relief scheme allows payment for the June period to be made by 17 August.
Payment is made by transferring the payable amount to the bank account of the tax authorities with reference to the VAT registration number of the company. Please note that payment should not be made earlier than five days prior to the deadline, as the tax authorities may refund the amount in this case. Payment may be made by a direct bank transfer, by direct debit or by credit card payment. Payment by cash or cheque is not allowed in Denmark.
Electronic filing. Electronic filing is mandatory in Denmark. It is compulsory for all taxable per sons to submit VAT returns online, using the Danish tax authorities’ website, www.skat.dk, through “E-tax for businesses” (TastSelv).
Payments on account. Payments on account are not required in Denmark.
Special schemes. Artists. Artists (or their heirs) have a special scheme where the VAT on the first sale of the artist’s own works may be calculated based on a reduced taxable amount of 20% of the regular taxable amount.
Dealers in secondhand goods, art, collectibles and antiques. Dealers in secondhand goods, art, collectibles and antiques may calculate the VAT payable based on the profit made on the sale (either calculated based on the individual sales or on the basis of the combined inventory of the dealer). For dealers in used cars, similar rules apply; however, the VAT payable must be calcu lated on the individual car. Due to the high Danish car registration tax, special rules apply for the calculation. In all cases, the rules are only applicable if the goods are purchased from a private individual or in circumstances where the goods were originally bought from a seller whose sale was exempt or also covered by the rules on secondhand goods.
Travel agents. Travel agents should calculate VAT on their supplies based on their profit on the travels sold.
Annual returns. Annual returns are not required in Denmark.
Supplementary filings. Intrastat. Danish taxable persons that trade with other EU countries must complete statistical reports, known as Intrastat, if the value of their sales or purchases exceeds certain thresholds. Separate reports cover intra-Community acquisitions (Intrastat Arrivals) and intra-Community supplies (Intrastat Dispatches).
The threshold for Intrastat Arrivals in 2022 is DKK13 million. The threshold for Intrastat Dispatches in 2022 it is DKK10 million.
Intrastat declarations must be completed in DKK.
The Intrastat return period is monthly. The submission deadline is the 10th working day of the month following the end of the Intrastat return period. For smaller businesses, an extended dead line applies. The threshold for being a “smaller business” and the actual deadline varies and will be informed to the businesses in question directly. The extended deadline has for 2021 been equal to the deadline for filing monthly VAT returns.
EU Sales Lists. If a Danish taxable person makes intra-Community supplies or renders services that are subject to reverse charge in another EU country in any return period, it must submit an EU Sales List (ESL). An ESL does not need to be submitted for a period in which no intraCommunity supplies are made.
ESLs must be completed in Danish kroner.
ESLs return period is monthly and must be submitted by the 25th in the month following the return period. In some cases, businesses that have limited intra-Community supplies may obtain permission to submit ESLs on a quarterly basis.
Correcting errors in previous returns. Errors in previous returns should be corrected by filing corrective VAT returns. It is possible to correct past returns until three years after the date the individual VAT return was originally due.
Corrections must be made electronically (both for domestic and foreign businesses) by correcting the specific VAT return related to the error.
Under specific circumstances, it is possible to apply for extraordinary correction 10 years retro spectively. This could be the case where the practice of the Danish tax authorities is rejected by the Court of Justice of the European Union and the case before the CJEU is 10 years old or more.
Digital tax administration. There are no transactional reporting requirements in Denmark.