VAT in Denmark – a complete guide. Rates and registration thresholds | VAT in Europe #2

Denmark introduced value-added tax (VAT) in 1967. It was decided to phase out the previous sales tax system at that time. Today, VAT in Denmark is known locally as Merværdiafgiftsloven (Momsloven).

The law from 1994 introduced in Denmark contains provisions regarding local VAT (Value Added Tax). Subsequent guidelines, various amendments, and updates are published in quarterly bulletins. These are issued by the Danish Customs and Tax Administration.

The European VAT Directive, similar to other EU member states, serves as the basis for implementing VAT regulations in Denmark. In this way, it governs the framework for VAT registration, as well as any declarations, compliance, Intrastat, and other related statements.

Should you register for Danish VAT?

When delivering goods or providing services locally, Danish authorities may require a company (not being a resident) to register for Danish VAT. Situations necessitating such a process are typical for most EU countries and include:

• buying and selling (trading) goods within Denmark,
• selling stored goods through the use of consignment warehouses,
• dispatching (selling) or acquiring (purchasing) goods from another EU country,
• online sales of goods to consumers from another country after exceeding 10,000 euros from a specific sale,
• organizing and conducting paid conferences, live events, exhibitions, etc.,
• companies not subject to VAT, simultaneously conducting business in Denmark under the reverse charge principle, and independent delivery of goods.

Entrepreneurs providing services and selling goods online to consumers in the EU, whose turnover from such sales exceeds 42,000 PLN (combined for all countries) – instead of registering for Danish VAT, they can register for VAT OSS.

Since the EU introduced the VAT package in 2010, registration is necessary only in a limited number of cases.

Danish VAT rates

Every foreign company must apply Danish VAT rates if they are registered in Denmark. If a business fails to fulfill this obligation, the company will be required to pay VAT at a reduced rate. The European Union establishes the framework for these rates (e.g., with a minimum rate of 15%). However, Denmark has the freedom to set its standard rate, as well as most reduced rates.

Compliance with Danish VAT

Foreign companies that are not registered in Denmark as tax residents are subject to a set of rules they must adhere to. This concerns the scope of bookkeeping and the calculation of VAT rates. This includes:

• issuing invoices with disclosed data as specified in the Danish VAT Act,
• properly invoicing customers for goods or services following local VAT regulations at the time of delivery,
• utilizing e-invoices and having them approved by customers,
• processing credit notes and other corrections,
• applying approved foreign exchange rates.

What is the tax point for Danish VAT?

Specific rules determine the tax point for Danish VAT. Payments to the tax office must be made within 10 days after the end of the VAT accounting period (monthly or quarterly). For most goods, this is the moment of delivery or transfer of ownership. As for services, it will be the moment when the service is completed.

VAT One Stop Shop (OSS) declarations

To simplify VAT requirements for B2C sales and reduce the need for VAT registration based on customer location, a single online portal for submitting VAT One-Stop-Shop (VAT OSS) declarations has been introduced. This portal enables the submission of quarterly declarations covering all EU countries.

Companies operating within the EU can register on the portal in the EU country where they operate. Once the application is approved, they will gain access to the online portal on the first day of the quarter following the registration approval. VAT groups can also apply for registration under a single number.

VAT in Denmark

RATE	TYPE	TYPE OF GOODS OR SERVICES
25%	standard	all goods and services not subject to zero VAT rate,
0%	zero	newspapers and magazines (published more frequently than once a month), intra-community and international transportation, medical services, financial and insurance services, sale of certain properties, professional training of others.

Having only two VAT rates is quite an unconventional solution – in most cases, there are four or even five rates. A relatively simple VAT system is also present in Slovakia – standard, reduced, and zero rates.

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