Denmark: VAT treatment of digital accessories in online games clarified in Tax Court Decision

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The Danish Customs and Tax Administration has clarified the VAT treatment of digital accessories traded within online games in National Tax Court Decision No. SKM2023.504.LSR, which was posted online. The case revolved around a taxpayer who engaged in the purchase and sale of digital accessories, commonly known as “skins,” in online games, without reporting or remitting VAT for these transactions. Following an investigation, the Tax Agency issued a notice of increased VAT liability.


In the subsequent appeal process, the National Tax Court supported the Tax Agency’s decision and made the following key determinations:


  1. The Tax Agency was accurate in designating the taxpayer as a taxable entity. This classification was based on the significant volume of the taxpayer’s digital accessory sales, which qualified as an independent economic activity as defined under section 3 of the VAT Act.
  2. Transactions involving skins, acquired through gambling in this context, remained subject to taxation, as the taxpayer’s business was closely linked to the sale of these accessories.
  3. The taxpayer was not eligible to deduct input VAT due to a lack of adequate documentation.



Source: skat.dk

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