VAT Registration in Denmark
In Denmark, businesses that engage in taxable activities are required to register for VAT with the Danish Tax Agency (SKAT) and provide certain information. Businesses must register for VAT within 30 days of starting taxable activities. Failure to register can result in penalties and interest charges.
A business is considered established in Denmark if it is incorporated in the country, if essential management decisions or central business administration takes place in Denmark, or if it has a physical presence in Denmark with the necessary human or technical resources to make or receive supplies.
Register for VAT in Denmark
In Denmark, individuals who are established in the country must register for VAT if the value of their taxable supplies in Denmark actually exceeds or is expected to exceed DKK 50,000 within a 12-month period, in accordance with Section 48 of the VAT Act.
However, the registration threshold does not apply to businesses that are established outside of Denmark, or to businesses that supply new means of transportation to other EU jurisdictions.
In addition to the above, special registration thresholds apply to the following:
Individuals who are legally blind, with a threshold of DKK 170,000, and
Artists and their descendants who make the first sales of their works of art. For the latter group, the registration threshold is DKK 300,000 in the current year and the preceding year.
Taxable Persons
According to the Danish VAT Act, individuals who carry out an independent economic activity are subject to taxation under Section 3. This applies to those who are either registered for VAT or are required to register for VAT. In addition, there are a few other groups of people who are also taxable, including those who occasionally supply a “new means of transport” to another EU country, public utilities, and state, regional, and municipal institutions that provide goods and services in competition with commercial enterprises.
Both natural and juridical persons are considered “persons” for VAT purposes, and it is the individual, rather than the business itself, that is subject to taxation. When registered for VAT, all business activities of the registered individual are typically covered.
Selling in Denmark?
Registration in Denmark
Voluntary Registration
The Danish VAT Act allows for voluntary registration under Section 49, which enables a person to recover input VAT even if they are not required to register for VAT. The person must either be making taxable supplies or carrying on a business with the intention of making such supplies.
To voluntarily register, the person must apply to the Tax Administration and commit to a minimum registration period of two years. Furthermore, if a person is established in Denmark through a residence or fixed business establishment, they may voluntarily register even if they do not make taxable supplies in Denmark, as long as they make or intend to make taxable supplies outside of Denmark that would be taxable if made in Denmark.
Exemptions from Registration
Individuals or entities in Denmark are exempt from registering for VAT if they fall under the following categories:
- Danish-based businesses that provide goods or services below the relevant registration threshold
- Companies that are exempt from VAT such as educational services, healthcare services, and financial services
- Individuals or entities that do not engage in an economic activity on a regular basis, or whose activity is not conducted in a commercial manner, are not considered to engage in “independent economic activity”
Group Registration
The Danish VAT Act allows two or more individuals to register as a group for VAT purposes under Section 47, subject to approval from the Tax Administration. Group registration allows taxpayers to treat the combined businesses of everyone as a single registered taxpayer, with certain conditions that may apply.
Divisional Registration
If a person operates a business in multiple divisions and maintains separate accounts for each division, they may register each division separately by submitting a request and obtaining approval from the Tax Administration.
However, the Tax Administration will not approve divisional registration if it leads to a significant transfer of supplies between divisions being subject to VAT and an overall reduction in the person’s VAT costs due to changes in the basis for calculating partial input VAT deductions. Regardless of whether a business is registered as a single entity or as a separate division, it is responsible for the VAT obligations of all its divisions.
VAT Representatives
A business that is established in an EU Member State, Norway, Iceland, the Aland Islands, the Faroe Islands or Greenland and has taxable supplies in Denmark must register for VAT in Denmark. However, it may choose to appoint a VAT representative in Denmark to act on its behalf for all VAT matters. If a business is established outside these jurisdictions and is required to register for Danish VAT, it must appoint a Danish VAT representative who is jointly and severally liable for any VAT debts incurred by the business.
The VAT representative must maintain VAT records to account for Danish VAT on behalf of the business. The appointment of a VAT representative is not a substitute for registration but an alternative way of managing VAT liability. The liability of a VAT representative is not subject to any caps.
Distance Sales
Starting July 1, 2021, there is a simplified registration process available for distance sellers within the EU and those outside the EU who sell low-value goods. This process is known as the “One Stop Shop” (OSS) regime and is applicable across the EU.
The OSS allows businesses to register for VAT in one EU member state, where they can declare and pay VAT on all their sales to customers in other EU member states. This reduces the administrative burden of having to register for VAT in each individual member state where sales are made. The OSS also simplifies VAT compliance for distance sellers of low-value goods, as they can declare and pay VAT on all their sales to customers in the EU through a single registration. The OSS covers both goods and services sold by distance sellers.
Last Updated: 27/12/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
