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VAT Returns & Recovery in Denmark

Businesses are required to submit VAT returns on a monthly, quarterly, or biannual basis, depending on their annual turnover. Typically, newly registered companies commence their VAT filings quarterly when they begin their VAT-liable activities in Denmark.

However, if the company’s annual sales turnover surpasses DKK 50,000,000, the filing frequency will be switched to monthly immediately. Conversely, if the turnover does not exceed DKK 5,000,000, the frequency will be adjusted to biannual filings.

VAT guide Denmark

VAT Returns in Denmark

Electronic Filing

In Denmark, electronic filing of VAT returns and electronic payment of VAT is mandatory, with a few exceptions such as businesses in bankruptcy. This means that businesses must submit their VAT returns electronically and pay their VAT obligations through electronic means, such as online platforms or other digital channels.

Filing Deadline

Companies are required to file VAT returns by electronic means via TastSelv Erhverv system (or “E-tax”).

The deadlines show as follows:

  • Businesses in Denmark earning less than 5 million Danish krones annually from taxable supplies must submit their VAT return twice a year by March 1st and September 1st following the end of their biannual VAT accounting period.
  • Businesses in Denmark earning between 5 million and 50 million Danish krones annually from taxable supplies are required to submit their VAT return quarterly. The deadlines for submission are June 1, September 1, December 1, and March 1, following the end of the VAT accounting period.
  • Businesses in Denmark earning more than 50 million Danish krones annually from taxable supplies are required to submit their VAT return monthly. The deadline for submission is the 25th of the month following the end of the VAT accounting period, except for June where the deadline is extended until August 17.
Interest and Penalties

In Denmark, it is a legal requirement to pay interest on underpaid VAT at rates set by statute. These rates are reviewed annually to ensure accuracy and fairness.

Additionally, failure to comply with VAT obligations, such as submitting accurate returns, may result in penalties imposed by the Danish Tax Administration. While these penalties can be tax geared, they can also be mitigated based on the specific circumstances.

If a VAT return is not submitted by the deadline, The Tax Administration will issue a provisional VAT statement based on the taxpayer’s previous liabilities. In addition, an administrative fee of 1,000 Danish krones will be charged.

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VAT Recovery in Denmark

If a foreign company is not engaged in taxable transactions in Denmark but incurs Danish VAT on local goods or services, it may be eligible to recover the Danish VAT through a VAT reclaim process. The European Union (EU) refund scheme is standardized across all EU member states, including Denmark, and is governed by Section 45 of the VAT Act.

 

To initiate the refund process, the business must submit an electronic refund application through an electronic portal established by the member state in which the business is established.

 

The refund application must meet certain criteria. For periods exceeding three months but less than a calendar year, the application must be for an amount greater than DKK 400. For a calendar year or a period shorter than three months, the application must be for an amount exceeding the equivalent of 3,000 Danish kroner. It’s important to note that applications for periods shorter than three months or longer than one calendar year are not permitted under this scheme.

 

Timing

 

The deadline for the refund application is September 30 of the calendar year following the year in which the cost was incurred. If this is missed, the input VAT cannot be refunded.

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