Everything you need to know about VAT in Denmark: rates, compliance, and more
Welcome to our comprehensive VAT (Value Added Tax) guide for Denmark, designed for e-commerce entrepreneurs within the European Union who are looking to expand their market presence to Danish consumers. Understanding Denmark’s VAT system is critical for the legal and effective operation of your business, ensuring compliance with both Danish and European Union VAT rules. This guide provides crucial information on VAT rates for different categories of items, VAT registration procedures, filing obligations, and other vital considerations.
VAT Rates in Denmark: 2024
As a member state of the EU, Denmark adheres to the VAT regulations established by the European Union, which include maintaining the standard VAT rate above the EU’s minimum of 15%. VAT-registered companies in Denmark must charge the correct VAT rate on their sales transactions and transfer the collected tax to the Danish tax authorities (SKAT).
Denmark simplifies the VAT system by applying a uniform VAT rate:
| Rate | Type | Goods or Services Covered |
|---|---|---|
| 25% | Standard VAT rate | This single rate applies across the board to all goods and services provided in Denmark, with several exemptions as outlined below. |
However, certain goods and services are exempt from VAT, including but not limited to:
- Postal services provided by the national postal authority
- Healthcare and dental care services
- Social services and related goods
- Educational services provided by public institutions
- Financial and insurance services
- Rental of residential property
- Cultural activities by certain organizations
- Activities performed by non-profit organizations
Please note that this list is not exhaustive, and there may be specific conditions or additional exemptions that apply. It is recommended to consult SKAT or a Danish tax advisor to ensure full awareness of any potential VAT exemptions that may pertain to your specific business activities.
Danish VAT Compliance
VAT compliance is a critical part of your business activities in Denmark. This includes obtaining a Danish VAT number and submitting VAT returns on schedule.
How to Register for VAT in Denmark
Businesses engaged in taxable sales in Denmark are legally required to register for VAT. Here’s how you can register:
Application Submission: To get started, fill out the VAT registration form available on the SKAT website and submit it electronically.
Documentation Provision: Attach necessary documentation such as the certificate of registration for your business, identification of company directors, and a business operation plan within Denmark.
Upon processing your application, SKAT will issue a VAT number, which is necessary for all VAT-related transactions in Denmark.
Danish VAT Returns
VAT-registered businesses must file VAT returns regularly. The frequency of the filing is based on your business size and type.
Electronic Filing: You must file VAT returns electronically via the online system provided by SKAT.
Submission and Payment: Ensure that you meet all filing deadlines and VAT payments to avoid penalties and interest charges for late submission.
For detailed instructions on VAT return filing or updates to the regulations, consult with SKAT or a professional tax advisor well-versed in Danish VAT laws.
VAT-Related Fines in Denmark
Staying compliant with VAT regulations is necessary to avoid penalties. SKAT can impose fines for various offenses, detailed below:
| Infraction Type | Penalty Description | Fine / Penalty Range |
|---|---|---|
| Late Filing | Failure to submit a VAT return by the due date. | Monetary penalties can be assessed, which may include a percentage of the VAT due or a minimum fixed amount. |
| Late Payment | Payment made after the VAT due date. | Interest is accrued on the outstanding VAT from the due date until full payment is made. |
| Filing Errors | Inaccuracies or incomplete information on VAT returns. | Fines depend on the nature and the extent of the error, and the eventual tax impact. |
| Non-Compliance with Registration | Not registering for VAT when required. | Penalties could include retrospective VAT liabilities, interest, and additional fines. |
| Poor Record-Keeping | Failure to keep adequate VAT records or invoices. | Fines can be imposed based on the degree of non-compliance and potential tax shortfall. |
Please note that penalties can vary. It is advisable to seek the latest guidance from SKAT or a professional tax advisor.
VAT Registration Thresholds in Denmark
It is crucial for businesses to understand the VAT registration thresholds:
- For local businesses: VAT registration is mandatory once the annual turnover exceeds DKK 50,000.
- For EU-based businesses: VAT registration is required from the first taxable sale to Danish customers, with no threshold.
- For non-EU-based businesses: VAT registration is mandatory from the first taxable sale in Denmark, and a fiscal representative is often required.
VAT thresholds and regulations may change, so always refer to the most recent information from SKAT or consult with a tax advisor experienced in Danish VAT law.
