Denmark introduces a new Reverse Charge scenario on telecommunication services

As of 1 January 2024, Denmark is implementing a new domestic reverse charge scenario that significantly impacts the VAT treatment of the telecommunications services wholesale. According to the legislative update, the reverse charge mechanism will apply to domestic supplies of telecommunication services where the primary purpose of the purchase of these services is resale, and the recipient's own consumption of the services is insignificant. These changes are set to streamline the taxation process and place greater responsibility on buyers in particular scenarios.

Defining Telecommunications Services

The following services fall under the category of telecommunications services for VAT purposes in Denmark:

• Fixed and mobile phone services, enabling voice, data, and video transmission.
• Telephone services via Internet.
• Audio and text services.
• Fax, telegraph and telex.
• Access to the Internet.
• Private network connections.

For more details, check here the full list of services considered as telecommunication services in Denmark.

The New Reverse Charge Scenario in Denmark

The reverse charge mechanism will apply to the specific scenario of domestic supplies B2B of telecommunication services for resale.

• Supplier requirements
  Taxable person established and VAT registered in Denmark
• Customer requirements
  Taxable person established and VAT registered in Denmark, acting as a reseller of the services in scope
• Scope
  Telecommunication services for resale.

For businesses engaged in supplying telecommunications services to other businesses, it is crucial to ascertain whether the buyer is a reseller of such services. If the customer qualifies as a reseller, and the customer’s usage of these services is negligible, the reverse charge procedure will come into play.

For more detailed information and official guidance on these changes, you can refer to the official notice published by the Danish tax authorities.