DenmarkManual

VAT registrations and simplifications in Denmark

When do I need a Danish VAT number? 

Generally, a foreign business must register for VAT in Denmark as soon as a taxable supply is made. The following are the usual examples of taxable transactions:

  • Domestic supply of goods not reverse charged: A supply of goods located in the Denmark where reverse charge does not apply requires a VAT registration of the supplier.
  • Supply of services not reverse charged: Foreign non-established businesses supplying services on which Danish VAT is due by the supplier must register for VAT. These services are rather exceptional, as the general B2B rule would apply.
  • Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
  • Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT.
  • Intra-Community supply: Supplying goods another Member State is also a taxable transaction that obliges the supplier to register for VAT. 
  • Distance sales: When applicable in case the Seller has not joined OSS. See the E-commerce manual for more information.

VAT registration must be applied for no later than 8 days before the start of the business subject to registration. However, backdated registrations are possible in Denmark.

There is a registration exemption threshold for Danish established companies amounting to DKK 50,000. This is the VAT registration threshold applicable to small established businesses (the converted threshold is equivalent to approximately EUR 6,700). Also, there is an optional VAT registration regime for taxable persons involved in the letting of immovable property for business purposes.

Non-established companies must submit apply for VAT registration before performing any taxable transactions. The tax authorities may require these taxpayers to provide a guarantee based on the VAT liability if it is assessed a likely risk of loss of tax revenue. In practice, we have never experienced this special request from the tax office.

VAT registrations are handled by the Business Authority or Erhvervsstyrelsen.  

More details about VAT registration in Denmark can be found here, here, here, here and here, including the registration form for foreign companies. Also, find here the legal guidance for VAT purposes.

Finally, the VAT registration obligation is regulated in Art. 47 and 48 DK VAT Law.

Fiscal representative requirements in Denmark

Companies established in a non-EU country other than Norway, Iceland, the Faroe Islands, Isle of Man, UK, the Åland Islands and Greenland need to appoint a fiscal representative in Denmark.

Also, a fiscal representative will be required in case the non-EU company performs imports or exports from the Danish VAT number – this also applies to those countries which have signed a mutual agreement instrument with Denmark -.

The VAT representative shall be a person resident in Denmark or a company established in the country. Also, the VAT or fiscal representative is jointly and severally liable for the VAT due by the foreign taxpayer.

The resident fiscal representative can represent several foreign companies with one VAT number in certain specific scenarios:

  • Delivery of goods according to ML § 36, subsection 1, no. 5 , to other EU countries.
  • Delivery of goods directly from a tax warehouse to another EU country or to places outside the EU.
  • Acquisition of goods in this country from another EU country and the goods are placed directly in a tax warehouse, in Copenhagen's Freeport or exported to places outside the EU.

In such cases, the resident representative completes a combined VAT return for the foreign companies (transactions mentioned in § 93 of the VAT Executive Order). After subsection 3, the resident representative must keep an account for each individual liable for VAT.

The obligation to appoint a fiscal representative in Denmark is regulated in Art. 47.2 DK VAT Law. Also, the legal guidance on VAT registration provides clarification to the fiscal representative requirement.

Find here the Marosa overview about the fiscal representation requirement.

VAT groups in Denmark

VAT grouping or fællesregistrering is possible in Denmark.

The condition to apply for VAT grouping is that the applicant entities run all businesses liable for VAT registration. Nevertheless, the tax authorities may grant authorization to a taxable person carrying out taxable supplies to register together with businesses involved in exempt activities and non-taxable persons. In the latter case, one group member must hold, directly or indirectly, all shares in the other members and the members must be established in Denmark.

In addition, the following VAT grouping rules apply in Denmark:

  • Only Danish-established businesses can be part of a VAT group. Foreign companies registered with a fiscal representative in Denmark cannot be part of a VAT group.
  • VAT grouping is optional in Denmark. Companies can apply for a VAT group when meeting the requirements, or they can choose to remain separate entities for VAT purposes.
  • There is a specific time frame to apply for the VAT groups regime: the application must be submitted at least one month before the change is desired.
  • Once the application is approved, a group VAT number is granted to the group. Jointly registered companies are considered as one company for VAT purposes.
  • Intra-group transactions are disregarded for VAT purposes.
  • Every group member is jointly and severally liable for the VAT debts and penalties of the entire group.
  • The minimum period for a VAT group is three years. After the first three years, entities may come in and out of the French VAT group with the representative’s consent.
  • For VAT refund purposes, each member would be considered a separate business unit.
  • Members of a VAT group submit one single consolidated VAT return. It is not possible to file separate VAT returns for each entity.

Find here more information about VAT groups in Denmark. Also, here the registration information.

The VAT grouping in Denmark is regulated in Arts. 3.3 and 47.4 DK VAT Law.

Consignment and Call-off stock in Denmark

The EU introduced a call-off stock simplification that all EU Member States must implement. This was put into place so that businesses that operate under a consignment stock structure do not have to VAT register in the country of destination. Denmark has introduced the consignment stock simplification.

 

Check out our article on the EU call-off stock simplified VAT rules for more detailed information.

Danish Bad Debt Relief

Bad debt refers to an unpaid invoice for which the supplier has paid the VAT to the tax administration: this is, an invoice has been issued with VAT, reported in the VAT return and the VAT amount has been paid to the tax authorities but the whole price has not been collected from the customer.

This is often due to the client´s bankruptcy, insolvency or simple missed payments to suppliers. In these cases, most countries allow to recover the VAT initially paid to the authorities, however, the conditions change from one country to another.

Bad debt relief refers to the possibility of recovering the VAT from that invoice. Denmark allows for bad debt relief by adjusting the out VAT paid in the periodic VAT return. In order to be able to deduct the bad debt:

  • The loss is recognized: the supplier must be able to demonstrate the loss by use of a court order.
  • When the debtor is declared in bankrupt procedure or the debtor is dead, this is treated as the equivalent to a court order.
  • Otherwise, it is sufficient that the Supplier has made an effort to claim the amount through a debt collection agency, a lawyer or by any other means without success.

Danish Import Deferral and Postponed VAT Accounting

Denmark has introduced a postponed import VAT accounting mechanism where import VAT can be reported as input and output VAT (reverse charged) in the VAT return instead of being paid to the authorities upon importation.

Import VAT deferral, meaning delaying the payment of VAT for a given period, is not applicable in Denmark. You should however be aware of the difference as postponed import VAT accounting is sometimes referred as deferral import VAT.

The application shall be submitted by the 15th day of the month previous to the desired start of the postponed import VAT accounting application.

Find here more information about imports in Denmark.

Have a look at our general article about postponed import VAT accounting

Danish Customs and VAT warehouses

Customs or bonded warehouses are available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due. Sales within the customs warehouse are zero-rated.

VAT warehouses are available for cleared goods (T2). These goods have already paid customs duties. The conditions are similar to those of Customs warehouses. The goods allowed are those included in Appendix V of the VAT Directive.

Find here more information about special customs regimes in Denmark. Also, Art. 12.2 Danish VAT Act regulates these Customs arrangaments.

Finally, find here official EU guidelines on Customs’ special regimes.

Special VAT Schemes in Denmark

Businesses established in Denmark benefit from a registration threshold of DKK 50,000 a year. Apart from that simplification for small businesses, the following special regimes apply:

 

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