DenmarkManual

Reverse charge in Denmark

Reverse charge for non-established companies in Denmark

According to art 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses.

Denmark has introduced this reverse charge on certain supplies. Supplies made by a non-established supplier in Denmark fall into the reverse charge mechanism in the following scenarios:

  • Supplies under triangulation arrangement by a non established Intermediate supplier
  • Supplies of goods with installation to a Danish taxable person and located in Denmark
  • Supplies of natural gas or electricity through distribution systems by non-resident suppliers to taxable persons registered in Denmark.

1.       Reverse charge on supplies of goods with installation

  • Supplier requirements
    Not established in Denmark
  • Customer requirements
    A taxable person (also applicable in the customer is another foreign entity).
  • Scope
    Supplies of goods with installation located in Denmark.

Check the Legal Guidance about reverse charge on supplies of goods with installation.

2.       Reverse charge on supplies of natural gas, electricity, heat and cooling energy

  • Supplier requirements
    Not established in Denmark
  • Customer requirements
    A taxable person VAT registered in Denmark
  • Scope
    Supply of natural gas or  electricity through distribution systems.

Check the Legal Guidance about reverse charge on supplies of natural gas and electricity.

The reverse charge on supplies made by non-established companies is regulated in Art. 46.1, for triangular trade, Art. 46.2 for supplies of goods installed in Denmark, and Art. 46.5 of the Danish VAT Act, for supplies of natural gas and electricity.

Reverse charge on B2B services

Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located.

According to the general B2B rule, any business resident outside Denmark supplying services to a Danish based customer will not charge any VAT and the transaction will be reverse charged by the customer.

There are however a number of exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in Denmark provided the following conditions are met:

  • Services connected to immoveable property are located where the property is located.
  • Passenger transport services will be located where the transport takes places (apportioned if necessary).
  • Catering services are located where the catering takes place.
  • Short term leasing of means of transport are located where the vehicle put at the disposal of the customer.
  • Access to conferences, fairs and exhibitions is located where the event takes place.

The general rule may also be deviated where the supplier has a permanent establishment in the country of the customer and the PE has intervened in the supply.

 

Also, have a look at specific content about carousel fraud published by the Danish tax authorities.

Reverse charge on specific goods and services in Denmark

Domestic reverse charge may also apply on the supplies of certain goods and services made by companies established in Denmark.

  • Supply of CO2 emission allowances, Art. 46.6 of the Danish VAT Act. The Supplier must be a Danish established company and the customer a taxable person.  
  • Supplies of investment gold, Art. 46.4 of the Danish VAT Act. The Supplier must be a Danish established company and the customer a VAT registered business in Denmark.  
  • Supply of metal scrap, Art. 46.7 of the Danish VAT Act. The Supplier must be a Danish established company and the customer a taxable person.  
  • Supplies of mobile phones, Art. 46.8 of the Danish VAT Act. The Supplier must be a Danish established company and the customer a taxable person. 
  • Supplies of integrated circuit devices, when included on the final product, Art. 46.9 of the Danish VAT Act. The Supplier must be a Danish established company and the customer a taxable person.  
  • Supplies of game consoles, tables and laptops, Art. 46.10 of the Danish VAT Act. The Supplier must be a Danish established company and the customer a taxable person.  
  • Supplies of gas or electricity to a distributor, Art. 46.11 of the Danish VAT Act. The Supplier must be a Danish established company and the customer is a reseller.  

Check the Legal Guidance about reverse charge scenarios in Denmark.
 

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