Value-added tax (VAT)

Denmark applies as a member of EU the common system of value added tax (directive 2006/112/EC).

Rate

VAT rate is 25% which is imposed on taxable deliveries and imports. Denmark does not apply differentiate VAT rates as known from other countries e.g. food.

VAT returns

However, some deliveries are exempted from VAT, most notably hospital, medical and dental care, insurance, certain financial activities, lottery and betting. Some VAT exempted activities may instead be subject to payroll duty (lønsumsafgift).

The frequency by which VAT returns are to be filed depends on turnover:
  • 0-5 mDKK (0-0.7 mEUR), biannual
  • 5-50 mDKK (0.7 – 6.7 mEUR), quarterly
  • <50 mDKK (< 6.7 mEUR), monthly

Input VAT

Input VAT can in general be deducted in so far the goods and services are used for the purposes of the taxed transactions though there may be limitations e.g. on amusements and entertainment.
Input VAT on capital goods are subject to adjustment obligation which is spread over five years. In case of immovable property, the adjustment period is extended to 10 years.
Reimbursement of Danish VAT to foreign companies not VAT-registered in Denmark is possible.

Distance selling

Foreign entities registered in another EU country and selling goods to privates (B2C) e.g. via internet may be liable for VAT registration in Denmark in order to pay in Danish VAT (25%) of the Danish sale.

The criterias for registration are:
  • Turnover > 280 tDKK (37 tEUR)
  • Retailer can be considered also to handle the transportation

If the goods sold are subject to special excise duties (e.g. confectionery, tobacco, light bulbs and alcoholic drinks) registration is compulsory disregard size of turnover.