Danish VAT rules: Guidelines for businesses operating in Denmark and the EU single market

The impact of EU VAT directives on Denmark's VAT rules and single market economy

Denmark is a part of the European Union and follows its VAT rules. The EU creates guidelines called VAT Directives that member states, including Denmark, must follow. These guidelines are more important than Denmark's own rules on VAT. Denmark is also a part of the EU's single market economy.

Non-resident VAT trading in Denmark: Guidelines and registration process for foreign businesses

Foreign businesses can register for VAT in Denmark without setting up a local company. This is called non-resident VAT trading. There is no minimum sales threshold for foreign businesses to register for VAT in Denmark, which means they must register from the first day they start their activities in Denmark. This also applies to non-EU companies, who may need to appoint a local fiscal representative in some cases.

There are specific situations where a foreign business must register for Danish VAT, such as when they import goods into the EU via Denmark, buy and sell goods within Denmark, store goods in a warehouse in Denmark, sell goods from Denmark to other EU countries, acquire goods from other EU countries into Denmark, or sell goods to private individuals in Denmark from another EU country, like online retailing.

The registration process for Danish VAT usually takes about three weeks from the date of application submission, but this may vary.

Danish transaction rules: Invoice requirements, foreign currency transactions, error correction and record keeping

In Denmark, there are specific rules that govern how transactions are recorded and processed. These rules cover a range of areas, including:

- Danish invoice requirements: This includes what information needs to be included on an invoice for it to be considered valid in Denmark.
- Foreign currency invoicing and reporting: If you're dealing with transactions in a foreign currency, there are specific rules you need to follow when invoicing and reporting those transactions.
- Correcting errors in previous returns: If you've made an error in a previous tax return or financial report, there are guidelines on how to correct that error.
- Record keeping requirements: There are certain records that businesses in Denmark are required to keep, such as financial statements, invoices, and bank statements. These records need to be kept in a specific format and for a certain period of time.

VAT in Denmark: Rates, returns and supplementary statistical information

In Denmark, the standard VAT rate has been 25% since 1992. There are only two VAT rates - 25% and 0%, with no reduced rates available. Some supplies are also exempt from VAT.

If your company has a Danish VAT number, you must submit periodic VAT returns that provide details on all taxable supplies and inputs. The frequency of these returns - monthly, quarterly, or bi-yearly - depends on your company's annual revenue. Deadlines for VAT returns also vary based on the filing frequency. You need to file these returns electronically using the TastSelv Erhverv system, which is the e-tax system for businesses.

In addition to VAT returns, your company may also need to submit supplementary statistical information. For instance, the Danish Intrastat system requires monthly returns that list all the movement of goods between Denmark and other EU-member states. There are annual thresholds that apply to these filings. The EC Sales List return provides information on the VAT numbers of EU customers and the sales values. You need to file EC sales lists either monthly or quarterly.

If your foreign company isn't making taxable supplies in Denmark but is incurring Danish VAT on local goods or services, then you can recover the Danish VAT through a VAT reclaim process. You can find more information on VAT in other countries as well.