New VAT rules on vouchers to take effect in Denmark

Starting from 1 January 2019, new rules regarding VAT on vouchers will be in place. These rules will be stricter and will affect vouchers issued by shops in Denmark. It is important for businesses to make the necessary adjustments to their invoicing and bookkeeping systems in preparation for these changes.

The reason for these changes is that the Danish Parliament is required to follow the EU Directive on the VAT treatment of vouchers. This directive will change the way VAT has been charged on vouchers in Denmark up until now. Previously, shops only had to pay VAT when the voucher was redeemed, and no VAT was paid on vouchers that were never used.

Under the new rules, VAT must be paid when a single purpose voucher is issued. These types of vouchers can only be used for one purpose, and the country where the goods or services are provided and the VAT rate are known at the time of issuance. This applies to both sales from the issuer to the distributor and sales from the distributor to the customer. However, VAT will not be charged when the voucher is redeemed.

As most vouchers issued in Denmark are only valid in Denmark and only have one VAT rate, these changes will affect the majority of vouchers issued in the country.

From an economic perspective, this means that issuers will no longer have an advantage in terms of deferring the payment of VAT until the voucher is redeemed. The same applies to the advantage of not having to pay VAT on non-redeemed vouchers.

The Danish Ministry of Taxation has sent out a draft bill for consultation on the amendment of the Danish VAT Act, with a deadline for responses of 10 August 2018. As the amendment is based on an EU Directive, it is not expected to undergo significant changes when read in the Danish Parliament.

The amendment will come into force on 1 January 2019, and businesses issuing vouchers must make the necessary adjustments to their invoicing and bookkeeping systems before then.