Worldwide VAT, GST and Sales Tax Guide
Thresholds
Registration
Established
DKK50,000 (approx. EUR6,700)
Non-established No threshold
Established within the EU
Distance selling
Intra-Community acquisitions
Electronically supplied services
DKK50,000 in Denmark, EUR100,000 in total within EU
DKK75,000 (approx. EUR10,000)
DKK80,000 (approx. EUR10,700)
DKK75,000 (approx. EUR10,000)
Recovery of VAT by non-established businesses Yes, subject to certain conditions
B. Scope of the tax
VAT applies to the following transactions:
• The supply of goods or services made in Denmark by a taxable person
• The intra-Community acquisition of goods from another EU Member State by a taxable person (see the EU chapter)
• Reverse-charge services received by a taxable person in Denmark
• The importation of goods from outside the EU, regardless of the status of the importer
Quick Fixes. Pending introduction of a “definitive” system for the VAT treatment of intra-Community supplies of goods to taxable persons, the EU has adopted Quick Fixes for intra-Community trade in goods. For an overview of Quick Fixes rules, see the EU chapter. For documentary requirements, see Section H. Invoicing, subsection Proof of exports and intra-Community supplies.
Quick Fixes have been implemented in Denmark since 1 January 2020. In general, the implementation follows the EU Directive; however, the Danish requirements regarding documentation for transport of goods to another Member State in connection with EU supplies have not been increased and are somewhat more lenient than the Quick Fixes EU Directive rules.
Effective use and enjoyment. To avoid instances of non-taxation or double taxation, EU Member States can apply use and enjoy rules that allow a service that is “used and enjoyed” in the EU to be taxed or prevent a service that is “used and enjoyed” outside the EU from being taxed. If a service is taxed in the EU under the use and enjoyment provisions, a non-EU supplier of the service may be required to register for VAT in every Member State where it has customers that are not taxable persons. For information regarding the rules relating to VAT registration, see chapters on the respective EU countries.
In Denmark, the following services are subject to the use and enjoyment provisions:
• Transfers and assignments of copyrights, patents, licenses, trademarks and similar rights
• Advertising services
• Services of consultants, engineers, consultancy firms, lawyers, accountants and other similar services, as well as data processing and the provision of information
• Obligations to refrain from pursuing or exercising, in whole or in part, a business activity or a right referred to in this list
• Banking, financial and insurance transactions, including reinsurance, with the exception of the hire of safes
• The supply of staff
• The letting of movable tangible property, with the exception of all means of transport
• The provision of access to a natural gas system situated within the territory of the Community or to any network connected to such a system, to the electricity system or to heating or cooling networks, or the transmission or distribution through these systems or networks, and the provision of other services directly linked thereto
• Telecommunications services (only for supplies from a Denmark supplier to non-EU taxable person or supplies from a Denmark supplier to any nontaxable person)
• Radio and television broadcast services (only for supplies from a Denmark supplier to non-EU taxable person or supplies from a Denmark supplier to any nontaxable person)
Transfer of a going concern. The Danish VAT Act stipulates that the transfer of a going concern (TOGC) is not a taxable transaction for VAT purposes. To qualify as a TOGC, the following conditions should be met:
• The transferred assets need to be a full or partial transfer of a business that can be run by itself (transfer of shares does not qualify, nor does stand-alone transfer of inventory).
• The transferring party will stop carrying out activities like those transferred.
• If the seller is registered for VAT for the transferred business/activity, the receiving party must be or become registered for VAT in Denmark.
Transactions between related parties. Denmark has rules for transactions between related parties. Related parties are:
• Parties closely related due to family or other personal relations.
• Parties closely related due to legal, managerial or membership relations.
• A party having economic interests in another party’s company or property.
If certain conditions are fulfilled, the tax authorities may fix the taxable amount at the open market value for the goods and services supplied.
If there is no proper market value for the goods and services or alike, the taxable amount must be the cost price (except for a normal markup), and the seller must take all cost elements into consideration.
The Danish tax authorities can adjust the taxable amount when:
• The payment for a VAT-taxable supply is lower than the cost price, and the buyer does not have full right to VAT deduction.
• The payment for a VAT-exempt supply is lower than the cost price, and the supplier has a limited right to VAT deduction (turnover split).
• The payment for a VAT-taxable supply is higher than the open market value, and the supplier has a limited right to VAT deduction (turnover split).
C. Who is liable
The term “taxable person” means any entity or individual that makes taxable supplies of goods or services, intra-Community acquisitions, or distance sales in the course of a business.
The VAT registration threshold is turnover of DKK50,000 a year for a business resident in Denmark. If the annual turnover subject to VAT is below the threshold, the business is not required to register for VAT in Denmark.
As of 1 January 2025, the same threshold applies for small businesses established in the other EU Member States. If the turnover in Denmark does not exceed DKK50,000, the business is not obliged to register, subject to certain conditions, including notification to the authorities in the country of establishment of the intent to rely on the threshold.
No registration threshold applies for a non-established business established in a non-EU country. Consequently, VAT registration is required as soon as a business established outside of the EU begins making supplies subject to VAT in Denmark.
Exemption from registration. If a business only makes supplies that are exempt from VAT, then it does not have to register for VAT. However, the business is often liable to register for salary duty. It is a duty, which some businesses must pay, when they deliver VAT exempt goods and services. For example, businesses that supply education, medical services, financial services, cultural ser-
Non-established businesses. A non-established business must register for Danish VAT if it makes any of the following supplies:
• Goods that are located in Denmark at the time of supply
• Intra-Community acquisitions in Denmark
• Distance sales greater than the annual threshold (the registration may be under the OSS)
• Business-to-consumer (B2C) e-services, broadcasting and telecommunications to individuals with Danish residence (except if such EU sales do not exceed the threshold) (the registration may be under the OSS)
• Services that are not subject to the tax under the “reverse-charge” mechanism (for example, services related to real estate that are supplied to private persons) (the registration may in many cases be under the OSS). Most services supplied to taxable persons in Denmark are covered by the Danish reverse-charge regime
For details on how a non-established business registers for VAT in Denmark, see the subsection Registration procedures below.
Tax representatives. Businesses established in the following countries are not required to appoint a tax representative to register for Danish VAT:
Aland Islands Faroe Islands Iceland United Kingdom (UK) EU Member States Greenland Norway
However, businesses established in the above countries may choose to appoint a tax representative to register for VAT. If a business established in a country, which is not an EU Member State, imports goods into Denmark, there will be an obligation to appoint a fiscal representative who is jointly and severally liable for any VAT or customs duty payments due (also applies to the nonEU countries mentioned above).
VAT registration for non-established taxable persons from the Aland Islands, EU Member States, the Faroe Islands, Greenland, Iceland, Norway and the UK without a fiscal representative will mean that the Danish tax authorities will contact the business directly at their address in their home country.
Businesses established in other countries must appoint a Danish resident (either a business or a natural person) as tax representative to register for VAT. The representative and the nonresident business are jointly and severally liable for VAT liabilities.
The Danish tax authorities may require a non-established taxable person to provide security equal to its expected VAT liability for a three-month period. This may occur if the tax authorities believe a risk exists that the non-established business may not pay its indirect tax obligations.
Reverse charge. If a non-established business supplies services to a taxable person in Denmark the taxable person may be required to account for the VAT due under reverse-charge accounting. This means that the taxable person charges itself VAT. The self-assessed VAT may be deducted as input tax.
In the case of digital services, telecom services or broadcasting services supplied in a B2B context, the place of supply is the place where the recipient is established. No Danish VAT should be charged, and reverse charge applies unless supplier and customer are established in Denmark.
In the case of digital services, telecom services or broadcasting services supplied in a B2C context, Danish VAT is always due in the case of supplies to customers established in Denmark, disregarding whether the supplier is established inside or outside the EU (except for EU businesses whose B2C supplies do not exceed the threshold of EUR10,000).
Online marketplaces and platforms. Under the new EU VAT e-commerce rules, effective 1 July 2021 taxable persons that “facilitate” certain B2C sales of goods are deemed to have purchased and then supplied those goods themselves. This means that the single supply from the “underlying” supplier to the final consumer is split into two deemed supplies:
• A supply from the supplier to the facilitator (deemed B2B supply).
• A supply from the facilitator to the final customer (deemed B2C supply). Any intermediation service provided by the facilitator is disregarded for VAT purposes.
This provision does not cover all sales facilitated via the facilitator. It only covers distance sales of goods imported from non-EU jurisdictions in consignments with an intrinsic value not exceeding EUR150. The jurisdiction of residence of the supplier using the facilitator is irrelevant. The supply to the facilitating platform is VAT exempt and the supplies made by that platform follow the e-commerce VAT rules as described above. In addition, the provision also covers sales within the EU, if the supplier is not established within the EU. This applies to both local shipments within one Member State as well as intra-Community shipments. In both cases, the final customer must be a nontaxable person.
In Denmark, online marketplaces and platforms established outside the EU must register in the country of dispatch. For more details about the rules for online marketplaces, see the EU chapter. Vouchers. Denmark has implemented the EU Voucher Directive in the Danish VAT law with effect as of 1 July 2019. Prior to this implementation, no definition of the VAT treatment of vouchers was included in the Danish VAT law. Thus, any voucher issued on 1 July 2019 or later shall from a Danish VAT point of view be treated under the new definition of single-purpose vouchers (SPVs) and multipurpose vouchers (MPVs) set out in the Danish VAT law. The wording of the Danish Amendment Act implementing the EU Voucher Directive is very similar to the wording in the EU Voucher Directive.
Since there is only the standard VAT rate of 25% in Denmark (except for a 0% VAT rate on newspapers), any voucher that can only be redeemed in Denmark would in general be qualified as an SPV for VAT purposes, unless the voucher can also be used for exempt goods or services (or newspapers). According to the guidelines made by the Danish Tax Agency in connection with the implementation of the EU Voucher Directive, any SPV must be treated as if the issuer supplied the goods and services (even if it is not so from a civil law point of view). The issuer must therefore pay the VAT when the voucher is transferred. It is the opinion of the Danish Tax Agency that it makes no difference if an SPV is issued in own name or if the issuer acts as provider of the voucher in its own name. The tax base for an SPV is the payment received.
For an MPV, VAT is not settled until the actual transfer of the underlying good or service to the bearer of the voucher. Thus, VAT is not due until the time of redemption, and no VAT is settled of the preceding transfers of an MPV. The VAT basis for an MPV is a starting point of the counter value paid for the voucher. If an MPV can be used multiple times, it is only the part of the voucher that is redeemed of which VAT should be calculated.
Registration procedures. For domestic businesses, the registration process is performed online and requires a digital signature (MitID) (which could be that of a Danish advisor, e.g., an auditor or a lawyer).
For foreign businesses, the registration application can be submitted either electronically or in hard copy. It is often made by paper, as a foreign business will normally not have a Danish digital signature. However, if made electronically, it can be done by an advisor using their digital signature. Foreign businesses must register for VAT by filling out the following form: https:// virk.dk/myndigheder/stat/ERST/selvbetjening/Registration_of_Non-Danish_Company__Start__40112/.
For foreign businesses, the registration application must include documentation for the company registration number in the home country (normally certificate of incorporation and articles of association), documentation of VAT registration in the home country (if applicable) and a confirmation from the tax authorities in country of establishment that the company has no unpaid debts to the tax authorities. For both domestic and foreign businesses, the VAT registration application must be submitted at the latest eight days before taxable activities are started in Denmark. If the application is not submitted or it is submitted late, or the information provided is not correct or insufficient, a penalty might be issued.
When a VAT registration is required, the business should submit a request to register at least 8 days before the start of the activities leading to the requirement to register. It is, however, possible to register retroactively.
The registration process normally takes roughly 14 days but can take up to 2 months. A certificate with the Danish VAT number can be downloaded at the e-tax platform. The business can login into the e-tax platform using its digital signature (MitID) or a special code (TastSelv code) issued by the Danish Tax Agency.
Deregistration. A taxable person that ceases to be eligible for VAT registration must deregister within eight days. For Danish businesses with a Danish business identification number, the VAT number will be the same if taxable activities are resumed. For foreign businesses, it is not possible to receive the same VAT number if taxable activities are resumed.
Changes to VAT registration details. Businesses with a Danish VAT registration must notify the Danish Tax Agency when there are changes to their VAT registration details, such as name of company, address and type of business. The business should notify the authorities as soon as the change is known. It could trigger a new VAT registration for the business if the business obtains a new company number, i.e., significant changes to the legal person. This could be the case if the business moves its establishment to another country.
Domestic businesses and non-established businesses with a Danish company number can notify the authorities about changes online. Non-established business without a Danish company number must submit a paper form to the authorities.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 25%
• Zero rate: 0%
The standard rate of VAT applies to all supplies of goods or services, unless specific measure provides for the zero rate or an exemption.
Examples of goods and services taxable at 0%
• Newspapers
• Supplies to ships
• Supplies of gold to the Danish National Bank
Some supplies are classified as “exempt-with-credit,” which means that no VAT is chargeable, but the supplier may recover related input tax. Exempt-with-credit supplies include exports of goods and related services, intra-Community supplies of goods and intangible services supplied to either another taxable person established in the EU or a recipient outside the EU (see the EU chapter).
The term “exempt supplies” refers to supplies of goods and services that are not liable to tax and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Medical services
• Education
• Financial services
• Insurance and reinsurance
• Supplies made by writers, composers and performing artists
• Cultural services
• Transport of passengers
• Investment gold
• Leasing of real estate
Option to tax for exempt supplies. It is possible to make a voluntary registration to tax letting and tenancy of real estate. The voluntary registration for letting of property must be at least two years. The two-year period starts when the first letting has commenced. In certain cases where the sale of real estate would be exempt, it may also be possible to obtain a voluntary registration for the sale to a taxable business.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.” The basic time of supply for goods is when they are delivered. The basic time of supply for services is when they are performed. However, if one of the other events described below occurs before the time of the actual supply, the VAT will become due at the time of that event.
If the invoice is issued prior to the actual supply, VAT is due when issuing the invoice. If the invoice is issued shortly after the actual supply, the invoice date is generally accepted as the “tax point.” If any prepayments are made earlier than the actual supply or before issuing the invoice, VAT is due at the time of the prepayment (see the Deposits and prepayments subsection below).
Deposits and prepayments. The time of supply for an advance payment is when the supplier receives the payment even if the supply has not been made. In this case, the VAT will be due for the prepaid amount at the time of prepayment. This also applies if an invoice is not issued at this point in time (in which case, however, the customer will not be able to deduct the VAT until they receive an invoice). A final time of supply occurs when the supply has been completed.
Continuous supplies of services. The time of supply of services where no final delivery has taken place, but payment has been made, is at the end of each VAT return period in which the payment covers. When, as part of a continuous supply of goods, the delivery is taking more than one month and has not concluded, delivery is considered to have taken place on the last day of the month. If delivery is taking more than one year and has not concluded and no payment has been made, delivery is considered to have taken place on the last day of the calendar year.
Goods sent on approval for sale or return. When goods are supplied in consignment/commission (sale or return), it is possible to choose between two different time of supply rules:
• The time of supply
Or
• The time of the payment to the consignee
If the last possibility is chosen, the invoice must be issued at the time of payment.
If the goods are returned to the seller, the treatment that applies depends on which time of supply the seller and consignee have agreed upon. If they have chosen the time of supply, a credit note must be issued. If they have chosen the time of the payment to the consignee, no payment has taken place and the consignee can return the goods without further issues.
If the goods are not sold, the VAT treatment depends on the circumstances. It may be that no supply has taken place, or it may be that a supply for no consideration has taken place.
Denmark does not have a specific time of supply rule for any supplies sent on approval for sale or return that are not under the consignment/commission setup, as outlined above. As such, the normal time of supply rules apply.
Reverse-charge services. Certain services imported from outside Denmark by a taxable person are subject to the tax under the “reverse-charge” mechanism, which means that the recipient of the service must account for VAT. The time of supply for a reverse-charge service is the VAT period in which the service is supplied or the period in which the invoice is issued if the invoice is issued shortly after the supply.
Leased assets. There are no special time of supply rules in Denmark for supplies of leased assets. As such, the general time of supply rules apply (as outlined above).
Imported goods. The time of supply for imported goods is the date of the customs clearance or the date on which the goods leave a duty suspension regime.
Intra-Community acquisitions. The time of supply for an intra-Community acquisition of goods is the 15th day of the month following the month in which the acquisition occurred. If the supplier issues an invoice before this date, the time of supply is when the invoice is issued.
Intra-Community supplies of goods. The time of supply for an intra-Community supply of goods is the 15th day of the month following the month in which the supply occurred. If the supplier issues an invoice before this date, the time of supply is when the invoice is issued.
Distance sales. There are no special time of supply rules in Denmark for supplies of distance sales. As such, the general time of supply rules apply (as outlined above) and is when the goods are delivered. For distance sales supplies, where the supplier is established outside the EU and the goods are supplied via an online marketplace and platform, the time of supply changes to the time of payment. The same applies for all supplies of goods under the import scheme.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for business purposes. Taxable persons generally recover input tax by deducting it from output tax, which is VAT charged on supplies made.
Input tax includes VAT charged on goods and services supplied in Denmark, VAT paid on imports of goods and VAT self-assessed on intra-Community acquisitions of goods and reverse-charge services.
A valid tax invoice or customs document must generally accompany a claim for input tax.
The time limit for a taxable person to reclaim input tax in Denmark is three years. If input tax has not been reclaimed (by error) in previous periods, the VAT return for the period in question may be adjusted to include the input tax until three years after the filing deadline for the VAT period where the input tax should have been reported.
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur). In addition, input tax may not be recovered for some items of business expenditure.
The following lists provide some examples of items of expenditure for which input tax is not deductible, and examples of items for which input tax is deductible if the expenditure is related to a taxable business use.
no business activities triggering a VAT registration obligation in Denmark have been performed during the refund period. Find below specific rules for Denmark:
• The deadline for refund claims for non-EU businesses is 30 September of the year following the year in which the tax is incurred.
• The minimum claim period is three months, while the maximum period is one year. However, a claim for the remainder of a calendar year can be for less than three months. The minimum claim for a period of less than a year is DKK3,000. For an annual claim or a claim for a period for the remainder of a calendar year, the minimum amount is DKK400.
• The claimant shall provide documentation that business activities are performed in the non-EU jurisdiction of the business’ establishment.
• Claims must be submitted in Danish, English, German or Swedish.
• Applications for refunds of Danish VAT should, for businesses established outside the EU, be sent to the following office:
Skattestyrelsen
Nykøbingvej 76
Bygning 45
DK-4990 Sakskøbing Denmark
• The Danish tax authorities are obliged to decide on the refund application no later than eight months after the application was submitted.
Late payment interest. In the case of late VAT refund payments (to both EU and non-EU nonestablished businesses), according to the Directive n° 2008/9/EC, implemented in the Denmark VAT law, Denmark must pay late payment interest at a variable rate as from the date the refund should have been made. The rate is 8%, plus the lending rate fixed by the Danish National Bank on 1 January and 1 July each year. At the time of preparing this chapter, the rate is 11.5% (effective 1 July 2024).
H. Invoicing
VAT invoices. A Danish taxable person must generally provide a VAT invoice for all taxable supplies made, including exports and intra-Community supplies.
A VAT invoice is necessary to support a claim for input tax deduction or a refund under the EU Directive 2008/9/EC or the EU 13th Directive refund schemes (see the EU chapter).
Credit notes. A VAT credit note may be used to reduce the VAT charged and reclaimed on a supply. It must be cross-referenced to the original VAT invoice and contain the same information. Electronic invoicing. Electronic invoicing is mandatory in Denmark for certain taxable persons.
Scope of electronic invoicing. For business-to-government (B2G) supplies, electronic invoicing is mandatory in Denmark. This is in line with EU Directive 2010/55/EU (see the EU chapter). This is with effect from 2005. Technically this is based on non-VAT rules and require that invoices sent to public bodies are sent electronically in a specific format. If preferred, invoices can be issued normally for such supplies (i.e., by paper), but must then be uploaded electronically.
For B2B and B2C supplies, electronic invoicing is allowed in Denmark, but not mandatory. This is in line with EU Directive 2010/45/EU (see the EU chapter). A wider e-invoicing framework based on non-VAT rules will be implemented during 2024-2026 as part of the digital bookkeeping regulations being rolled out in Denmark.
The Danish business authorities will gradually implement general B2B e-invoicing requirements during 2024-2026. The implementation means that businesses will be required to possess the technical capability to issue and receive e-invoices using either the OIOUBL or the Peppol BIS formats, although the use of e-invoices will not be mandatory. This means that businesses must
have the infrastructure and systems in place to send and receive electronic invoices, but they can continue to use traditional paper invoices or other methods if they prefer.
There is no threshold beyond which taxable persons are required to adopt electronic invoicing in Denmark.
The requirements related to electronic invoicing are the same as those for paper invoicing. For the EU VAT in the Digital Age (ViDA) proposals, refer to the EU chapter.
Simplified VAT invoices. A simplified invoice can be issued if the total sales value does not exceed DKK 3,000 ex VAT. The simplified invoices must contain the following data:
• Date of issue
• Sequential invoice number
• Supplier’s VAT number
• Supplier’s name and address
• Quantity and nature of the goods/services supplied
• Total payable amount, including VAT
• Payable VAT amount or the necessary information to calculate the VAT amount, e.g., by stating that the VAT amount is 20% of the total payable amount including VAT (equal to the Danish VAT rate of 25%)
Companies mainly or only selling to private consumers must issue a simplified invoice, unless they use a cash register system and provide a cash receipt to the customer. The cash receipt must contain the following data:
• Date of issue
• Supplier’s VAT number or supplier’s name and address
• Quantity and nature of the goods/services supplied
• Total payable amount including VAT
• Payable VAT amount or the necessary information to calculate the VAT amount, e.g., by stating that the VAT amount is 20% of the total payable amount including VAT
Self-billing. Self-billing is allowed in Denmark. It is possible to enter into an agreement where the customer issues the invoice to themselves on behalf of the supplier. The parties must enter into a written agreement to allow for self-billing. The agreement must include a description of the process, including how the supplier approves each invoice (may be by not opposing the invoice within a fixed number of days). The self-billing invoice must contain the same information as a regular invoice, plus the wording “selvfakturering” or “self-billing” and the customer’s VAT registration number.
Proof of exports and intra-Community supplies. VAT is not chargeable on supplies of exported goods or on intra-Community supplies of goods (see the EU chapter). However, to qualify as VAT-free, exports and intra-Community supplies must be supported by evidence that proves the goods have left Denmark. Acceptable proof includes the following documentation:
• For an export, the seller must retain the signed customs documentation with a pro forma invoice and commercial evidence such as customer orders and contracts.
• For an intra-Community supply, the seller must indicate the customer’s VAT identification number (from a different EU country) and must retain commercial documentation, such as purchase orders, transport documentation and evidence of both payment and receipt of goods.
No special documentation applies in Denmark for evidencing the application of the Quick Fixes. Normal intra-Community documentation rules apply.
At the time of preparing this chapter, it was not expected that EU rules regarding maximum documentation requirements will lead to additional requirements in Denmark in the situation where the seller is responsible for transport.
exempt activities and if so, which pro rata deduction rate they used for the most recent accounting year.
Supplementary filings. Intrastat. Danish taxable persons that trade with other EU countries must complete statistical reports, known as Intrastat, if the value of their sales or purchases exceeds certain thresholds. Separate reports cover intra-Community acquisitions (Intrastat Arrivals) and intra-Community supplies (Intrastat Dispatches). The threshold for Intrastat Arrivals in 2024 is DKK41 million. The threshold for Intrastat Dispatches in 2024 is DKK11.3 million. At the time of preparing this chapter, the thresholds for 2025 have not been announced.
Intrastat declarations must be completed in DKK. The Intrastat return period is monthly. The submission deadline is the 10th working day of the month following the end of the Intrastat return period. For smaller businesses, an extended deadline applies. To qualify as a smaller business, acquisitions must be below DKK41 million, and dispatches must be below DKK16.5 million (2024 numbers). The deadline varies and will be informed to the businesses in question directly. They can be found on the website of the Danish Statistics Agency: Intrastat – Statistics Denmark (dst.dk).
EU Sales Lists. If a Danish taxable person makes intra-Community supplies or renders services that are subject to reverse charge in another EU country in any return period, it must submit an EU Sales List (ESL). An ESL does not need to be submitted for a period in which no intra-Community supplies are made. ESLs must be completed in Danish kroner. ESLs return period is monthly and must be submitted by the 25th in the month following the return period. In some cases, businesses that have limited intra-Community supplies may obtain permission to submit ESLs on a quarterly basis.
Correcting errors in previous returns. Errors in previous returns should be corrected by filing corrective VAT returns. It is possible to correct past returns until three years after the date the individual VAT return was originally due.
Corrections must be made electronically (both for domestic and foreign businesses) by correcting the specific VAT return related to the error.
Under specific circumstances, it is possible to apply for extraordinary correction 10 years retrospectively. This could be the case where the practice of the Danish tax authorities is rejected by the Court of Justice of the European Union and the case before the CJEU is 10 years old or more. The Danish tax agency may also require the business to make corrections beyond the three years if they find that the business has filed incorrect returns due to gross negligence.
Digital tax administration. There are no transactional reporting requirements in Denmark.
J. Penalties
Penalties for late registration. There is no specific penalty in Denmark for the late registration of VAT. However, a penalty may be charged of up to twice the VAT amount due in the period during which the business should have been registered, if the authorities deem that this should be classified as gross negligence. Even where no penalties apply, the tax authorities will charge interest for late payment of VAT for previous periods when registering retroactively.
Penalties for late payment and filings. The penalty for the late submission of a VAT return is DKK65 per reminder for payment. If a business still does not submit its VAT return, the Danish tax authorities will submit a temporary VAT return on behalf of the business. An extra duty of DKK800 will apply for this. In addition, interest is levied for late payment of VAT. The interest rate for 2024 is 0.9% per month, calculated daily. This interest is not deductible for income tax purposes.
For Intrastat, if a report is late or missing, a fine of DKK550 is imposed. Continued failure to report will be sanctioned by the police and the legal courts.
If an ESL is late, a reminder penalty of DKK65 is imposed.
Penalties for errors. If the authorities find that an error was made by simple negligence, no penalty will normally apply if the business makes a self-disclosure to the authorities. This could include erroneously treating a supply as exempt when it should have been taxed, deducting input tax that was not deductible or miscalculating the deductible pro rata for partially exempt businesses. It should be mentioned that if the rules are very clear, it is the opinion of the tax authorities that it is not possible to regard an error as a result of simple negligence.
If an error is discovered during an audit and the error is excusable and/or common, the tax authorities will most likely simply issue a decision that the business must correct the error. If not, the authorities may issue a fine of up to two times the VAT wrongfully deducted or not reported.
As of 1 July 2023, new rules came into force regarding payment of additional VAT in connection with subsequent corrections of VAT returns. Interest will be charged on all corrections that lead to additional payment for the individual VAT period. The interest is calculated from the date of the payment deadline for the original VAT return. The interest rate is fixed annually with effect from 1 January. The interest rate for 2024 is a monthly rate of 0.9%. Generally, interest is levied on all errors that are post-declared, as outlined above, including erroneously treating a supply as exempt when it should have been taxed, or deducting input tax that was not deductible. It may also be relevant where a deduction has been made in a wrong period, as this will lead to additional payment for the period where the deduction was originally made. Interest is calculated monthly on a day-by-day basis as compound interest, meaning that interest on interest is paid. It is possible to request exemption from such interest, but it is expected that this will only be granted in very special cases.
There are no specific penalties associated with the late notification or failure to notify the tax authorities of changes to a taxable person’s VAT registration details. For further details, see the subsection Changes to VAT registration details above.
Penalties for fraud. If a business by gross negligence or deliberately reports VAT incorrectly resulting in excess repayment of VAT or insufficient settling of VAT, the consequences will depend on several things. In the VAT rules, the penalty for fraud may be fines or prison for up to 18 months. In severe cases, the penalty code may be used, allowing for significantly longer prison sentences. In the case of fraud, any involved tax advisors may also be subject to fines. This would require that the advisor has displayed gross negligence. In severe cases, it would be possible to prosecute the advisor under the penalty code, including sentencing the advisor to prison.
Personal liability for company officers. The VAT liabilities for a company with limited liability may only be collected from the company. However, if a company officer is found to have participated in activities to defraud the tax authorities by filing wrong returns, that person may be sued for damages. In addition, it is possible to bring criminal proceedings against that person, but this requires evidence of gross negligence or deliberate evasion on its part. In that case, both fines and prison sentencing may be applicable.
As of 1 July 2023, company officers of a company that has been discontinued may be held personally liable for taxes in cases where the individual is deemed to have contributed to incorrect reporting to the tax authorities that has led to insufficient reporting and /or payment of taxes.
Statute of limitations. The statute of limitations in Denmark is three years. This is for corrections both by the tax authorities and taxable persons, calculated from the filing deadline for the VAT return for the individual VAT period.
If the tax authorities find that the taxable person has demonstrated gross negligence, they may under certain conditions extend this period to up to 10 years (only applicable to the disadvantage of the taxable person). If case law (from Danish courts or the Court of Justice of the European Union) means that the Danish practice is amended, special rules apply that may allow for amendments going back up to 10 years (only applicable to the advantage of the taxable person).