What is VAT registration?
VAT registration is when a company or individual engaged in business activities registers with the authorities to collect and pay VAT on behalf of the state.
But before you report VAT, you must be VAT registered.
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When should you register for VAT?
In Denmark, VAT registration is mandatory for companies with an annual turnover of more than DKK 50,000.
It is also mandatory to register if you operate a VAT-liable business – this can be a hotel and restaurant business or a construction and civil engineering business. This applies regardless of the annual turnover.
Voluntary (and advantageous) registration
If you do not meet the turnover threshold or do not operate a VAT-liable business, you can still register for VAT.
Voluntary VAT registration can provide access to VAT deductions on purchase costs, and it can be advantageous for companies that deal with other VAT-liable businesses. If you add VAT to your selling prices, you can deduct the VAT from your company expenses. You can only do this if you are VAT registered.
VAT liable companies
As a general rule, self-employed individuals and companies must be VAT registered if they sell services or goods for payment. This can be retail stores such as supermarkets and bookstores. It can also be online businesses that sell goods and services via webshops or apps.
This also applies if you manufacture, purchase, lease, or otherwise supply goods to your customers. Services such as repairs, maintenance, and construction are also VAT liable, as are consultancy, entertainment, and advertising services.
VAT exempt services
There are special VAT-exempt services that are exempt from VAT. This applies, among other things, to doctors, banks, and insurance, which are exempt from VAT and instead must pay a payroll tax.
Below are more examples:
- Health services: Medical treatment, dental care, physiotherapy, psychology, etc.
- Education: Education and teaching, including teaching materials, books, etc.
- Cultural services: Access to museums, theater performances, concerts, etc.
How to register for VAT
VAT registration is free and takes place at the Danish Business Authority. You can find the registration form on virk.dk, which you submit digitally with MitID (formerly NemID).
Once registered, you must report VAT to the Danish Tax Agency, responsible for VAT in Denmark. You can read more about this here.