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VAT

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What is VAT in Denmark?

VAT is short for Value Added Tax and is a tax added to any sale of services or products.

The tax is added to the sale price of all goods or services sold in Denmark.

The customer pays the VAT, but the seller’s responsible for adding it to their goods/services. VAT must be included in the price the customer pays.

You can claim your foreign VAT and have it refunded with Acubiz

If you are a VAT-registered company, you can get foreign VAT refunded based on expenses and travel expenses. We can handle the task for you, so you don’t have to go through the lengthy application process.

How much is the VAT?

Denmark’s VAT rate is 25% on most goods and services.

The rate is defined for each item or service, so there are also 6% and 12% rates.

How do you calculate VAT?

VAT is a percentage of the sales price of your goods or services.

Let’s say you sell a desk for 1000 DKK with a VAT rate of 25%. The calculation would look like this:

  • 1000 DKK * 0.25 = 250 DKK
  • Add the VAT to the sale price: 1000 DKK + 250 DKK = 1250 DKK

Therefore, the desk must be sold for 1250 DKK, which the customer must pay.

The VAT of 250 DKK is paid later to the Danish Tax Agency. It is, therefore, essential to keep track of receipts so that the company bookkeeper can account correctly when the tax authorities need specific information.

When do you have to pay VAT?

As a business owner in Denmark, you must charge and pay VAT on your goods/services if you are registered for VAT with the Danish Business Authority. However, your turnover (and not your profit) determines whether you have to pay VAT.

If you sell for more than 50,000 DKK, excluding VAT per year, you must register for VAT.

Registering before you reach the limit is an advantage – otherwise, you may not be allowed to deduct the VAT from your investments.

Reporting and other VAT rules

All VAT-registered companies are required to report VAT to the Danish Tax Agency. Your turnover determines how often you have to report VAT:

  • Newly established companies: Report every quarter for the first 1.5 years. Turnover is insignificant.
  • Annual turnover of 0 to 5 million DKK: Report every six months.
  • Annual turnover of 5 to 50 million DKK: Report every quarter.
  • Annual turnover over 50 million DKK: Report every month.

It is important to follow the applicable VAT reporting and registration rules; otherwise, you may receive a fine.

VAT-free services and companies

Some VAT-free services and companies are not required to pay VAT. Instead, they are subject to a payroll tax, which is a tax for companies that sell VAT-free services.

As a rule, it is healthcare or education – specifically, private practice doctors, dentists, funeral directors, undertakers, psychologists, and banks.

Examples of VAT-free goods:

  • Cultural activitiesFunerals
  • Taxi rides
  • Train rides
  • Airplane rides
  • Charity events

You can have both taxable and non-taxable sales.

For example, if you perform non-taxable healthcare treatments but also sell products subject to tax, you must pay tax on the taxable sales but not on the healthcare treatments.

Foreign VAT

If you need to trade with other countries, the rules depend on whether it is within or outside the EU and whether you are dealing with goods or services and businesses or individuals.

EU company

If you trade with companies within the EU, you can sell goods without Danish VAT, provided your goods are transported to another EU country, and your customer’s VAT number is valid.

Your customer’s VAT number must be shown on the invoice for the transaction.

Registered supplier in another EU country

If you buy from a VAT-registered supplier within the EU, where you have given your supplier your Danish VAT number, there will be no VAT on your invoice. When you record the transaction, you must calculate VAT at 25%, which you are allowed to include as input VAT, meaning that the VAT account will be balanced at 0.

Companies outside the EU

You must pay customs duties if you trade with countries such as Norway or the USA. However, you do not have to pay Danish customs duties or VAT on exports because the goods are not consumed in the country.

Private customer in another EU country

Here, the Danish VAT must be charged as with other customers in Denmark.

Do you want to know more?

At Acubiz, we can help your company with automatic VAT refunds through an app.

You can also see our other solutions and get smoother invoice management for VAT or other expenses.

FAQ

What is VAT?
VAT is an abbreviation for value-added tax. The tax is levied on the sale of goods or services by businesses in Denmark.
In Denmark, the standard VAT rate is typically 25% on most goods and services, but there are also reduced rates or zero rates applicable in some instances.
If your business is VAT registered, you are required to report and pay VAT. If your business’s taxable turnover is below DKK 5 million per year, you must report VAT every six months. If you are a new business, you need to report VAT quarterly for at least one and a half years.

VAT is calculated by taking the price of a good or service and multiplying it by the applicable VAT rate (typically 1.25).

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