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VAT in Denmark - 2021 Guidelines

VAT in Denmark

Updated on Monday 08th March 2021

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VAT-in-DenmarkThe Danish taxation system is based on the collection of direct and indirect taxes. If the category of direct taxes contains the income and the corporate taxes, the most important indirect tax is the value added tax (VAT) which is imposed to consumers and collected by Danish companies.
 
Denmark is one of the oldest European countries imposing the value added tax. The first time the VAT was levied in Denmark dates back in 1967. In order to have the VAT collected, companies in Denmark must register and obtain a VAT number from the tax authorities.
 
Our lawyers in Denmark can offer more information on the imposition of the value added tax in 2021. They help foreign investors open companies in Denmark.
 

VAT rates in Denmark

 
Unlike other countries in Europe which levy the VAT at different rates, Denmark only imposes two rates:
  • the standard rate, which is 25%;
  • a 0% rate which is applied to newspapers and international trade.
A special VAT rate applies to tourist buses from foreign countries passing through Denmark. Our Danish law firm can explain how this rate is imposed.
 
The Danish VAT applies to the supply of goods and services to both companies and individuals carrying out business operations in the country. The supply of goods or services by local companies or residents outside the country are also levied the VAT in Denmark.
 

VAT exemptions in Denmark in 2021

 
Companies and individuals selling products or services in Denmark may also be exempt from paying the VAT, provided these goods or services enter one of the following categories:
  • healthcare;
  • tourism;
  • education;
  • cultural activities;
  • sports activities;
  • transportation;
  • real estate transactions, with the exception of property sales;
  • postal services;
  • certain banking services.
The Danish VAT must be paid upon the filing of tax declarations. Our attorneys in Denmark can offer more information on the Income Tax Law which provides for tax obligations for companies.
 

Registering for VAT in Denmark

 
VAT registration for companies in Denmark is not compulsory. Only companies with an annual turnover above 50,000 DKK must register for VAT. Companies with incomes below this threshold are not required to register for VAT in Denmark, however this is recommended as the amounts paid can be deducted when filing the annual tax returns.
 
Investors who need complete information and guidance for value-added tax purposes in 2021 can reach out to our team of lawyers who specialize in Tax Law as well as the relevant accounting and reporting regulations. (in Denmark these are the IAS/IFRS/Danish GAAP) We can provide details on any updated to the relevant regulations as well as give you more details on the provisions of the existing double tax treaties, should this be of interest.
 
For full information on the Danish VAT, please feel free to contact us. You can also rely on our law firm in Denmark for assistance in registering for VAT in 2021.