Understanding VAT in Denmark is crucial for both businesses and consumers. It is essential for business revenue and significantly impacts Denmark's economy. The standard VAT rate in Denmark is 25%; however, certain goods and services are exempt from this tax. Even though this may sound complicated, it is easy to understand.
Welcome to our in-depth guide to VAT in Denmark. In this blog, we'll review the foundations of VAT in Denmark, including its rates, history, and vital details for visitors and businesses.
Denmark has one of Europe's highest standard VAT rates, at 25%, which applies to most goods and services. Interestingly, unlike many other European countries, Denmark has no reduced VAT rates.
Some products and services are subject to a 0% VAT rate. This applies to items like newspapers and periodicals, both digital and physical. Skattestyrelsen, or SKAT, is the Danish VAT authority responsible for VAT management.
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Denmark was among the pioneers in implementing a VAT system. Over time, Danish VAT laws have seen significant adjustments, particularly to align with the Sixth EC VAT Directive (renamed Council Directive 2006/112/EC) since January 1, 2007, and the EU VAT Package from January 1, 2010.
On July 1, 1994, the Danish VAT Act, or Momsloven, was enacted. Danish VAT laws are mainly under the Directive, although there are some minor variations and the use of voluntary rules.
A CVR number in Denmark stands for Central Business Register number. It is an eight-digit number allotted to businesses registered with the Danish Business Authority (Erhvervsstyrelsen).
This number is similar to a social security number for an individual but for business enterprises or companies. Remember that not all businesses require a CVR number. Businesses with an annual turnover below DKK 50,000 and not VAT-registered are exempt.
This number acts as the primary identification number for businesses in Denmark. Registering your company through the Danish Business Authority's online platform gives you a CVR number.
The CVR number has several uses. Some of these are getting business insurance, opening bank accounts for the company, and even serving as a VAT number if your company is registered with the Danish VAT authority.
| Danish VAT Percentage | Items |
|---|---|
| 25% |
|
| Exempt | Passenger transport, Books, Newspapers, Periodicals, Admission to cultural services (theatre, etc), and Writers/composers are exempt from VAT in Denmark. |
You must submit VAT returns regularly if your business is registered for VAT in Denmark. How often you do this depends on how much money your business makes each year, which is subject to VAT. If you earn less than DKK 5 million annually and have been filing your returns on time, you'll file them every six months.
New businesses and those making between DKK 5 million and 50 million a year file returns every three months. If your yearly VAT earnings are more than DKK 50 million, or if you ask, you'll need to file monthly.
The deadlines for submitting VAT returns depend on how often you need to file them. If you file quarterly or half-yearly, you must send in your returns by the first day of the third month after the reporting period ends. For monthly filers, the deadline is the 25th of the following month. The deadlines might get pushed to the next working day if there are public holidays.
Also Read about; What is Self Employed VAT and How It Works?
Tourists visiting Denmark can get a VAT refund on purchases. To qualify, you must be a tourist from outside the EU who is coming to Denmark for leisure. You should not be studying, working, or living in Denmark. Each purchase receipt must be worth at least DKK 300.
Conclusion
Businesses and visitors need to understand the Danish VAT system. Dealing with VAT regulations can be difficult because of their special exemptions and standard rate of 25%. But now that you know what this guide offers, you'll be more prepared to deal with VAT-related issues in Denmark.
FAQs
How do I get a VAT refund at the airport in Denmark?
You can claim your tax refund at the airport by getting your Tax-Free form stamped by customs upon departure from Denmark.
What is the VAT rate in Copenhagen?
As in all of Denmark, the VAT rate in Copenhagen is 25%.
How can I shop tax-free in Denmark?
To shop tax-free in Denmark, request a Tax-Free form at participating stores and get it stamped by customs at the airport when leaving the country.
Rían Doyle
I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.
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