Key takeaways
- Denmark has a standard VAT rate of 25% which applies to most goods and services. Understanding and adhering to this rate is crucial for businesses operating in Denmark.
- Denmark also has a 0% VAT rate for items such as newspapers, promoting access to information, as well as exemptions (for example, public passenger transport) designed to support specific industries.
- Adhering to VAT registration thresholds, compliance requirements, and invoicing rules is vital for businesses operating in Denmark. Non-compliance can result in penalties, interest charges, and even criminal prosecution.
In short: The standard VAT rate in Denmark is 25%, and it applies to most goods and services. Newspapers are zero-rated, and some goods and services are exempt. Danish businesses must register for VAT once taxable turnover passes DKK 50,000 over 12 months. They file VAT returns monthly, quarterly, or half-yearly, depending on turnover.
Denmark is a thriving economy with a strong ecommerce and digital services market. If you want to expand your business into Denmark, you need to know the Danish VAT system, including VAT rates. This guide covers all aspects of Danish VAT compliance, from VAT rates to registration, invoicing, and more. Read more in our guide: Finnish VAT Rates and VAT Compliance.
What are the VAT rates in Denmark?
Denmark has a standard VAT rate of 25%, a 0% rate for items such as newspapers, and a range of VAT exemptions. VAT in Denmark is governed by the Danish VAT Act, known as Merværdiafgiftsloven (Momsloven). It is run by the Danish Tax Authority, Skattestyrelsen (SKAT). For a full country overview, see our Denmark VAT manual.
VAT-registered sellers of goods and services must apply the correct Danish VAT rates and collect the tax. They then pay it to the Danish tax authorities. If a foreign business registered for VAT in Denmark fails to charge Danish VAT, it can be liable for any VAT it did not collect. You can also read Denmark to Introduce New Domestic Reverse Charge VAT Rules in 2024.
Standard VAT rate
The standard VAT rate in Denmark is 25%, one of the highest in the EU. It applies to most goods and services in the country.
Businesses selling goods and services in Denmark must apply this standard rate to stay VAT compliant.
Reduced VAT rates and exemptions
Some items, like newspapers, are subject to a 0% VAT rate. This means no VAT is added to the price, so these items are in effect tax-free. This policy aims to promote access to information.
On top of the zero rate, some goods and services, such as public passenger transport, are exempt from VAT under the Danish VAT Act. These exemptions relieve specific industries or activities from VAT. They aim to support economic growth and social welfare. You need to know these reduced rates and exemptions to work out and report your VAT correctly.
How do VAT registration and compliance work in Denmark?
VAT registration and compliance in Denmark depend on your business's status and circumstances, as specific thresholds and rules apply. Both are vital parts of doing business in Denmark.
When to register for VAT
Businesses must register for VAT in Denmark if their taxable turnover exceeds DKK 50,000 over a 12-month period. Keep a close eye on your taxable turnover to stay compliant.
Distance sellers face a separate rule. EU businesses whose total cross-border sales to consumers in other EU countries pass €10,000 must charge Danish VAT on sales to Danish consumers. They can register in Denmark or use the OSS.
How to register for VAT
To register for VAT in Denmark, you must send all requested documents electronically to the tax office. These include, but are not limited to:
- The business’s name
- Address
- VAT registration number
- Description of the goods or services provided
You may need extra documents, depending on your business's circumstances.
Foreign companies registering for VAT in Denmark should consider using a fiscal representative or tax advisor. They can guide you through registration and help you follow Danish VAT rules. This is especially helpful if you don't know the Danish tax system and VAT requirements. We cover this in more detail in Danish Parliament Closer to Implementing Global Minimum Tax.
Fiscal representation
Non-EU-based businesses must have a fiscal representative in Denmark. A fiscal representative knows the Danish VAT system well. This makes them useful when you carry out activities that create VAT obligations.
What are the invoicing and reporting requirements in Denmark?
Danish VAT rules require compliant invoices, proper records, and VAT returns filed on time. You must make sure every invoice you issue follows Danish VAT regulations.
Invoicing rules
All invoices for VAT sales in Denmark must include certain information. This includes:
- The seller’s name, address, and VAT registration number
- The buyer’s name and address
- The date of the invoice
- The invoice number
- A description of the goods or services sold
- The quantity and unit price of the goods or services sold
- The total amount of the invoice
- The applicable VAT rate
Make sure your invoices follow these rules to avoid penalties and keep accurate records of your VAT transactions.
Record keeping
Businesses in Denmark must keep their accounting records, including VAT records, for at least 5 years from the end of the financial year they relate to. Accurate records help you follow Danish VAT rules and make future audits or inspections easier.
VAT return filing and deadlines
VAT return deadlines in Denmark depend on the size and turnover of your business. You file monthly, quarterly, or half-yearly. For example, businesses with annual turnover between DKK 5,000,000 and DKK 50,000,000 must file quarterly VAT returns. This is also known as the quarterly settlement. The deadline is the first day of the third month after the end of the period.
Businesses with annual taxable revenue over DKK 50,000,000 must file monthly VAT returns. The due date is the 25th of the month after the end of the period.
What are the penalties for non-compliance in Denmark?
Penalties for breaking Danish VAT rules range from fines to criminal prosecution. The consequences for your business can be serious.
In Denmark, you pay interest each month on any amount you pay late. There is also an administration fee of DKK 65 for every reminder you receive. The penalty for not filing a VAT return on time is DKK 1,400 per period.
In extreme cases, failing to follow Danish VAT rules may lead to criminal prosecution and prison.
Be aware of these risks and take every step needed to follow Danish VAT rules.
How do intra-community VAT transactions work in Denmark?
Intra-community VAT transactions between Denmark and other EU member states can be complex. You need a good grasp of the rules, including those on tax administration.
Reverse charge mechanism
The reverse charge mechanism is a VAT accounting method that moves the duty to report and pay VAT from the supplier to the customer. It applies to specific transactions between Danish and EU businesses. These include cross-border services or goods subject to import VAT.
The reverse charge mechanism makes VAT reporting and payment simpler for businesses trading within the EU. It helps them follow Danish VAT rules.
Intrastat declarations
Intrastat declarations are required for businesses with annual EU arrivals of at least DKK 42,000,000 or annual EU dispatches of at least DKK 11,800,000.
Deadlines for Intrastat declarations in Denmark differ between Group 1 and Group 2 businesses. Each group has its own due dates.
You may also need to submit EC Sales Lists for sales of goods and services to other EU Member States.
How can you stay VAT compliant in Denmark?
To stay VAT compliant in Denmark, learn the Danish VAT rates, registration thresholds, and invoicing and reporting rules. This helps you avoid costly penalties. With the right VAT knowledge and tools, you can do business in Denmark with confidence and stay compliant.
Do you need help with your VAT compliance? Book a free call with one of our VAT experts to find bespoke solutions for your business, optimize your VAT costs, and reach millions of new potential customers.
How Taxually handles this
Taxually’s CrossTax handles VAT registration, VAT, OSS and IOSS returns and fiscal representation in the countries you sell into, and checks your sales data against 250+ validation rules before each filing. OneTax then pays every tax authority with one bulk payment in your chosen currency.
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Frequently asked questions
What is the VAT rate in Denmark?
The standard VAT rate in Denmark is 25%.
Does Denmark charge VAT to the UK?
No, Denmark does not charge VAT to the UK, as sales of goods outside the EU are exempt from VAT regardless of the buyer.
Who has the highest VAT in Europe?
Hungary has the highest standard VAT rate in Europe, at 27%.
Finland follows at 25.5%, and Sweden and Denmark have a rate of 25%.
When do businesses need to register for VAT in Denmark?
Businesses are required to register for VAT in Denmark when their taxable turnover reaches DKK 50,000 over 12 months. EU distance sellers must charge Danish VAT once their total cross-border sales to EU consumers exceed €10,000, either by registering in Denmark or through the OSS.
