LOCAL VAT MEASURES FOR FOREIGN COMPANIES IN DENMARK
Denmark had no simplification measures applicable for call-off stock arrangements up to 31/12/2019. Foreign companies were therefore required to register for VAT purpose locally.
Since 01/01/2020, the European simplification regime for call-off stock arrangements ("2020 Quick Fixes") entered into force and is to be applied by all Member States, including denmark. This implies that all other possible national arrangements regarding call-off stock arrangements are mute and, if they provide for divergent rules, should be viewed as not in line with EU Law.
Triangulation can be applied when the middleman (B) is VAT registered for others supplies in the 3rd country (Member State of destination)?
Yes
The Danish conditions related to the triangular simplification scheme were amended with effect on 1st July 2019. Under the previous rules, the simplification was not applicable if the middleman was registered for VAT in the Member State of destination. As of 1st July 2019, the Danish VAT Law states that the middleman may not be established (instead of registered) in the Member State of destination, which is now in line with the European VAT Directive.
Chain transactions refer to successive supplies of goods which are subject to a single intra-Community transport. The intra-Community movement of the goods should only be ascribed to one of the supplies, and only that supply should benefit from the VAT exemption provided for the intra-Community supplies. The other supplies in the chain should be taxed and may require the VAT identification of the supplier in the Member State of supply.
However, the divergent approach amongst Member States in the application of these exemptions for cross-border transactions has created difficulties and legal uncertainty for businesses.
Optional reverse charge for supply of goods?
No
Reverse charge is not applicable to major supplies of goods [except for supplies of goods with installation and other specific items].
Optional reverse charge for supply of services
Yes
Reverse charge is applicable to major supplies of services [except for admission fee to event] provided the supplier is not established in Denmark [regardless whether VAT registered or not] and the recipient is a taxable person established in Denmark.
Optional reverse charge (art. 194 of the VAT Directive)
Member States in which the VAT is due may provide that the person liable for the payment of VAT is the person to whom the goods or services are supplied where the transaction is carried out by a taxable person who is not established in the country in which the VAT is due.
VAT Warehousing implemented in Denmark?
Yes
Denmark has introduced VAT warehousing regime applicable under specific conditions.
VAT Directive
Member States may exempt the importation of goods and the supply of goods which are intended to be placed under warehousing arrangements other than customs warehousing.
Is it possible for a company to pay the import VAT via the periodical VAT return?
Yes
Postponed accounting via the VAT return is possible under specific conditions. A specific deferred payment for VAT and customs purposes (similar delay) is also is also applicable.
Under the most usual regime in Denmark, the payment of the customs duties is delayed (until the 16th of the next month) and the import VAT is accounted for in the periodical VAT return of the taxpayer. An overview of the importations (so-called “importspecifikation”) is received on a monthly basis. Based on that document, the import VAT is simultaneously reported as VAT due and VAT deductible in the Danish VAT return. There is no bank guarantee connected to that regime but extra fees of 3,5 per thousand of the customs duties is due to the Danish State.
VAT DIrective
Member States may provide that VAT on importation does not need to be paid at the time of importation on condition that it is entered as such in the VAT return to be submitted.
VAT OBLIGATIONS IN DENMARK
How is the tax period determined in Denmark?
Monthly/Quarterly/Half-yearly
Your company has to report its VAT position by filing periodical VAT returns either every month, every quarter or every six months depending on its turnover. Your company has to declare VAT quarterly if you request it, or if Danish VAT authorities assess your business annual turnover subject to VAT to be DKK 5-50 million (€ 670.000 - € 6.700.000 ).
Half-yearly settlement deadlines
You need to file a VAT return every six months if your annual revenue subject to VAT is less than DKK 5 million and if you have filed your VAT return and paid on time.
Quarterly settlement deadlines
You need to file a VAT return quarterly if your business is new, if you have requested quarterly settlement, or if Danish authorities assess your business's annual revenue subject to VAT to be DKK 5-50 million.
Monthly settlement deadlines
You need to file a VAT return monthly if your business's annual revenue subject to VAT is more than DKK 50 million, or if you have requested monthly settlement yourself.
Every year in November, Danish VAT authorities assess if your settlement period is appropriate based on your VAT declarations for the period July 1st in the previous year to June 30th in the current year. You may apply for a shorter settlement period, e.g. half-yearly to quarterly. You cannot apply for a longer settlement period.
If your business is new, your company has to declare VAT quarterly for at least 18 months before Danish VAT authorities [SKAT] assess your business revenue and possibly change it, requiring you to declare VAT every six months.
When should periodical VAT return be filed?
Your company has to file VAT returns by electronic means via "E-tax".
The deadlines are determined as follows:
- 1st day of the 3rd month after the end of the quarter or half-year in case of the VAT returns are submitted on quarterly or half-yearly basis;
- 25th day of the month of the next month in case the VAT returns are submitted on a monthly basis.
If you do not declare VAT on time, Danish VAT authorities may determine VAT due based on an estimate. For this, they charge a penalty of DKK 800 and a reminder fee of DKK 65. Despite the estimate, your company will always have to declare the actual VAT amounts for the period.
VAT Directive
The tax period shall be set by each Member State at one month, two months or three months. Member States may, however, set different tax periods provided those ones do not exceed one year. The VAT return shall be submitted by a deadline to be determined by Member States. That deadline may not be more than two months after the end of each tax period.
Is this requirement laid down in the country and what is the filing deadline?
No
Your company is not required to file any summarizing annual VAT return in Denmark.
VAT Directive
Member State may require taxable persons to submit a return in respect to all transactions carried out in the preceding year. That return shall provide all the information necessary for any adjustments.
Are quarterly filings allowed by the country and what is the filing deadline?
The recapitulative Statement [ESL] must be drawn up for each calendar month. Quarterly reporting can be opted for under conditions.
Your company has to file ESL by electronic means no later than the 25th day of the month after the end of the reporting period [month/quarter] to which it relates.
VAT Directive
The recapitulative statement shall be drawn up for each calendar month. However, Member States, in accordance with the conditions and limits which they may lay down, may allow taxable persons to submit the recapitulative statement on each calendar quarter where the total quarterly amount of intra-EU supplies of goods does not exceed either in respect of the quarter concerned or of any of the previous four quarters the sum of € 50.000 or its equivalent in national currency. The recapitulative statement shall be submitted within a period not exceeding one month.
What is the payment deadline?
The VAT due should be paid by the filing for the VAT return. If you do not pay on time, Danish VAT authorities will charge interest for late payment.
Are interim payments required?
Interim payments are not required.
VAT Directive
Any taxable person liable for the payment of the VAT must pay the net amount of the VAT when submitting the VAT return. Member States may, however, set a different date for payment of that amount. Member States may require interim payment to be made.
Is any VAT credit automatically carried forward or refunded?
A VAT credit is not automatically carried forward to the next period. Refund is done immediately (generally within 21 days after you have declared VAT).
VAT refund – Full deduction of VAT on hotel accommodation costs – 01/01/2015
From 01/01/2015, Danish VAT Act will allow full deduction of input VAT on hotel accommodation costs. The deduction will be increased from currently 75% to 100% where the expenses are strictly related to business taxable activities.
VAT Directive
Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period. However, Member States may refuse to refund or carry forward if the amount of excess is insignificant.
VAT OVERVIEW IN DENMARK
What is the local name of the tax?
Mervaerdiafgift [MOMS]
What is the structure of the VAT number?
Danish VAT numbers have 10 characters [DK + 8 digits].
VAT Directive
Member States must apply a standard VAT rate [not lower than 15%] which must be the same for the supply of goods and for the supply of services. Member States may apply either one or two reduced rates [not lower than 5%] only to supplies of goods or services as listed in the Annex III of the VAT Directive.
VAT rates
Denmark applies a standard VAT rate of 25% and no reduced rates.
DKK 280.000
see various thresholds applied in the EU
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