VAT REGISTRATION IN DENMARK
When do you have to register for VAT?
It is mandatory for your company to apply for VAT registration with the Danish tax authorities before starting your activities. Financial penalties may apply if the application for registration is submitted late.
What documents do I need to provide when I register?
If your company wishes to register for VAT in Denmark, it is essential to contact the Danish tax authorities. There is no need to contact the tax authorities in your country of establishment.
In particular, your company will need to submit the following documents:
- The VAT registration form(s) completed in the language of the country
- A copy of the articles of association
- An extract from the trade register
- A certificate of VAT liability
- Power of attorney (if using a fiscal agent)
- Proof of activity on the territory of the country concerned: a contract, an order form, etc.
The Danish tax authorities may require some of these documents to be translated into Danish.
How long does it take to get a VAT number?
If your file is complete, it generally takes one month to obtain the VAT number.
Is a fiscal representative necessary?
Non-European companies cannot register for VAT themselves in Denmark. They have to do it through a VAT representative. This is a local company that will represent you to the local VAT authorities. He is responsible for the respect of all your VAT obligations, including those of which he was not aware. For this reason, he may require a deposit (e.g. a bank guarantee) from you before accepting the representation assignment.
European companies are not obliged to appoint a VAT representative. However, to facilitate their relations with the local tax authorities, they may appoint a proxyholder (agent) to carry out the tax formalities on their behalf. In this case, it is not necessary to issue a bank guarantee. The company remains solely responsible for paying its VAT debts.
VAT OBLIGATIONS IN DENMARK
Is it necessary to keep VAT accounting ledgers?
Your company must keep ledgers sufficiently detailed to enable the application of VAT and its control by the Danish tax authorities.
When do you have to file a VAT return?
- Your company is required to file periodic VAT returns on a monthly basis if your business's annual revenue subject to VAT is more than DKK 50 million (€ 6.700.000), or if you have requested monthly settlement yourself.
- Your company is required to file periodic VAT returns on a quarterly basis if Danish authorities assess your business's annual revenue subject to VAT to be DKK 5-50 million (€ 670.000 - € 6.700.000), if your business is new, or if you have requested quarterly settlement yourself. 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..
- Your company is required to file periodic VAT returns on a half-yearly basis if your business's annual revenue subject to VAT is less than DKK 5 million (€ 670.000) and if you have filed your VAT return and paid on time .
The VAT return must be filed electronically :
- By the 1st day of the 3rd month following the quarter or half-year in case of the VAT returns are submitted on quarterly or half-yearly basis.
- By the 25th day of the month following the month in case of the VAT returns are submitted on monthly basis.
The VAT expert's eye
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.
Do I have to submit an annual return?
Your company is not required to file an annual recapitulative VAT return.
The VAT expert's eye
Member States may require the taxable person to file a return containing all the data referred to in Articles 250 and 251 and concerning all transactions carried out during the previous year. This return shall include all the information necessary for any adjustments. They authorize, and may require, the return to be made by electronic means under conditions which they determine (Art. 261 of the VAT Directive).
What is the deadline for paying Danish VAT?
The company must pay the VAT due has the same deadline as the VAT return.
The VAT expert's eye: The 5-day-rule
Beware. If the Danish authorities receive your payment too early, they will refund it and consider payment was not made. Payment should therefore reach the authorities at the earliest 5 working days before the deadline.
If you do not pay in the right frame time, you will risk the application of late payment interests.
When should the intra-EU statement be filed?
The company is obliged to file an electronic intra-Community listing at the latest on the 25th day of each month.
Quarterly reporting can be opted for under conditions.
The eye of the VAT expert
A recapitulative statement is drawn up for each calendar quarter within a period and according to procedures to be determined by the Member States. However, Member States may provide for recapitulative statements to be submitted on a monthly basis. Member States may allow, and may require, recapitulative statements to be submitted electronically under the conditions they determine (Art. 263 of the VAT Directive).
When should the Intrastat declaration be submitted?
The eye of the VAT expert
Statistics Denmark operates with two deadlines for reporting to Intrastat: an earlier deadline for larger reporters (Group 1) and a later deadline for smaller reporters (Group 2). Companies whose trade changes level will automatically be reclassified as either Group 1 or Group 2 via an annual procedure conducted in February. It is not possible to request a change of group.
INVOICING RULES IN DENMARK
Does the invoice have to include VAT? Reverse charge?
As a supplier of goods or services, your company is normally obliged to issue an invoice with VAT to its customer. This is the general rule. However, there are many derogatory situations which transfer this obligation to pay tax to the customer himself. These situations are known as "reverse charge" situations.
The special reverse charge rules have been introduced in Denmark for foreign companies:
For supplies of goods:
The reverse charge is not applicable to major supplies of goods [except for supplies of goods with installation and other specific items].
For supplies of services:
The reverse charge is applicable to all domestic supplies of services [except for admission fee to event] made by a business not established in Denmark, provided that the customer is a taxable person established in Denmark.
What are the mandatory mentions on an invoice?
The VAT Directive lays down the minimum information that you must include on your invoice. In some cases, countries may add additional compulsory information. Particular attention should be paid to the conversion rates when the currency used on the invoice is not that of the country in which the transaction takes place, and to the specific statements justifying the legal reason why VAT is not charged.
What VAT rate should be mentioned on an invoice?
Denmark has only 1 Standard VAT rate of 20% and no reduced rates.
VAT REFUNDS IN DENMARK
How can I recover VAT in Denmark?
There are several methods to obtain refunds of Danish VAT. The practical formalities for reclaiming foreign VAT will differ depending on whether or not your company is established in Europe and/or is identified for VAT in Denmark:
- If your company has a VAT number in Denmark, it will have to submit a refund application in the form and within the timeframe required by local regulations. 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).
- If your company is established in a European country and does not have a VAT number in Denmark, it will have to apply for a VAT refund electronically from its country of residence, in the form and within the time limits required by Directive 2008/9.
- If your company is established outside Europe and does not have a VAT number in Denmark, it will have to appoint a tax representative to submit its refund application in the form and within the time limits required by the 13th Directive.
Is Danish VAT recoverable on all expenses?
VAT incurred on purchases, imports or intra-Community acquisitions of goods and services can be reclaimed by a foreign company provided that these expenses are for taxable activities and provided that the appropriate documentation is available.
VAT is however not recoverable or partially recoverable notably on the following expenses:
- Restaurant: 25% recoverable.
- Passenger cars: 0% recoverable.
- Entertainment, representation and presents.
- Food for the owner and employees.
Danish VAT allows full deduction of input VAT on hotel accommodation costs, provided the expenses are strictly related to business taxable activities.