Denmark has the third-highest value-added tax (VAT) rate in Europe. In 2024, the country collected 9.1% of its gross domestic product (GDP) through VAT. Businesses that operate in or sell into Denmark need to pay close attention to VAT rules, which can impact everything from pricing to compliance and cash flow.

Below, we’ll explain what the Denmark VAT rate is, which goods and services are taxed, who needs to register for VAT in Denmark, and how Danish VAT compliance and refunds work in practice.

What’s in this article?

• What is the Denmark VAT rate?
  
• Which goods and services are subject to VAT in Denmark?
  
• What is a Denmark VAT number?
  
• When do Denmark-based businesses need to register for VAT?
  
• When does a foreign business need to register for Denmark VAT?
  
• How does VAT compliance work in Denmark?
  
• How do VAT refunds work in Denmark?
  
• How Stripe Tax can help
  

What is the Denmark VAT rate?

Denmark applies a single, flat VAT rate of 25% to almost all taxable goods and services. There are no reduced rates, special tiers, or category-based percentages. While there are a few zero-rated and exempt transactions, if a sale is subject to VAT in Denmark, you can almost always assume it’ll be taxed at 25%.

Which goods and services are subject to VAT in Denmark?

Denmark’s VAT system categorizes goods and services as standard-rated, zero-rated, or VAT-exempt. Here’s a breakdown of each category.

Standard-rated

The majority of physical goods, digital products, and services are subject to the standard VAT rate of 25%, including retail products, professional services, software, subscriptions, hospitality, utilities, and food. If a product or service is sold commercially and isn’t an explicit exception by law, it probably falls into this category.

Zero-rated

Certain transactions are taxable at a 0% rate, although they’re not exempt. This means that while no VAT is charged, input VAT can still be reclaimed. The zero-rated category mainly applies to exports of goods outside the EU, intra-EU supplies to VAT-registered businesses, international transport services, and specific cultural goods such as newspapers and books.

VAT-exempt

Some activities fall completely outside the VAT system, which means VAT isn’t charged and input VAT generally can’t be recovered. Common exemptions include healthcare and medical treatment, education, residential real estate rentals, passenger transport, and certain nonprofit or cultural activities.

What is a Denmark VAT number?

A Denmark VAT number is the identifier that ties your business to the Danish VAT system. It’s used on invoices, VAT returns, EU filings, and any communication with the tax authorities. Without a VAT number, a business can’t legally charge VAT, file VAT returns, or reclaim VAT on costs.

A Danish VAT number consists of eight digits and is typically shown with the country prefix “DK” for cross-border use. Domestically, the same number is referred to as the company’s Central Business Register (CVR) number. It must appear on VAT invoices issued by registered businesses. It allows customers to verify VAT status and, in cross-border EU transactions, determines whether reverse charge applies. VAT reverse charges happen when the customer, rather than the seller, is responsible for reporting and paying the VAT directly to the tax authority. This is common during cross-border B2B transactions within the EU.

Danish VAT numbers can be validated through the EU’s VAT Information Exchange System (VIES). Public CVR records also show whether a business is registered for VAT, which adds a layer of transparency to commercial relationships.

When do Denmark-based businesses need to register for VAT?

Businesses based in Denmark must pay VAT once their taxable turnover exceeds 50,000 Danish kroner (DKK) during any rolling 12-month period. At that point, VAT registration becomes mandatory and VAT must be charged from the effective registration date.

If sales are predicted to exceed 50,000 DKK, businesses need to register in advance rather than wait until after the threshold is breached. This avoids retroactive VAT liabilities and penalties. Businesses under the threshold can still choose to register. This is common when a business has significant VAT-bearing costs and intends to recover input VAT rather than absorb it as an expense.

If a business makes taxable but zero-rated supplies (e.g., exports), VAT registration is still required—even if all sales are taxed at 0%. If all activity is VAT-exempt, VAT registration is generally not required.

When does a foreign business need to register for Denmark VAT?

Foreign businesses that make B2C sales into Denmark register for VAT from their first taxable sale, unless they use the EU’s One Stop Shop (OSS), an online VAT payment portal and management system. If OSS isn’t used, then local Danish VAT registration is required.

Storing goods in Denmark, including through third-party warehouses or fulfillment centers, mandates VAT registration from the first taxable sale. In these cases, there’s no turnover threshold. Local VAT registration is also required for services that are taxed based on where they’re carried out, such as events, catering, construction, and on-site services. If a foreign business imports goods into Denmark in its own name, then sells them, it must register to account for import VAT and subsequent sales VAT.

When a company sells services to VAT-registered Danish businesses and the reverse charge mechanism applies, VAT registration is usually not required. The Danish customer accounts for VAT instead, but only if all legal conditions are met. Businesses established outside the EU typically must appoint a Danish fiscal representative when they register for VAT. The representative shares responsibility for compliance and acts as a local point of contact with tax authorities.

How does VAT compliance work in Denmark?

Once you’re registered, VAT in Denmark becomes an ongoing responsibility. Here’s how to stay compliant.

Charging VAT

Pay special attention to the VAT charged and ensure it’s correct. In many cases, that means charging 25%. VAT invoices must include your business name, address, Danish VAT number, invoice date, invoice number, a clear description of the goods or services, the VAT rate applied, the VAT amount, and the total price including VAT. Missing or incorrect invoice details can block VAT recovery for customers and create audit risk.

Filing VAT returns

Filing frequency depends on turnover. Smaller businesses often file quarterly or semiannually, while larger businesses file monthly. Returns and payments are submitted electronically through the Danish tax authority’s portal, and deadlines are strictly enforced.

Late filings, late payments, or underreported VAT can trigger fines and interest. Errors can usually be corrected through amended returns, but proactive correction is far safer than waiting for an audit.

Keeping proper records

Businesses must retain VAT records, invoices, and supporting documentation for at least five years. Records can be digital, but they need to be complete, accurate, and accessible in case of a review.

Managing cross-border reporting

Businesses that trade within the EU might need to submit additional reports, such as EC Sales Lists and Intrastat declarations, depending on transaction volume and activity type.

How do VAT refunds work in Denmark?

Refunds are available to VAT-registered Danish businesses and to foreign businesses that incur Danish VAT but aren’t registered. The refund can be either paid directly to your bank account or offset against other tax liabilities. Large or unusual refund claims might be reviewed before payment, but routine refunds are common, especially for growing or investment-heavy businesses.

Here’s how each business type reclaims VAT.

VAT-registered Danish businesses

If VAT paid on business purchases exceeds VAT collected on sales during a filing period, the difference becomes a refundable credit. The refund is claimed directly through the VAT return and is typically paid out after the return is processed.

EU-based foreign businesses

Businesses established in other EU countries can reclaim Danish VAT through the EU VAT refund system in their home countries. To request a refund, they must send an electronic refund claim to their own national tax authorities. These will confirm the validity of the claim and forward it to their counterpart in the member state where VAT was incurred.

Non-EU businesses

Non-EU businesses can apply directly to the Danish tax authority with a dedicated refund application. These claims also have deadlines, minimum amounts, and documentation requirements, including valid invoices.

Not all VAT is refundable. Expenses such as entertainment and certain vehicle-related costs might be partially or fully unrecoverable under Danish VAT deduction rules.

Comment Stripe Tax peut vous aider

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