Foreign businesses registered for VAT in Denmark are confronted with subsequent obligations from different agencies depending on the activities carried out. We have summarised the typical compliance footprint a foreign business has towards the Danish authorities.
Businesses are VAT registered with the Danish Tax Agency. Foreign businesses without a business address in Denmark may appoint a local non-liable representative, e.g. a lawyer, to be the main point of contact in view of Danish authorities.
The business has obtained a VAT registration – what next?
VAT returns – how often and how do you do it?
When a business registers for VAT, it must report VAT returns on a regular basis. Usually, the business files its VAT returns on a quarterly basis, however if the business expects an annual turnover exceeding DKK 55 million (about EUR 7 million), VAT returns must be filed monthly.
After 1.5 years, the Danish Tax Agency may change the frequency of the VAT reporting to monthly, quarterly or semi-annually, depending on the actual turnover.
VAT returns are filed only on www.skat.dk, which is the Danish Tax Agency’s online portal. The easiest way to access is to obtain an e-tax password.
Make sure to have a NemKonto assigned.
All businesses operating in Denmark are required to register a NemKonto. A NemKonto is the business’s existing bank account, which is assigned as the account into which payments from Danish Authorities are transferred.
If the business is in a receivable VAT position, VAT will be returned to the NemKonto. As a result, no payments can be made prior to registering NemKonto. Furthermore, even if the business will only be in a payable position and will not receive payments from Danish authorities, it is still a requirement to obtain a NemKonto.
If the business has a Danish bank account, obtaining a NemKonto is easy. The Danish bank will assist with defining the bank account as the NemKonto.
Obtaining a NemKonto with a foreign bank account is generally a KYC-application process requiring various documentation as well as involving the authorised signatories of the business.
The processing time is currently up to 10 weeks, so we recommend starting the process as soon as the VAT registration has been completed.
Businesses with an address in Denmark must obtain a NemID.
All businesses with a business address in Denmark must obtain a NemID – specifically an employee certificate. NemID is a common digital secure solution, which is primarily used to access online banking or information from public authorities, which is sent to the business’s digital mailbox.
The business is responsible for monitoring the digital mailbox, which may contain important letters and deadlines.
Be aware of the Intrastat thresholds
All businesses in Denmark trading with other EU countries are liable to submit Intrastat declarations when certain thresholds are exceeded.
Intrastat is a statistical report on the trade of goods between Denmark and the Intrastat area, which consists of the EU and Northern Ireland.
Businesses are liable to report on Intrastat export in 2021 if:
- The business’s total export of goods to other EU countries in 2020 exceeded DKK 5.2 million (about EUR 0.7 million), or
- The business’s export of goods from other EU countries and Northern Ireland exceeds 12 million (about EUR 1.6 million) during 2021.
Businesses are liable to report to Intrastat import in 2021 if:
- The business’s total import of goods from other EU countries in 2020 exceeded DKK 7.2 million (about EUR 0.9 million), or
- The business’s import of goods from other EU countries and Northern Ireland exceeds DKK 14 million (about EUR 1.9 million) during 2021.
Other VAT compliance updates
As of 1 April 2021, it is possible for businesses to register in the One Stop Shop scheme in Denmark. As of 1 July 2021, the businesses are able to report and pay VAT in the One Stop Shop scheme.
Conclusion
In summary, a VAT registration in Denmark requires more than just the actual VAT registration. There are important requirements and expectations which must be followed so as to ensure compliance with Danish law.
Read the WTS Global VAT Newsletter here.
