For goods or services to be liable to VAT in Denmark, the place of supply must be in Denmark pursuant to the rules of the VAT Act. When determining the place of supply a distinction is made between goods and services.

Goods
Place of supply is in Denmark in the following cases:

  1. If the goods are physically handed over in Denmark
  2. The goods are in Denmark when their transportation to the purchaser starts.
    1. This does not apply, however, if the goods are installed or assembled by the supplier (carried out by the supplier, or on his behalf, and assembly is made abroad)
    2. This also does not apply to distance selling where the seller is liable to register for these sales in another EU Member State.
  3. If goods are dispatched or transported to Denmark, and are installed or assembled in Denmark by a foreign supplier, or on his behalf.
  4. If goods are sold in Denmark by distance selling from another EU Member State, when the supplier is liable to register for these sales here. Please note that you are liable to register in Denmark, if your turnover from distance selling to Denmark exceeds 280,000 DKK.
  5. If goods are supplied onboard a ship, plane or train providing passenger transport within the EU, and departing from Denmark.

Services
Services are defined as anything which is not goods such as consulting services, advertising services, transport services, hiring-out of assets, hotel and restaurant services, cleaning service and construction services.

Place of supply of the following services is in Denmark. This applies whether the purchaser is a taxable person or not:

  1. Services provided in connection with an immovable property located in Denmark
  2. Transport of persons, if transport is made in Denmark.
  3. Restaurant and catering services, if services are provided in Denmark
  4. Short-term hiring-out of means of transport, if the means of transport is made available to the customer in Denmark. New rules apply as of 1 January 2013.

If you provide services under point 1. – 4. to a person or companies who are not registered for VAT in Denmark, you must register for VAT in Denmark.

If you provide the same services to a VAT liable person in Denmark, the reverse charge rules will in most cases apply to these supplies, and you are not required to register for VAT in Denmark (see below information on reverse charge).

Persons who are not liable to VAT may, in certain situations, be VAT-liable purchasers. You will for instance become liable to register, if you buy goods from other EU Member States. This VAT registration also influences on your status for the purpose of VAT in connection with the acquisition of services from other EU Member States.

The place of supply of almost any type of services, apart from the ones mentioned under point 1. – 4., is only in Denmark, if the purchaser is a taxable person. The reverse charge will always apply to the provision of services to taxable persons (see below information on reverse charge). This applies, regardless of whether the taxable purchaser is liable to VAT in Denmark or is exempt from VAT, see section 4 below.

Entrance tickets for arrangements such as trade fairs, exhibitions and concerts are subject to VAT in Denmark, if these arrangements are actually held here. This means that the organizer must register for VAT in Denmark and account for Danish VAT due on the entrance ticket.

Special rules apply to restaurant and catering services supplied onboard ships, trains and planes.

If the place of supply of the service provided is not in Denmark, you are not required to register for VAT in Denmark.

Reverse charge
Although you provide services with place of supply in Denmark, the reverse charge rules may often apply.

This means that the general rules do not apply. According to the general rules, the seller must invoice, charge and account for VAT to SKAT, when place of supply is in Denmark.

In short: The seller is in most cases the person liable to pay towards SKAT. The person liable to pay is the person who must declare and account for VAT to SKAT.

If the reverse charge rules apply to a service provided by you, the purchaser of the service will become the person liable to pay.

This means that you must invoice sales without invoicing and charging Danish VAT. The purchaser will be obliged to account for and pay the Danish VAT.

If you make supplies to which the reverse charge applies, you are not required to register for VAT in Denmark. If you also carry out activities for which you are liable to register for VAT in Denmark, for instances supplies to non-taxable persons in Denmark, you must register for VAT in Denmark.

Examples of supply of services

1. Supply of services connected with an immovable property located in Denmark to a VAT registered company.

Example:

An order was placed with a self-employed German craftsman to do repair works to a cow shed of a farmer in Denmark, i.e. supply of services to a taxable person. The German craftsman must issue an invoice without VAT, this being a transaction between companies. The invoice must clearly state that the supply is made according to the reverse charge rules.

The Danish farmer must declare the VAT due on the acquisition on his VAT return.

The VAT rate is 25%, as works were performed in Denmark.

The reverse charge rules apply to this supply. Thus, the German craftsman/supplier is not required to register for VAT in Denmark.

2.  Supply of services connected with an immovable property located in Denmark to a non-taxable person

Example:

An order is placed with a German carpenter to install a new roof on the house of Mr. Jensen in Tønder in Denmark. Mr. Jensen is a private person, i.e. this service is supplied to a non-taxable person. Thus, the reverse charge rules do not apply in this situation. The German craftsman must register for VAT in Denmark and issue an invoice with Danish VAT to Mr. Jensen, as the place of supply is in Denmark. The VAT rate is 25%, as works are performed in Denmark. The German craftsman must declare the invoiced VAT on his VAT return along with the input tax, if any.

The reverse charge rules do not apply this being a service supplied to a non Vat taxable person. The foreign company therefore must register for VAT in Denmark, as place of supply is in Denmark.

3. Supply of services connected with immovable properties located in Denmark to VAT-registered persons as well as non VAT-registered persons.

If you supply services connected with an immovable property to VAT-liable persons the reverse charge mechanism will be obligatory. If, on the other hand, you supply services connected with an immovable property to non taxable persons, you must, as seller, account for VAT. This means that if you supply services connected with an immovable property to VAT liable as well as non VAT-liable persons, you must only charge Danish VAT on the services connected with an immovable property to the non VAT-liable person. For supplies made to the VAT-liable person, the reverse charge rules apply, which should appear from the invoice issued by you.  

Example

A self-employed German craftsman is to build a cowshed for a Danish Farmer and install a new roof on the house of Mr. Jensen in Tønder in Denmark as well. Mr. Jensen is a private person. Thus, these are supplies made to a VAT-registered and a non-taxable person in Denmark as well. Place of supply of both supplies is in Denmark, as the immovable properties are located here.

The German craftsman must issue an invoice without VAT to the Danish farmer, as this is a transaction between companies. The invoice must clearly show, that it relates to reverse charge sales.

At the same time, the German craftsman must register for VAT and declare and account for VAT in Denmark on sales to Mr. Jensen. These are supplies made in Denmark to which the reverse charge rules do not apply, as they are supplied to a non-taxable person. He must therefore issue an invoice to Mr. Jensen including Danish VAT of 25%. Subsequently, the German craftsman must declare and pay the VAT amount to SKAT.

You are not permitted to charge Danish VAT on the invoice to the Danish farmer/VAT-liable person, although you are registered for VAT in Denmark. Relating to the example, you must only charge Danish VAT on the invoice, if you supply services connected with an immovable property to non-taxable persons. 

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