The VAT policy in Denmark is based on the "destination principle" of the European Union VAT system. This means that VAT, or moms in Danish, is payable to the country's government where the product or services are consumed, regardless of where you're supplying them from. So, if you have clients in Denmark, you have to comply with Danish VAT rules. VAT is administered by SKAT, the Danish Customs and Tax Administration.
The standard VAT rate in Denmark is 25%, and while there are no reduced VAT rates, you may be entitled to certain deductions based on your services and income. This guide includes everything you, as a freelancer, need to know about VAT in Denmark in a nutshell. Let's get started!
If you have a sales income of more than 50,000 DKK over 12 months, you must report and pay VAT; however, registering for VAT is optional if your sales income is less than 50,000 DKK. If you register for VAT, you must make sure to charge, declare and pay VAT even if your sales are less than 50,000 DKK.
Certain services, such as those in the health care and education sector, are exempt from registering and paying for VAT. Generally, in this case, you will still need to pay payroll tax instead of VAT. However, it is possible to have both sales subject to VAT and sales exempt from VAT- you only have to pay VAT on the sales subject to VAT.
If you’re still confused about your tax situation or whether you need to register for VAT, click here to find out.
All foreigners who meet the legal requirements can work in Denmark as freelancers; however, most of the world’s citizens would first need a visa or work permit to do so.
Citizens of a Nordic country do not need a work permit; they are free to arrive, live and work in Denmark. However, citizens from an EU or EEA nation and Switzerland have to apply for a certificate of registration at the Government Administration (Statsforvaltningen). For citizens of the remaining countries, a work permit is required.
Xolo can help you register as a freelancer in Denmark and handle all the necessary paperwork on your behalf. With Xolo Go, you use a slice of our company as a legal framework to invoice your clients whether they're across town or across an ocean.
Since 1992, the standard VAT rate in Denmark has been 25%. This is levied on all goods and services. There are no reduced VAT rates, but the 0% rate is applied on certain products like newspapers and journals, intra-community and international transportation. Although there are no charges on zero rates, you should record sales of goods and services and create a report based on your returns.
You must register for VAT if your revenue exceeds 50,000 DKK over 12 months. If you know that your sales will exceed this amount, you must register no later than 8 days before starting your business.
Once you have a Danish VAT number, you must submit periodic VAT returns detailing all taxable sales and purchases. Returns are submitted monthly, quarterly or bi-yearly, depending on your annual sales income.
The deadlines are determined as follows:
How to Register for VAT in Denmark
You must register for VAT online by filling out the form ”Registration of Non-Danish Company – Start - 40.112”. Once you have registered, you will be sent the registration certificate along with your Danish VAT number (CVR number/SE number) to your postal address. After registering, you will also receive a password to E-tax for businesses, which you must activate within 30 days. You can access this to declare, pay and file VAT returns for every period.
Financial Obligations of VAT Registered Freelancers In Denmark
Registering for VAT is only the first step. From the day of your registration's effective date, you must:
Furthermore, every VAT-registered individual is required to:
If you’re feeling overwhelmed by all this information, don’t worry. At Xolo, we can help you to future-proof these vital documents by automatically generating, storing, and maintaining them digitally in our servers for as long as you need them.
How Xolo Can Help?
With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC.
Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Denmark in no time!