VAT Guide for Freelancers in Denmark

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!

Who is required to account for VAT in Denmark?

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.

VAT Guide for Expat Freelancers in Denmark

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. 

What are the VAT Rates in Denmark?

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.

When to register for VAT

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.

  • You need to file every six months if your annual revenue subject to VAT is less than 5 million DKK and if you have filed your VAT return and paid on time.
  • You need to file a VAT return quarterly if your business is new, if you have requested quarterly settlement, or if Danish authorities assess your business's annual revenue to be 5-50 million DKK.
  • You need to file a VAT return monthly if your annual revenue is more than 50 million DKK or if you have requested a monthly settlement yourself.

The deadlines are determined as follows:

  • 1st day of the 3rd month after the end of the quarter or half-year in case of the VAT returns are submitted on quarterly or half-yearly basis;
  • 25th day of the month of the following month in case the VAT returns are submitted monthly.

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.

Alternatively, you can make use of the Mini One-Stop Shop, an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return. This scheme is optional but especially useful if you have customers in multiple countries, including Denmark, within the EU. In addition, MOSS allows you to avoid registering in each Member State of consumption. To learn more, click here.


You can also hire an accountant (or agency) to handle all your VAT registration and returns. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

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:

  • Charge the correct VAT rate
  • Pay any VAT owed to the Tax Department of Denmark for each period
  • File VAT returns
  • Maintain VAT records for at least six to ten years

Furthermore, every VAT-registered individual is required to:

  • Keep track of all purchases and transactions,
  • Keep a running total of their VAT account, and
  • Make sure their VAT invoices are accurate.

 

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?

Why submit your tax reports with help from certified tax consultants? Learning all the Danish tax guidelines can be challenging, especially if you’re a sole proprietor and in charge of several aspects of your business. Luckily, at Xolo, we offer a range of solutions that can handle all the paperwork and legal jargon, allowing you to focus on your core competencies.

With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC. 

  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.
  • Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!
  • We offer different tiers of service depending on the solopreneur’s, or as we call them, Xolopreneur's, individual needs.
  • Once you get your business set up, you can run it from anywhere in the world! So whether you’re looking to gain access to the EU market or a digital nomad - this is the place for you! 

 

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!