VAT (value added tax) is a consumption tax that is imposed on the sale of goods and services.

Businesses charge VAT on their sales (output VAT) and can deduct the VAT they themselves have paid on purchases for the business (input VAT). The difference between output VAT and input VAT is settled with the Danish Tax Agency.

In the end, it is the consumer who pays the VAT, while businesses only act as collectors and intermediaries.

The VAT rate in Denmark is 25% and applies as a general, uniform rate on almost all goods and services.

There are no reduced VAT rates in Denmark as known from many other EU countries.

Certain areas are, however, exempt from VAT, for example health services, education, financial services and the rental of real estate.

It is the consumer who ultimately pays the VAT, because it is added on top of the price of goods and services.

Businesses act as collectors of VAT by adding VAT to their sales.

VAT liability applies to businesses that supply VAT‑liable goods and services in Denmark when their turnover exceeds the registration threshold of DKK 50,000 per year.

Certain services and goods are exempt from VAT in Denmark under the Danish VAT Act, including:

• Health services such as medical, dental and hospital care
• Social services and education
• Financial activities such as loans, granting of credit, insurance and certain banking services
• Rental and sale of real estate (with exceptions such as new buildings and building land)
• Certain cultural activities, for example authors’ and composers’ fees and some theatre and concert activities

The exemptions mean that the business does not charge VAT to customers, but at the same time cannot deduct VAT on purchases related to the exempt activities.

In trade with foreign countries, the VAT treatment depends on whether the trade takes place within the EU or with a country outside the EU.

Within the EU: Sales of goods to other EU countries are generally VAT‑exempt if the buyer is a VAT‑registered business in the other EU country and accounts for VAT under the reverse charge rules. Similar rules apply to services to business customers.

For sales to private consumers in the EU, VAT is charged under special rules on distance sales and the One Stop Shop scheme, where VAT is paid in the country where the consumer lives.

Outside the EU: Exports of goods to countries outside the EU are VAT‑exempt in Denmark, while the buyer pays any import VAT and customs duties in the country of destination. For purchases from abroad, Danish businesses must calculate and settle Danish VAT under the reverse charge rules, with a corresponding right to deduct the VAT as input VAT.

VAT settlement is done digitally via TastSelv Erhverv.

The settlement frequency depends on the size and registration of the business: small businesses typically settle semi‑annually, medium‑sized businesses quarterly and large businesses monthly.

If a business does not pay VAT correctly, the Danish Tax Agency can demand payment of the outstanding VAT with interest and any fees.

Missing or late reporting can lead to fines.

In cases of serious or intentional VAT evasion, there may be stricter sanctions, including higher fines or, in serious cases, criminal liability for the company’s management.

A business can obtain a refund of VAT abroad if it has paid foreign VAT on goods or services purchased for business use.

The refund is applied for in the country where the VAT was paid, and the procedure depends on whether the country is inside or outside the EU.

EU countries: The application is made digitally through TastSelv Erhverv in Denmark, and the Danish Tax Agency forwards it to the relevant EU country.

Outside the EU: The application is typically sent directly to the authorities in the relevant country according to their rules and deadlines.

It is a condition that the business is not VAT‑registered in the country where the VAT is to be refunded, and that the expense relates to the business’s VAT‑liable activities.