There are several types of tax; Value Added tax shorten as VAT is a type of tax that applies to the sales of goods and provision of certain services. Although not all goods and services attract taxes. A company either local or foreign which sells, stores, or imports its goods within the territory is obligated to register for VAT and pay taxes when due. Not only that, but it also must file periodic returns and pay VAT at the same time. Any business which fails to meet these obligations may be subject to certain fines and penalties.
If you are interested in VAT registration in the country, this guide provides basic information about the tax, and how to register.
Types of Value Added Tax
Unlike in other countries, there is only one rate charged in the country. The Standard VAT rate of 20 percent is charged on a few taxable goods and services. There are no reduced rates except exemptions.
Registration
Business entities need to register and file an application for the tax before starting a business or after the first taxable transaction. Late application and registration are subject to fines and penalties. To make the process easy, companies only must submit certain documents to the tax office and then await the issuance of their VAT numbers. This number is used for tax purposes related to the sales of goods.
Registration Threshold
A company that exceeds certain thresholds must file an Intrastat statement. The thresholds available here are:
- Arrivals: DKK 13.000,000
- Shipments: DKK 10.000,000
Processing Time
After the submission of the required documents and the application form, it takes one month for the number to be issued.
Documents Required
The following documents must be submitted during the registration:
- Completed registration form
- Extract from the trade register
- Proof of activity within its territory
- Certificate of VAT liability
- Power of attorney (when fiscal representatives are hired by non-EU businesses)
- Copy of Articles of Association, etc.
Hiring A Fiscal Representative
It is not important for companies owned by EU citizens to hire fiscal agents. However, entities owned by foreigners who are non-EU nationals must hire fiscal agents to represent them during tax registration. This representative handles their tax activities and is liable for VAT owed by the companies they represent.
Filing VAT Returns
A company must file periodic returns monthly provided its annual revenue is liable to VAT exceeding DKK 50 million, or if requested. A company files quarterly if Danish authorities if the annual revenue subject to VAT is between DKK 5 to 50 million, if the business is new, or if requested. A new business must declare VAT quarterly for at least 18 months before a change can be made by the Danish tax office. If your company’s annual VAT-taxable revenue is less than DKK 5 million and you have timely submitted and paid your VAT return, you may file periodic VAT returns on a semi-annual basis. Returns must be filed electronically on the 1st day of the 3rd month after the quarter or half-year in case of a quarterly or half-yearly basis. Or by the 25th day of the month after the month on monthly basis. Unwanted fines should be avoided by timely and accurate filing.
VAT Penalties
The tax office can fine a business for late registration. Inaccurate filings also attract fines. To avoid these fines, a company here is required to comply with the rules of the tax authorities and government by registering for the tax before starting taxable business transactions within its territory.
