Special notice regarding Covid-19 and VAT registration
The situation linked to the COVID-19 pandemic has resulted in support packages for Danish registered businesses. Among other things deadlines regarding filing and payment of VAT were changed. Please find the changes here
Also, it is made possible for companies to have up to 10 MIO DKK on their Danish Tax Account for a temporary period, if the company adjusts the amount threshold.
In case you have questions or need assistance, please do not hesitate to contact us.
Distance selling to private individuals in other EU countries
If your company is selling products over the Internet to consumers in other EU countries, there is a limit to how much you can sell to retail customers before you have to register for VAT in the country. Click here
to learn more about individual thresholds for EU countries, and please contact us for further information and assistance with VAT registration in that country. Please note that from the 1st of January 2021 the thresholds will be withdrawn and One-Stop-Shop (OSS) will be implemented.
The changes will result in the same rules governing the distance sale of goods and services in all EU countries.
In essence, the new rules mean that the current mini-one-stop-shop (MOSS) for TBE services (telecommunications, broadcasting and electronic services) will be expanded to a one-stop-shop (OSS), which includes all B2C services and distance sales of EU goods. The rules also mean that imports of goods from third countries worth a maximum of 150 euros are covered by the OSS rules.
Brexit – what are the possible consequences for your company?
As you may know, British voted no to continued membership of the European Union. When, on the 31st of December 2020, they finalize the exit of the EU, you might have to treat trade with British customers the same as trade with customers in third countries. Sales and purchases of goods might be considered as export and import, so export declaration papers would have to be filed as well as having to adjust the specification of the Danish VAT return. Sales of goods to private consumers could be achieved without a VAT charge. Buying and selling services might largely be conducted as before, but there could be a number of services that, in the future, could be imposed Danish VAT, for example, consultancy services used in Denmark. Great Britain’s withdrawal will, possibly, remove the binds to the EU’s VAT Directive, which might cause the UK to introduce a local VAT regime. This might influence foreign companies’ ability to recover local British VAT.
Stricter documentation requirements for VAT-exempt EU trades
The European Commission has adopted a number of changes to the current VAT system, which have an impact on how cross-border transactions are handled in regard to VAT. Therefore, in December 2019, the Danish Parliament passed the necessary amendments to the Danish VAT Act. With these changes, validation of the buyer’s VAT number is now a material requirement in being able to deliver goods without applied VAT to customers in other EU countries. All active EU VAT numbers can be found in the EU’s VIES database.
When checking on VIES, an inquiry number is assigned to the enquirer – this number is stored in the debtor directory, and the EU customers’ VAT numbers must also appear in the company’s debtor directory. The verification on VIES must be done regularly and at least once every quarter during continuous trading – on occasional deliveries the customer’s VAT number must be validated in VIES prior to each delivery. This must be an actual VAT number registered in the VIES system. Where, on the EU’s VIES page, you can only verify VAT numbers individually, Elin Schnedler ApS makes available a form, free of charge, where you can enter a number of VAT numbers and have them verified. Click here for download.
In addition to the validation of the VAT number itself, the data associated with the VAT number must be compared with the company’s own registration information on the customer.
If formalities are not in order, the company risks – in addition to a fine – to be charged 25% Danish sales tax on the delivery unless:
• The seller can prove to have acted in good faith, and
• A correction of the error is made to the relevant authorities
If your customer claims to be registered for VAT – but this cannot be confirmed in VIES – you can request confirmation from the customer’s local tax authority. If you cannot get a VAT number verified and you are also in doubt as to whether a buyer has a valid VAT number, you should calculate VAT on the sale.
Note: Foreign companies may need to register separately for cross-border transactions in the EU. The procedure is not the same in all EU countries. If you receive an invoice from an EU supplier, and you have doubts whether the VAT has been correctly applied or the supplier is forced to charge local VAT due to a lack of local registration for cross-border trade, please contact us for assistance.
New rules for online stores that have sales to Norwegian private customers
Deliveries to Norwegian retail customers at values below NOK 350 have previously been exempt from VAT. On 1 April 2020, this VAT exemption was repealed. Instead, the seller is obliged to pay import VAT and any other shipping charges up to NOK 3,000. This means that all online stores that sell to Norwegian customers must be registered in Norway. A simplified registration has been created for these online stores. The VAT must be reported every quarter.
The simplified registration only applies to online stores that sell exclusively to private individuals and for sales below NOK 3,000. In the event that the seller also has sales to Norwegian corporate customers, or sales worth more than NOK 3,000, it is recommended to setup an ordinary VAT registration.
If you have any questions about this or need assistance in setting up simplified or regular registration in Norway, please contact us for a non-binding talk.