What is VAT?
VAT is short for value-added tax and is an indirect tax. It is a tax from the state that businesses can collect from their customers by adding it on top of the selling price. In this way, it is collected by the business and calculated from the selling price of the good. The VAT rate in Denmark is currently 25%.
With this method the business “collects” the VAT from its sales and keeps it for a period, this period varies depending on the business type, read more about this under VAT deadlines.
A business that purchases a good or service in Denmark initially pays the VAT the seller has put on the good or service. But when the VAT has to be paid to SKAT, the paid VAT is deducted.
Does my business have to be VAT registered?
Remember that not all businesses are required to be VAT registered. It depends on your annual turnover. If your business’s turnover is less than 50.000 kr. a year, then it is optional if you want to register for VAT or not.
It does look more professional if your business is VAT registered, as if it is not your business will often be perceived as a hobby business.
You register your business for VAT on virk.dk, you can do it in connection with getting your CVR-number.