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Home // Home page // Do you need to register for a VAT-exempt activity?
Even if your business primarily operates VAT-exempt activities, it must register for VAT when...
March 29, 2023

Do you need to register for a VAT-exempt activity?

Many businesses are unaware that there may be a requirement to register their business for VAT even if their primary activity is VAT exempt.

The requirement for VAT registration can occur when a business has the following activities:

  • Buying goods and services from abroad
  • Canteen where the company collects payment from its employees

VAT on purchases of goods from abroad

Even if your business is primarily a VAT-exempt business, it must be registered for VAT when you purchase goods (more than $80,000) or services (no minimum threshold) from abroad.

This is because purchases of goods and services from abroad are often subject to reverse charge rules. This means that it is the buyer's responsibility to settle the VAT.

Canteen services are subject to VAT

Selling canteen services is a fully taxable activity. The company receives a VAT deduction for all purchases for canteen operations, but must also pay VAT on the income. Employee payments often do not cover the company's actual canteen operation costs, which is why the Danish Tax Agency has drawn up rules on how to settle a fictitious sales VAT, also known as canteen VAT.

Many companies run small canteens. The concept of running a canteen also includes the mere activity of buying, for example, rye bread and cold cuts and selling it to your employees for DKK 20 per day. In these situations, the purchase and sales VAT will often be identical, but in other cases there will be a difference based on the notional canteen VAT.

Your business must account for canteen VAT even if it does not deduct VAT on purchases or the canteen operation is of a smaller size. The company is still obligated to calculate and pay the canteen VAT as soon as the registration limit of DKK 50,000 for VATable turnover is exceeded within a 12-month period. This limit is typically already reached when a company has 18-20 employees.

What if the company forgets to register for VAT?

Forgetting to register for VAT can be costly, especially after the Tax Agency introduced interest on incorrectly declared VAT last year.

If your company buys goods or services from abroad, or runs a canteen, it's worth checking whether you are correctly accounting for VAT on the activity.

More information

If your company needs advice on VAT registration or assistance in reviewing your VAT, you are welcome to contact inforevision's tax department. You can also read more about us here.

Flemming Saabye
Head of the tax department
T 39 53 50 38
fsa@inforevision.dk

Nana Johansson
VAT Advisor
T 39 53 50 05
nan@inforevision.dk

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