VAT rules on sales to private consumers in the EU
If your business provides distance selling of goods and sells number of services to private consumers in the EU, special rules apply for business to declare and pay VAT in the member country where the consumption will take place. From 1 July 2021, a new joint EU amount limit will be implemented, among other things, requiring businesses in the EU to pay VAT in the country of consumption if they providing distance selling of goods and certain services (electronically supplied services, including telecommunications services and radio and tv broadcasting services) to other EU countries and their total sales exceed EUR 10,000 per year. Please see New rules from 1 July 2021 below for further information.
These special rules only apply to sales to private consumers in the EU. Usually, VAT on sales to private consumers is paid in the country where the business is registered.
However, in order to make it easier for the businesses to charge, declare and pay VAT according to the special rules, an optional Union scheme has been established so that your business can be registered in only one country and declare and pay the EU VAT in that country. So far, this scheme is known as One Stop Moms (VAT Mini One Stop Shop Scheme) in Denmark. From 1 July 2021, it will be called Moms One Stop Shop (VAT One Stop Shop Scheme) in Denmark.
You can read more about the new rules and about the VAT One Stop Shop Scheme on this page.
Generally, the new rules on sales to private consumers in the EU are as follows:
- In relation to distance selling of goods and sale of certain services (electronically supplied services, including telecommunication services and radio and television broadcasting services) a common EU limit was introduced meaning that only when a business' total sales to other Eu countries exceed EUR 10,000 per calendar year, the VAT should be paid in the country of consumption. However, this limit only applies to businesses established within the EU.
- It also means that national amount limits for distance selling of goods will be abolished.
- Several types of services are included in the rules allowing businesses to declare VAT via the VAT One Stop Shop Scheme.
- As regards import from non-EU countries to private consumers in the EU, imports of a value of less than DKK 80 will now be subject to VAT - and VAT will be charged from the first krone.
- When the business sells goods or services it has to charge different VAT amount from its customers (private consumers) depending on in which country the consumer lives and where the goods/services will be used.
If you have corrections to VAT returns before 2021
If you need to correct VAT returns before 1 July 2021, you need to do so in the former VAT Mini One Stop Shop scheme. This is why you still have access to that scheme.
If, from 1 January 2019 until 30 June 2021 your business provides electronically supplied services, telecommunications services and radio and tv broadcasting services to private consumers in the EU for less than EUR 10,000 during a calendar year, you do not need to declare and pay VAT in all the EU countries where you supply private consumers. You may in stead choose to declare and pay the VAT in the home country of your business.
New common limit for distance selling and electronically supplied services, etc.
From 1 July 2021, distance selling of goods inside the EU will be included in a new common EU amount limit that already applies to electronically supplied services, etc. This limit defines when businesses have to declare and pay VAT in the country of the consumer and when they can do so in their own country.
Until 1 July 2021, the Danish limit for distance selling of goods is DKK 280,000. The new common EU limit for the total of distance selling of goods and sale of electronically supplied services, telecommunications services and radio and tv broadcasting services to other EU countries is EUR 10,00 per calendar year.
Distance selling is considered to be the sale of goods that are sold from a business and sent to a private consumer crossing a national border on its way where the seller is involved with the transport of the goods. This applies most often to online sales.
When sales exceed the limit of EUR 10,000
If your business provides distance selling of goods and/or sale of electronically supplied service and the total exceeds EUR 10,000 per calendar year, you have to declare and pay VAT in all of the EU countries to which your goods or services are dispatched or where the consumption will take place. However, the optional VAT One Stop Shop scheme (the Union scheme) allows you to register your business in one country and declare and pay your EU VAT there.
Read more below about the various schemes in VAT One Stop Shop - schemes and advantages.
Sales of less than EUR 10,000
If your business has distance selling of goods and/or sales of electronically supplied services, telecommunications services and radio and tv broadcasting services which does not exceed EUR 10,000 per calendar year, you do not need to declare and pay VAT in all of the EU countries to which the goods or services are dispatched of the consumption will take place. Then, you have to remember that in this case you have to pay Danish VAT and file your VAT return via your normal business routines.
If your business has sales for less than EUR 10,000, you can still choose to use the optional VAT One Stop Shop scheme (the EU-Scheme). If you choose to use this scheme, your business has to be registered for the scheme and declare and pay VAT through the scheme.
Read more below about the various schemes in VAT One Stop Shop - schemes and advantages.
If your business is located outside the EU and sells goods or services to private consumers in the EU, the VAT should be paid in the home country of consumption. The limit of EUR 10,000 does not apply to these businesses.
Sale of services
If your business provides services for private consumers in the EU, it has to declare and pay VAT on sales of services in all the EU countries where your consumers live.
If your non-EU business provides services for private consumers in the EU, your business may register for the optional VAT One Stop Shop scheme (the non-Union scheme) and declare and pay VAT in only one country. Read more about the non-Union scheme below in VAT One Stop Shop - schemes and advantages.
Sales of goods of maximum EUR 150
Other rules apply to the sale of goods. From 1 July 2021, imports from non-EU countries of a value of less than DKK 80 will no longer be exempt from VAT. This means that VAT will be charged from the first krone on all shipments of goods.
If your business outside the EU provides goods to private consumers in the EU and the value does not exceed EUR 150, your business may register for the optional VAT One Stop Shop Scheme (the import scheme) and declare and pay VAT in only one country. Read more about the import scheme below under VAT One Stop Shop - schemes and advantages.
Sale of goods exceeding EUR 150
If you sell goods for more that EUR 150 to private consumers in the EU, your business cannot make use of the VAT One Stop Shop scheme. Normally the private EU consumer will be paying the import VAT and it is typically the shipping agency that charges the import VAT at the time of handing over the goods.
If your total sales to other EU countries exceed EUR 10,000 a year, you have to charge your private consumers different VAT rates depending on in which country the consumer lives or where the goods/services will be used.
Once the new rules take effect, you should:
- be able to charge different VAT rates (standard rates or reduced rates) and VAT amounts on sales to various EU countries when you provide a private consumer with goods or services (this could be via a web shop).
- be able to determine the individual goods or services as several EU countries differentiate their VAT. For example: A country’s standard VAT rate may be 22%, but it has reduced the VAT rate on books to 20% and on medicine the VAT rate is 10%. See an overview of current VAT rates in the EU.
- have specific accounts in your business accounts for this kind of sales. Read more in Danish about accounts in our legal guide section D.A. 16.3.8 Accounts.
- specifically check in which country the consumer want to use the goods or services.
- keep your accounts for 10 years.
- declare and pay VAT in each individual EU country. VAT One Stop Shop offers you a very simple way to do this which you can read more about on this page.
- Declare the total value in A, B and C relating to trades outside Denmark in your ordinary tax return.
In order to make it easier for businesses to declare and pay VAT on sales to private consumers in the EU, the current VAT Mini One Stope Shop Scheme will be extended to include goods and services on which the VAT should be paid in the country of consumption. Such goods and services are typically sold online to consumers in the EU. From 1 July 2021, it will be called Moms One Stop Shop (VAT One Stop Shop Scheme) in Denmark.
The VAT One Stop Shop Scheme may reduce the administration of EU businesses by enabling them to declare and pay VAT on sales to private consumers in the EU in only one EU country. Read more about VAT One Stop Shop and how to register your business
The Union scheme (EU businesses)
The Union scheme applies for businesses in Denmark or in other EU countries. It includes distance selling of goods and sale of certain services to private consumers in other EU countries where the VAT should be paid in the country of consumption. This means that you can declare VAT in your home country in stead of having to register in the individual countries. The scheme also applies to businesses that are registered in the EU but established outside the EU if it provides distance selling of goods inside the EU.
Read more about the Union scheme.
The non-Union scheme (for businesses outside the EU)
The non-Union scheme applies to businesses established outside the EU (a so-called third country) that have no fixed place of business in the EU. The non-Union scheme includes services on which VAT should be paid in the country of consumption. This means that businesses outside the EU should not register in the countries to which they provide services for private consumers, but they can choose to register in one country from which they can declare VAT on goods sold to the rest of the EU.
Read more about the non-Union scheme.
The import scheme (import of goods of a value of less then EUR 150 to private consumers in the EU)
The import scheme is new and aimed at businesses providing distance selling of goods imported from non-EU countries for private consumers in the EU and of a value not exceeding EUR 150. Distance selling is considered to be the sale of goods that are sold from a business and sent to a private consumer crossing a national border where the seller is involved with the transport of the goods. This applies most often to online sales.
The import scheme is established as the VAT exemption for goods of a value of less than DKK 80 from non-EU countries will be abolished. If the business is registered outside the EU and want to sign up for the scheme, it should sign up via an intermediary and this intermediary should be registered in an EU country.
If your goods are subject to certain excise duties (such as alcohol and manufactured tobacco) you cannot include these goods in the import scheme.
If the business is selling goods of a value of more than EUR 150 from a country outside the EU for private consumers in the EU, it cannot sign up for the import scheme.
Read more about the import scheme.
Your business IOSS number is confidential
When your business is registered for the import scheme, you will receive an IOSS number (or an IM number) for shipping your goods. The IOSS number may not be visible on your shipment (package/envelope).
The IOSS number is used for customs clearances purposes for a shipment. In this way, the Danish Customs Agency (Toldstyrelsen) can see that you settle VAT on the value of your goods via the One Stop Shop scheme. The goods are thus delivered directly to the buyer without any further VAT charge.
You have to be very carful in your use of the IOSS number - and you may not give it to anybody of no relevance to your business.
If you have corrections to VAT returns before 2021
If you need to correct VAT returns before 1 July 2021, you need to do so in the former VAT Mini One Stop Shop scheme. This is why you still have access to that scheme.
For further legal information in Danish see our legal guide .