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Avoid problems when applying for VAT registration in Denmark

In this blog, we describe how to avoid problems when applying for VAT registration for a new ApS. One of the more significant changes we have seen this year is increased due diligence by the Danish Tax Agency when applying for VAT registration. It is mainly foreign shareholders, either non-residents or residents of Denmark, who are affected.

Avoid problems when applying for VAT registration in Denmark

Avoid problems when applying for VAT registration in Denmark

In this blog, we describe how to avoid problems when applying for VAT registration in Denmark.

One of the more significant changes we have seen this year is increased due diligence by the Danish Tax Agency when applying for VAT registration.

This is relevant for limited liability company structures like the ApS.

We have not seen problems for sole proprietors.

Also, it is mainly foreigners, either non-residents or residents of Denmark, who are affected, but we have seen a few Danish citizens getting the same level of due dilligence.

In general, incorporating the ApS is usually relatively smooth.

Learn what to do after your ApS is incorporated

However, after receiving the CVR number and submitting the application to register for VAT, challenges sometimes can occur:

If you do not receive the VAT registration within two weeks after your ApS is incorporated and the application for VAT registration is submitted, you will most likely receive a letter sent to the company-registered address with a list of questions.

Remember to ask your employees to check your mailbox at the company-registered address daily, since it contains an important deadline to respond to the Danish Tax Agency.

If you do not respond within the deadline, the application will just be cancelled without further notice.

You can always apply for a VAT registration later, but it naturally prolongs the VAT registration process.

You can check here if the company is already registered for VAT:

Check if your company is registered for VAT on SKAT’s website

The letter from the Danish Tax Agency seems to generally contain the same requests for documentation and questions.

Here, we will go through each request for documentation and questions, based on the replies we have seen from the Danish Tax Agency, and we also let you know how to prepare and avoid being declined for your VAT registration:


How to avoid problems when applying for a VAT registration in Denmark


1. A description of the company’s activities, i.e. information about customers and suppliers as well as copies of all contracts and offers

Here, it is essential to provide a detailed description of the company’s activities.

If the description contains information only about customers and suppliers abroad, the Danish Tax Agency might decline your application due to a lack of VAT-applicable activity in Denmark.

It can also be a problem, if the management is living and working from abroad.

The Danish Tax Agency seems to prefer a management that plans to work physically from Denmark.

It is unclear how many days per year you should plan to be in Denmark as a manager, but “the more the better” is most likely the correct answer.

So, to get the VAT registration approved, a new ApS will usually be required to have some level of presence and activity in Denmark.

It can be having the management, customers, suppliers, employees, an office, a warehouse in Denmark or similar.

You should always provide a detailed list of customers and suppliers.

Also, you should prepare a list if you do not yet have any customers or suppliers.

In this case, describe who you expect will be your customers and suppliers.

Make a list with the following information for each company:

Company name
Company address
Phone numbers
Website
Mail
TIN (if you can get this)

Choose a minimum of 5-10 companies that are or can become your customers or suppliers.

If they are not customers or suppliers yet, simply write that these are the companies you will approach and expect to cooperate with.


2. An explanation of what prerequisites you have to run the company, e.g. education, industry knowledge, and experience

Write a detailed explanation of what you have done in your professional life.

You should update your personal LinkedIn and Facebook page and ensure any information mentioned here matches what you write in your reply to the Danish Tax Agency.

They sometimes check if the information match.

Have you worked in the industry before?

What relevant jobs have you had?

Include names of companies, years, job descriptions and other relevant information.

The Danish Tax Agency wants you to have sufficient experience to manage the new ApS.


How to avoid problems when applying for a VAT registration in Denmark


3. A budget for the company’s first 12 months

The budget is essential and should contain the following:

An operating budget showing the expected sales and costs for the first 12 months;
A cash flow budget for the first 12 months;
A balance budget showing assets, equity and liabilities at the end of the first 12 months.

You can read more about budgets here


4. Documentation of how the incorporation of the company are financed, e.g. incorporation costs, operating assets, and premises

Using the cash flow budget as a reference, you need to explain how the incorporation of the ApS is financed.

You should include the bank transfer confirmation of the share capital.

And document where this money came from.

You can attach a PDF from the bank account where you did the transfer and write, as an example, “The share capital of 40.000 DKK was transferred from my personal bank account. The bank account statement is attached. The source of funds are from salary payments relating to my previous work as director.”

You should also explain where the share capital is now.

If deposited into a lawyer’s bank account, ask the lawyer to make a statement that they have the money deposited.

Furthermore, all agreements you have made for the ApS should be attached.

It can f.ex. be lease agreements, agreements with lawyers, loans, supplier contracts, or customer agreements.

Since the ApS is new, this naturally can be difficult to send.

Alternatively, you can attach mail correspondence with banks, potential customers and suppliers, potential employees, etc.

The more you can provide, the better.


How to avoid problems when applying for a VAT registration in Denmark


5. All accounting material from the day the company was incorporated until today

You should provide the invoices you have received so far.

Most will have at least one invoice from the lawyer incorporating the ApS.

It can also be a bank statement.

Or simply provide any receipts or invoices you already paid for using your credit card or bank account.

Maybe you bought an internet domain or a SIM card for a mobile phone.

All costs you incurred already are reasonable to include.


6. A copy of the company’s bank account statement

You should attach the bank account statement from the new bank account belonging to the ApS.

If you still need to open a bank account, then at least attach the mail correspondence with the bank.

The Danish Tax Agency want to see that you can receive payments from customers and pay invoices.

It can be a foreign bank account.

It should be in the name of the ApS.

Try Revolut if you cannot get a bank account in a Danish bank.


7. Copy of leases

Attach the rental agreement for the address used to incorporate the new ApS.

The address is the same as shown on VIRK:

Check the address on VIRK

Attach the bank transfer confirmation of the deposit for the lease.


8. Information on which vehicles, machines, and other operating assets are used in the company

Write a detailed explanation of what equipment you need in the company.

If you can attach pictures, links to a website with pricing (check that you have used the exact pricing in the budget) or proforma invoices, it all helps.


How to avoid problems when applying for a VAT registration in Denmark


9. Information about where the company’s management, actual place of business, and accounting material is physically located

It would help if you had an office, warehouse or other physical presence in Denmark to have enough physical substance to be considered eligible for VAT registration.

An utterly remote company with a director working from abroad will often be declined for VAT registration in Denmark since the Danish Tax Agency cannot see why a VAT registration are needed in Denmark.

Also, having a 100% virtual office seems to generally not get accepted for VAT registration.

Furthermore, if you have a time-restricted office like a co-working space, we have seen that limited access, which is only for a few days per month, often will result in not getting the VAT registration.


10. Address on the website, if the company has one

You should have a functioning website which looks professional.

All links must be working correctly.

Any information you write on your website regarding your personal experience, skill, how many years you worked, clients you have worked for, etc., should naturally be the same as what you write in the reply to the Danish Tax Agency.

Also, include the company name, address and CVR for the new Danish ApS on the contact page and footer.

Any information on the website, e.g., about countries, employees, customers or suppliers, should match your other replies.


11. Information on how the company markets itself

Make a description of how you will market your company.

If possible, you can attach an offer from a marketing agency for your company.

And remember, to include the same marketing cost in your budget as shown in the quote.

You can contact our marketing agency here if you need a quote


12. Information about who will work for the company and how you will pay them – if employment contracts have already been written, you must also send a copy of them

Since the company is not registered as an employer yet, it is of course difficult to hire someone.

So instead, you can attach the mail correspondence if you are already speaking with someone about being employed.


13. Photo identification, e.g. a copy of the director’s passport and driving license

Remember to attach a scan of the director’s passport and driver’s license.


Do you need help?

Let us know if you need our help preparing the reply to the Danish Tax Agency.

You can schedule a meeting with an accountant here:

Book a meeting with us here


(This blog was updated last time: 29.3.2024)


FAQ

What change has been observed in the Danish Tax Agency's approach to VAT registration?

The Danish Tax Agency has increased due diligence when applying for VAT registration, especially affecting foreign shareholders.

Who is mainly affected by the increased due diligence for VAT registration in Denmark?

Mainly foreigners, both non-residents and residents of Denmark, and occasionally Danish citizens.

What challenges might occur after submitting a VAT registration application?

If VAT registration isn't received within two weeks, a letter with questions may be sent to the company's registered address, requiring a timely response to avoid cancellation.

What documentation is requested by the Danish Tax Agency for VAT registration?

Detailed company activity description, personal qualifications, a 12-month budget, financing documentation, accounting documentation, bank statements, lease copies, operational asset details, and company management location.

Why might a VAT registration application be declined?

Lack of VAT-applicable activity in Denmark, management working from abroad, or insufficient physical presence in Denmark could lead to application decline.

How should one prepare for the VAT registration process?

Provide detailed descriptions of company activities, qualifications, financial plans, and ensure all requested documentation is accurate and comprehensive.

What should be included in the company's first 12-month budget for VAT registration?

An operating budget, a cash flow budget, and a balance budget detailing expected sales, costs, assets, equity, and liabilities.

How can one prove the financing of the company’s incorporation?

Include bank transfer confirmations, statements about the source of funds, and any relevant agreements or correspondences.

What is important about the company’s website in relation to VAT registration?

The website should be professional, with accurate information matching the application, including the company's name, address, and CVR.

What should be provided if the company has not yet opened a bank account?

Mail correspondence with the bank should be attached to show efforts to open an account and the capability to handle financial transactions.