Key takeaways
- New VAT rules: From January 1, 2024, Denmark applies a local reverse charge for wholesale telecommunications services.
- Buyer responsibility: VAT must be self-accounted by the buyer when services are purchased mainly for resale with minimal personal use.
- Scope: Applies only to transactions between Danish VAT-registered entities, including intra-group transactions.
As of January 1, 2024, Denmark is set to implement new regulations regarding its local reverse charge VAT (Value Added Tax) as it applies to the wholesale supply of telecommunications services.
Telecommunications are defined for VAT purposes as follows:
- Fixed and mobile telephone services facilitating voice, data, and video transmission and switching, including video phone services.
- Internet-based telephone services, including Voice over Internet Protocol (VoIP).
- Various telephone features like voice mail, call waiting, call forwarding, caller ID, three-way calling, and other call management functions.
- Paging services, audio text services, and communication services such as facsimile, telegraph, and telex.
- Internet access services, including World Wide Web access.
- Private network connections that offer exclusive telecommunications links for clients.
The new regulations state that the local reverse charge is applicable when the primary intent of purchasing telecommunications services is for resale, with minimal personal usage by the buyer. As a result, it will be the responsibility of the buyer to handle VAT payments to the Danish tax authorities. Any business dealing in telecommunications services to another business must confirm if the buyer is a reseller of such services. In such cases, the reverse charge procedure would apply.
These regulations are limited to transactions between Danish entities that are both locally based and VAT-registered. They are universally applicable in situations where telecommunications services are resold and the buyer's usage of these services is minimal. This includes internal transactions within a corporate group (for instance, transactions involving a local procurement company within the group).
Frequently asked questions
What do Denmark’s new VAT rules for telecommunications cover?
From January 1, 2024, Denmark’s local reverse charge applies to wholesale telecommunications services, including phone, VoIP, internet access, and related communication services.
Who is responsible for paying VAT under the new rules?
When telecommunications services are purchased mainly for resale, the buyer—not the seller—must account for VAT to the Danish tax authorities.
