Denmark: New Domestic Reverse Charge VAT Rules to be Introduced in 2024

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Effective January 1, 2024, Denmark is set to roll out updated regulations governing its domestic reverse charge VAT for the wholesale supply of telecommunications services.

For VAT purposes, telecommunications services encompass the following:

  •       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 such as 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 offering exclusive telecommunications links for clients.

The updated regulations specify that the local reverse charge applies when the primary purpose of purchasing telecommunications services is for resale, with minimal personal usage by the buyer. Consequently, the responsibility for VAT payments to the Danish tax authorities will lie with the buyer. Businesses involved in providing telecommunications services to other businesses must verify whether the buyer qualifies as a reseller of such services. In cases where the buyer is a reseller, the reverse charge procedure will be applicable.

These regulations pertain specifically to transactions between locally based and VAT-registered Danish entities. They are universally applicable when telecommunications services are resold, and the buyer’s utilization of these services is minimal. This includes internal transactions within a corporate group, such as transactions involving a local procurement company within the group.