EC urges Denmark to change VAT law
Monday February 1, 2010
The European Commission has urged Denmark to update its VAT regulations.
The commission formally requested the EU country to change its law regarding the application of certain exemptions under the VAT Directive, as the current regulations go beyond what it permitted under the directive.
If the Denmark’s legislation is not amended within two months, the commission said it will refer the matter to the European Court of Justice.
Under Article 132 of the VAT Directive, certain transactions and activities which are deemed to be in the public interest are VAT exempt.
Currently, Denmark exempts all supplies carried out by charitable or non-profit organisations in connection to their businesses, which does not comply with Article 132 of the VAT Directive, the commission said.
Denmark also exempts goods supplied by second-hand shops if the profits are used entirely for charitable or public interest purposes, which is also in contradiction with Article 132 of the VAT Directive.