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.
Thursday December 10, 2009
A new court ruling in Denmark means services provided to local firms from abroad could now be subject to VAT.
The Danish National Tax Tribunal ruled that data processing services provided to a Danish bank from the UK are liable to Danish VAT under the reverse change mechanism.
Initially, the services outsourced to the UK third party were deemed to be accounting and management services which are not subject to reverse charge VAT in Denmark.
Upon closer inspection however, the court stipulated that the services should be considered data and as a result, subject to reverse charge VAT.
The court concluded that the services provided by the UK firm did not qualify for any exemptions because they were not essential to the loan transactions the Danish bank was providing.
The outcome will have implications for other data outsourcing firms with business ties to Denmark.
Denmark recently launched a crackdown on VAT fraud relating to carbon credits traded through the EU emissions trading scheme.
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Tuesday November 24, 2009
The European Commission has formally requested a number of member states to amend legislation which allows non-taxable companies to join VAT groups.
According to the European Commission, this current setup is "not in line with the proper application of Article 11 of the VAT Directive".
Proceedings have already begun against Ireland, Spain, Finland, Sweden, Denmark, the Netherlands and the Czech Republic.
The UK government has been given two months to amend its legislation to bring it in line with the EU otherwise the case may be referred to the European Court of Justice.
In the case of Sweden, the proceedings concern the fact that the country limits the VAT grouping system to financial and insurance services, which contravenes the VAT Directive.
Earlier this year in July, the commission adopted a communication on the VAT grouping option provided for in the VAT Directive, which set out how the regulation would be practically implemented.
