A Guide to Nordic VAT Compliance

April 9, 2020

The Nordic Region is one of the largest economies in Europe. Combined, this region has a population of 25 million people and they are very receptive to digital products. According to E-Commerce Europe, Nordic countries are some of the biggest online spenders per year per capita. However, before entering the market companies should familiarize themselves with Nordic VAT compliance rules.

 

Denmark

In Denmark, businesses have to register for VAT if:

  • they are supplying goods or services that are not subject to reverse charge by the customer. It also applies to intra-community supplies of goods and intra-EU acquisitions of goods;
  • a non-taxable person’s intra-community acquisitions are above DKK 80,000 (EUR 10,700);
  • in distance selling, the general turnover threshold for mandatory VAT registration is DKK 280,000 (EUR 37,500).

Penalties are applied for late registration, Taxpayers can be charged up to DKK 2,000., however, if taxpayer didn’t registered for VAT intentionally or because of gross negligence, penalties can be increased up to 200%.

Distance sellers not exceeding the above threshold can voluntarily register for VAT in Denmark, but VAT compliance rules states that, if distance seller is based in EU, first he must notify EU Member State where the compulsory VAT registration obligation requirements were met that he wants to register in a second one, even though the distance selling threshold hasn’t been exceeded.

 

Finland

In Finland, businesses have to register for VAT if:

  • they are making supplies of goods and services in the country. This also applies to intra-community supplies of goods and intra-EU acquisitions of goods. Intra-community acquisitions trigger this, too;
  • in distance selling, the general turnover threshold for mandatory VAT registration is EUR 35,000.

Late filings and payments of VAT can result in penalties. Late registration can be fined up to EUR 5,000 in the case of negligence. Penalty can be increased by 15-50% if failure to comply with registration and/or reporting obligations are continuous or if the taxpayer’s activities show a clear disregard for these obligations.

Distance sellers not exceeding the above threshold can voluntarily register for VAT in Finland, but VAT compliance rules states that this must be permitted by the EU Member State where the compulsory registration obligation requirements were met and approved by tax authorities.

 

Sweden

In Sweden, businesses have to register for VAT if:

  • they are supplying goods and services that are not subject to reverse charge by the customer. This applies to intra-community supplies of goods and intra-EU acquisitions of goods. Intra-community acquisitions trigger the registration, too;
  • in distance selling, the general turnover threshold for mandatory VAT registration is SEK 320,000 (EUR 31,300).

Late filing, late payment, and incorrect reporting can lead to penalties. If too little output VAT or too much input VAT is declared, the penalty is 20% of the amount. If the output tax is reported late or the input tax is deducted earlier, a penalty of 2% or 5% of the declared tax amount can be charged.

Voluntary registration for distance sellers not exceeding the above threshold can be applied in Sweden, but as with Finland and Denmark, appropriate EU Member States must be informed and the decision must be approved.

When it comes to digital products VAT compliance, the Nordic Region follows the rules outlined by the EU council for such goods and services. Businesses venturing into these countries should expand their knowledge of applicable VAT rules. If you need assistance with VAT registration and compliance, contact our 1stopVAT team.

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