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The Essential Guide to Nordic VAT Compliance

The Essential Guide to Nordic VAT Compliance
Understanding VAT Requirements in Denmark, Finland, Iceland, Norway and Sweden


The Nordic region is one of the biggest economies in Europe and although a small population, they are however a population that is receptive to trending digital products and all who live there are almost exclusively online. This guide discusses the VAT requirements for registration and compliance in the Nordic region so that your business is well equipped for any VAT implications, helping you to avoid any penalties as a result of non-compliance. This guide can be used for all businesses including digital services businesses (those that supply an internet-based service or product) 

Market Trends within the Nordic Region (source)

The Nordic Region is made up of Sweden, Finland, Norway and Denmark and is ranked the sixth largest economy in Europe. With a combined population of only 25 million people with four different languages and varying cultures, consumer preferences are the same among them as well as follow the trends of other European countries. 

E-Commerce Europe suggests that Norwegian e-commerce customers, with EUR 2.592 spent per capita, are the biggest spenders in Europe. Sweden, Finland, and Denmark are among the top countries. The Netherlands also ranks high. A PostNord study found that the Nordic countries had the second-highest spending per year per capita, after the United Kingdom. 

The below information is provided as a free sample from VATGlobal’s world-leading, holistic International VAT knowledge hub, vlearn. Vlearn is the perfect companion for any tax department belonging to businesses who may be venturing into unknown jurisdictions and need VAT compliance assistance. 

Please note: For VAT purposes Norway is not part of the EU and therefore we will not be going through their VAT registration and compliance requirements. 

When Does a Non-Resident Country Require VAT Registration in the Nordic Region? 

The following scenarios trigger a registration obligation in these Nordic countries: 


Compulsory VAT Registration Scenarios in Nordic Region 

Country

VAT Registration Trigger

Denmark

Making Taxable Supplies

  • Supplies of goods/services in Denmark and not subject to reverse charge by the customer (nil threshold)
  • Intra-community supplies of goods (nil threshold)

Intra-EU Acquisitions of Goods

Intra-community acquisitions by a non-taxable person in excess of DKK 80,000 (EUR 10,700)


Distance Sales (i.e intra-EU B2C sales)

  • Distance sales in excess of DKK 280,000 (EUR 37,500)

Finland

Making Taxable Supplies

  • -Making supplies of goods/services in Finland (nil registration threshold)
  • Intra-community supplies of goods.

Intra-EU Acquisitions of Goods

Intra-community acquisitions.


Distance Sales (i.e intra-EU B2C sales)

  • Distance sales in excess of EUR 35,000

Sweden

Making Taxable Supplies

  • Supplies of goods/services in Sweden and not subject to reverse charge by the customer (nil threshold)
  • Intra-community supplies of goods (nil threshold)

Intra-EU Acquisitions of Goods

Intra-community acquisitions of goods (nil threshold)


Distance Sales (i.e intra-EU B2C sales)

  • Distance sales in excess of SEK 320,000 (EUR 31,300)

Voluntary VAT Registration Scenarios in Nordic Region 

Country

VAT Registration Trigger

Denmark

Businesses below the distance selling threshold of DKK 280,000 (EUR 37,500) can elect to register. Specific procedures would need to be followed. In this case e.g notification to be made in the EU Member State where the compulsory registration obligation ordinarily arises, of option exercised to voluntarily register in second EU Member State, even though threshold has not been exceeded. 

Finland

Businesses below the distance selling threshold are able to elect to register before the threshold is crossed. Specific procedures would need to be followed for this to be permitted e.g supported by the appropriate notifications made in the EU Member State where the compulsory registration obligation ordinarily arises (i.e notification/confirmation by tax authorities of option exercised to voluntarily register in second EU Member State. 

Sweden

Distance Sales (i.e intra EU B2C sales)

A request can be made for a voluntary registration for sales below the threshold. Specific procedures would need to be followed in this case e.g notification to be made in the EU Member State where the compulsory registration obligation ordinarily arises, of option exercised to voluntarily register in second EU member State, even though threshold has not been exceeded. 

VAT Non-Compliance Penalties in the Nordic Region 

Below outlines two areas where penalties are imposed if non-compliant. Incorrect VAT treatment can mean undercharging of output tax, over-claim of input tax, accounting for VAT in the wrong period etc. 

Late VAT Registration

Incorrect VAT Treatment

Denmark

Late registration penalties of up to DKK 2,000 may be applied at the discretion of the tax office. 

Penalties are based on taxpayers’ behaviour. For example, if this arises through gross negligence or intentional behaviours, penalties can be up to 1-2 times the tax amount. Voluntary notification to the tax authorities, of errors arising could lead to reduction or mitigation of penalties. 

Finland

No specific administrative penalties apply. However, the resulting late filings and payments of VAT amounts due, can give rise to penalties. A late registration penalty may be imposed up to EUR 5,000 in cases of negligence.

The percentage depends on the nature of the omission or error. As a general rule, the penalty is set at 10%. 

A tax increase of at least 15% and a maximum of 50% if: 

  • Failure to comply with the reporting obligation is recurrent; or
  • taxpayers ‘ activities show a clear disregard for tax obligations

The penalty imposed is 3% if the matter in question is ambiguous or unclear. 

There is no tax increase if the omission is negligible or there is valid reason for neglect.

(interest would be due in addition)

Sweden

Although no specific penalties apply for late registration, this can arise for late filing, late payment and incorrect reporting as a result. 

If too little output VAT or too much input VAT is declared, the penalty is 20% of the tax amount.

If output tax is reported late or input tax is deducted earlier than when entitled, a surcharge penalty of 2% or 5% of the tax amount declared in the incorrect period can be levied. 

(interest would be due in addition)

VAT Rates in the Nordic Regions

Country

VAT Rate

Denmark

25%

Finland

24%

Sweden

25%

Digital Services VAT or VAT on E-services in the Nordic Region

The Nordic region follows the same principles set out by the EU council for all 27 EU member states with regards to digital services VAT compliance. 

The EU council and thereby the Nordic countries define digital services as: 

Radio and television broadcasting services:

  • The supply of audio and audio-visual content for simultaneous listening or viewing by the general public based on a programme schedule by a person that has editorial responsibility
  • Live streaming via the internet if broadcast at the same time as transmission via radio or television

 Telecommunications services:

  • Fixed and mobile telephone services for the transmission and switching of voice, data and video, including telephone services with an imaging component, otherwise known as videophone services
  • Telephone services provided through the internet, including Voice over Internet
  • Protocol (VoIP)
  • Voicemail, call waiting, call forwarding, caller identification, three-way calling and other call management services
  • Paging services
  • Access to the internet

 Electronically supplied services:

  • Supplies of images or text, such as photos, screensavers, e-books and other
  • Digitised documents, for example, PDF files
  • Supplies of music, films and games, including games of chance and gambling games, and programmes on demand
  • Online magazines
  • Website supply or web hosting services
  • Distance maintenance of programmes and equipment
  • Supplies of software and software updates
  • Advertising space on a website

Threshold: €10 000 of sales in EU countries.

Filing frequency and deadline: Quarterly – 20th of the month following the quarter end.

Client type: B2C

Local Representative needed: No


Conclusion: 

We hope this guide to Nordic VAT compliance will assist your business in making strategic VAT compliance decisions upon venturing into the Nordic region. VATGlobal can assist your business with all VAT Registration and Compliance issues throughout the Nordic region, including Norway. VATGlobal also offers vlearn as an alternative for tax departments who want to expand their expertise in the field of international tax.

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