VAT registration: when, how, and what if you wait too long

The threshold

You must register for VAT when your VAT-able turnover exceeds DKK 50,000 within 12 months, or as soon as you can see that it will. It is not a calendar year; it is 12 rolling months.

When does it pay to register earlier?

If you invest at the start, in equipment, a vehicle, stock, you can only deduct the input VAT if you are registered. A carpenter who buys DKK 60,000 of tools in the first month gets DKK 12,000 back by being registered from day one. If you sell only to companies, the VAT on the invoice doesn't bother them; they deduct it.

When is it a disadvantage?

If you sell to private customers and are below the threshold, VAT makes your prices 25 % higher without the customer getting anything for it. A hairdresser with DKK 40,000 in turnover can rightly wait.

How to register

At virk.dk under your company: "Register for VAT". You choose a start date and receive confirmation. There is no fee. From the registration date every invoice must carry VAT, and you must report for every period, also periods with no sales.

If you have waited too long

The Tax Agency can register you retroactively from the date you crossed the threshold. You then owe the VAT on everything you have sold since, without being able to charge it to the customers afterwards. That is the expensive way to learn the rule.

What LegaSum does

LegaSum follows your turnover over the last 12 months and tells you when you approach the threshold, as one question: "You are at DKK 43,000 with two invoices on the way. Shall we register you for VAT from next month?" Say yes, and the registration is ready.