New documentation requirements from 2020 regarding VAT-exempt EU sales

20 December 2019

Louise Eide Hartung, Director, VAT |

From 1 January 2020, the documentation requirements concerning export of goods sold to customers in other EU countries exempt of VAT are tightened – particularly, when the foreign buyer is responsible for the freight.

Sale of goods to VAT-registered customers in other EU countries can generally be completed without VAT if the seller ensures that the goods sold are actually exported from Denmark and the seller reports the sale to the so-called EU sales list.

With effect from 1 January 2020, documentation requirements within the EU are harmonized. In Denmark, it is relevant both in cases where the seller is responsible for the freight and for purchases where the foreign buyer is responsible for the freight.

Seller is responsible for the freight

According to the current rules, it is sufficient that the Danish company (the seller) is able to present, for example, an invoice concerning the freight, a consignment note or a statement from a carrier or freight forwarder.

From 1 January 2020, it shall be presumed that the goods have left the country if the seller is able to present two different documents substantiating that the goods have left the country. The documents must be issued by two different parties and must not contradict each other. Sufficient documentation will, for example, be a signed CMR transport document or an invoice from a carrier when supplemented by documentation for payment of the freight expenses or documentation regarding insurance of the transported goods.

Buyer is responsible for the freight

In cases where the foreign buyer is responsible for the freight and where payment is made for the goods either before or at the time of collection, currently, the Danish company must be able to provide documentation concerning the freight within a period of three months after the end of the month in which the goods are sold. 

According to the new rules, it shall be presumed that the goods have left the country when the seller receives a declaration from the buyer confirming that the buyer, or someone on his behalf, was responsible for the freight, no later than the 10th of the month following the collection of the goods. The declaration must contain the following information:

  • Date of issue
  • Name and address of the buyer
  • Quantity and nature of the goods
  • Date and place of arrival of the goods (destination)
  • Registration number (if a vehicle is sold)
  • ID of the person (driver) who collected the goods on behalf of the buyer

In addition to the above, the seller must be able to combine the documentation with the documentation requirements mentioned under “Seller is responsible for the freight”

It is important to be aware of the advanced date for obtaining the necessary documentation. Companies that are unable to present the prescribed documentation in a timely manner risk paying Danish VAT concerning the sale which may be difficult to reclaim from the foreign buyer. Consequently, the Danish company may incur a loss, which may be non-deductible for tax purposes. The new rules are also of great importance for the freight forwarding industry.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge. Please sign up here.