Set up Danish taxes in your Shopify store

The most important difference when it comes to charging VAT in your store is whether your business is VAT-registered or not. This topic is covered in more detail in our Shopify VAT guide for selling to EU customers.

If your business is VAT-registered and you want to sell to both consumers (B2C) and business customers (B2B) in various countries of the European Union, you will need to set up your tax settings and tax rates properly.

• Tax settings
• Tax rates in Denmark and the EU
  • Selling physical goods
  • Selling digital goods

To charge VAT to some customers and not to others, you may choose from two possible settings, based on how you want to display product prices in your Shopify store.

When selling primarily to consumers (B2C), you may choose to display product prices as including VAT.

To display your product prices including VAT, but still allow your business customers to have VAT deducted at checkout:

1. In your Shopify admin, go to the Settings → Taxes page.
2. In the Tax calculationssection, check the All prices include taxand the Include or exclude tax based on your customer's country checkbox.
3. Save your changes.

In case your customers are predominantly businesses (B2B) you can choose to have your product prices displayed as excluding VAT.

To display your product prices excluding VAT:

1. In your Shopify admin, go to the Settings → Taxes page.
2. In the Tax calculationssection, uncheck the All prices include taxand the Include or exclude tax based on your customer's country checkbox.
3. Save your changes.

In the EU, you need to charge different tax rates when selling physical and digital goods.

When selling physical goods to customers in the EU, you should charge the VAT rate of your home country.

As of 2017, the current rate of VAT (MOMS or Merværdiafgift) in Denmark is 25%.

To set VAT rates for selling physical goods:

1. In your Shopify admin, go to the Settings → Taxes page.
2. In the Tax regions section for the European Union, click Set up.
3. In the VAT Collection section, click on Collect VAT.
4. Enter your VAT registration number. If you have applied for a VAT registration number but don't have one yet, leave this field blank. You can update it later when you receive it.
5. Save your changes by clicking on the Collect VAT button.

Surpassing VAT threshold in a different EU country

If your taxable turnover in the last twelve months in a different EU country surpasses its VAT threshold, you will have to register for a local VAT registration number. Additionally, you will have to charge the VAT rate of that country instead. You can read more about VAT thresholds in our EU VAT guide for Shopify stores.

For example, if your business is based in Denmark, but you have had to register for a local VAT registration number in Germany, the Danish VAT rate of 25% applies to all EU countries except for Germany. You should charge your German customers with the new German VAT rate of 19%.

To charge your German customers with the correct VAT rate, you need to add the German VAT registration number to your tax settings.

In Shopify, you can add a local VAT registration number for a different country, which allows you to charge correct VAT rates.

Adding the local VAT registration number, is as easy as adding your home country's VAT registration number.

In case you are not able to select the additional country you are VAT-registered in, you may need to create a shipping zone first.

To create a shipping zone:

1. In your Shopify admin, go to the Settings → Shipping and delivery page.
2. In the Shipping section, click Manage rates → Create shipping zone.
3. Type in the name of the shipping zone, add the country (or countries) you are VAT-registered in using the search bar, and when finished, click Done.
4. To make this zone available, add the shipping rates.
5. Save your changes.

When selling digital goods (such as e-books, downloadable music, stock photographs, or online courses) to customers in the EU, you should charge VAT at the rate applicable in the customer’s country.

To learn more, see this article to find out how to set up EU taxes for selling digital goods.

Once you set your tax rates correctly in your store, Sufio will automatically create valid invoices with a detailed breakdown of the charged VAT.

Invoices can be created in multiple languages and include all the necessary details to make them compliant with invoicing legislation in the EU.

Issuing invoices with the correct tax breakdown is important for your bookkeeping and tax purposes.

If you are selling to businesses (B2B), Sufio invoices include all the required information, as well as VAT registration number (CVR or Momsregistreringsnummer) of your Shopify store and your business customers.

Last updated on March 8, 2020.