Ina Reese Tax & Legal Practice – Flensburg | Harrislee

Trade with Denmark

Law & Taxation Reese Flensburg
22.10.2026
General information
Permanent establishment, Denmark, The emergence of Denmark, Denmark VAT, Denmark VAT RUT Register, Danish companies, Danish customers, Double Taxation Agreement, Secondment, Border region, Delivery and installation, Reverse Charge, Value Added Tax

Trade with Denmark

Business dealings with Denmark: VAT, permanent establishments and contracts

It takes ten minutes to get from Flensburg to Padborg, and half an hour to Aabenraa. For many businesses in the region, Denmark is therefore not an export market, but simply part of their day-to-day business. The wholesaler supplies Danish customers, the metal fabricator is erecting a hall in Sønderborg, and the electrical firm is sending two fitters to a building site in Kolding for three weeks.

From a legal and tax perspective, there is always a boundary to consider. For the German side, German VAT and income tax law apply, as does the double taxation agreement between Germany and Denmark. In addition, there are Danish reporting and registration requirements. We highlight where typical mistakes tend to occur in practice and how they can be avoided.

Deliveries of goods to Danish companies

If a German company supplies goods to a Danish company and the goods arrive in Denmark, the supply is exempt from VAT in Germany (Section 4(1)(b), Section 6a of the German VAT Act (UStG)). The Danish customer pays tax on the purchase in Denmark. The VAT exemption is subject to three conditions, which the tax office checks thoroughly during a tax audit. Since 2020, a VAT registration number and a recapitulative statement have been explicit requirements for the exemption:

Customer’s valid VAT number: The customer must use a Danish VAT registration number. Its validity can be checked with the Federal Central Tax Office (Section 18e of the German Value Added Tax Act (UStG)). The qualified verification check also verifies the name and address and should be carried out before the first delivery and regularly thereafter.
Correct summary declaration: The delivery must be included in the summary declaration submitted to the Federal Central Office. If it is missing or incorrect, the tax exemption will cease to apply until the declaration has been corrected. A correction has retroactive effect. The return must be submitted by the 25th of the following month. If the value of the supplies did not exceed 50,000 euros in either the current quarter or any of the four preceding quarters, a quarterly return is sufficient (Section 18a of the Value Added Tax Act).
Proof that the goods have arrived in Denmark: The standard document is the confirmation of receipt (Section 17b of the VAT Implementation Regulation). It contains the customer’s name and address, the quantity and type of goods, the place and month of receipt, the date of issue and the customer’s signature, which may be omitted in the case of electronic transmission. A collective confirmation covering a quarter is permitted.

The invoice must also include a reference to the tax-exempt intra-Community supply and the VAT registration numbers of both parties (Section 14a(3) of the German Value Added Tax Act (UStG)).

Collection is particularly prone to errors. If the Danish customer collects the goods themselves in Flensburg, the supplier does not have their own consignment note. The signed confirmation of arrival is then often the only proof that the goods have crossed the border. It should therefore be signed at the time of collection. The result is 19 per cent VAT, which the supplier can hardly charge the customer retrospectively.

Services for Danish companies

In the case of services provided to Danish companies, the place of supply is generally in Denmark, at the customer’s registered office (Section 3a(2) of the German Value Added Tax Act). The customer is liable for Danish VAT under the reverse-charge mechanism. The German invoice is issued without VAT and must include the statement „VAT liability lies with the recipient of the service“ as well as the VAT registration numbers of both parties. It must be issued by the 15th of the following month (Section 14a(1) of the German VAT Act). These supplies must also be included in the recapitulative statement.

This applies, for example, to consultancy, planning, software development, advertising and the repair of movable property. Exceptions apply, amongst other things, to services relating to land, passenger transport and admission tickets to events.

Craftsmanship and installation in Denmark

Services relating to a plot of land are deemed to be supplied at the location of that plot (Section 3a(3)(1) of the German Value Added Tax Act (UStG)). This applies to construction work, installations, repairs to buildings and valuations of plots of land. If the business supplies the materials and installs them permanently, this constitutes a ‘supply of work and materials’ for VAT purposes, which is also carried out at the installation site in Denmark. Read more about the distinction in our article Supply of works or performance of works.

The key factor, then, is who you are working for:

A Danish company as a client: Under Danish law, the Danish customer is generally liable for VAT when a trader not established in Denmark provides construction services or supplies and installs goods. In this case, the German company is not required to register in Denmark. However, the Danish tax authorities highlight an important exception: if the German main contractor, in turn, engages German subcontractors, they may become liable to register in Denmark.
Private customer in Denmark: There is no reverse-charge procedure in this case. The business must charge and pay Danish VAT at 25 per cent. For contracts for work and materials, registration in Denmark is usually required for this purpose, and an application should be submitted at least eight days before work commences. In the case of pure services without the supply of materials, such as a repair, Danish VAT can instead be declared via the OSS procedure with the Federal Central Tax Office (Section 18j of the German VAT Act (UStG)). Which procedure applies therefore depends on whether the transaction involves the supply of goods and services or a service alone.

There is no summary declaration for property-related services. However, there are additional obligations in Denmark in this regard.

The RUT Register

Anyone who temporarily sends employees to Denmark to provide a service must register with the Danish „Register for udenlandske tjenesteydere“ (RUT). For self-employed persons without employees, this requirement applies in certain sectors, particularly in construction and in the installation and repair of machinery. Registration must take place no later than the start of work; any changes must be reported by the next working day. Late registration may result in a fine of 10,000 Danish kroner, approximately 1,340 euros.

Danish clients in the construction, agriculture, horticulture and cleaning sectors are obliged to ask to see proof of a RUT number. If this is not provided, they must inform the Danish Working Environment Authority. Denmark has tightened its checks in recent years. From 1 January 2026, a copy of the service contract must also be uploaded to the RUT system when registering. A German company without a RUT number will therefore quickly become a problem for its client on Danish construction sites.

When does a permanent establishment in Denmark come into being?

As long as a German company does not have a permanent establishment in Denmark, it pays tax in Germany on its profits from its business in Denmark. For construction sites and installation projects, the double taxation agreement sets a clear threshold: a construction or installation project is only deemed to constitute a permanent establishment if its duration exceeds twelve months (Article 5(3) of the Double Taxation Agreement with Denmark). Irrespective of this, a fixed place of business in Denmark, such as an office or a workshop, may constitute a permanent establishment. A mere warehouse or distribution centre is not sufficient for this purpose (Article 5(4) of the Denmark Double Taxation Agreement).

If a permanent establishment arises, Denmark may tax the profits attributable to it. Germany exempts these profits (Article 24 of the Denmark Double Taxation Agreement). However, in the case of sole traders and partners in partnerships, these profits increase the tax rate on their other income (progression clause). In Denmark, this then gives rise to specific tax return and accounting obligations.

For large projects, it is worth bearing the twelve-month limit in mind right from the start. Delays, temporary interruptions and rework are generally included in this. The start and end dates of on-site work should therefore be clearly documented.

Deploying staff in Denmark

Payroll tax

If employees of a German company work temporarily in Denmark, their wages remain taxable in Germany under the double taxation agreement provided that all three of the following conditions are met (Article 15(2) of the Double Taxation Agreement with Denmark): The employee works in Denmark for no more than 183 days in the calendar year, the employer is not resident in Denmark, and the wages are not paid by a Danish permanent establishment. It is the working days in Denmark that are counted, not the days spent there.

A particular feature of Danish law may throw a spanner in the works. If staff work on an hourly basis and under the instructions of the Danish client, as if they were part of that client’s business, Denmark treats this as the supply of labour („arbejdsudleje“). The wages are then taxable in Denmark from the very first day, with a flat-rate tax of around 35 per cent. The 183-day rule under the agreement does not apply to commercial labour hire either (Art. 15(4) of the Denmark Double Taxation Agreement). Germany then credits the Danish tax. However, Denmark interprets the concept of temporary agency work more broadly than Germany. If the German tax authorities do not consider it to be temporary agency work, both countries will tax the wages, and there is a risk of double taxation. A fixed-price contract for work and services, with the German company providing its own site management and retaining the right to issue instructions, keeps this risk to a minimum.

Social security

EU rules apply to social security. In the case of a posting lasting up to 24 months, employees remain covered by the German social security system (Article 12 of Regulation (EC) No 883/2004). The A1 certificate serves as proof of this and should be applied for even for short-term assignments.

Working conditions

Denmark does not have a statutory minimum wage. Wages and working conditions are regulated by collective agreements. We explain which Danish working conditions apply to posted workers and what should be included in an employment contract for assignments abroad in the Employment law.

Cross-border commuters within our own workforce

Many businesses in the region employ staff who live in Denmark and work in Germany. Their wages are generally taxed in Germany (Article 15(1) of the Denmark-Germany Double Taxation Agreement); the agreement does not contain any specific provisions for cross-border commuters. If such employees work partly from home in Denmark, the jurisdiction for tax and social security contributions may change. This should be checked before any home-working arrangement is agreed.

Contracts with Danish customers

Which law applies?

In the case of sales contracts between businesses, the UN Convention on Contracts for the International Sale of Goods (CISG) automatically applies between Germany and Denmark unless the parties exclude its application. This also applies to contracts for goods that have yet to be manufactured. Since 2013, it has also applied to the conclusion of contracts, following Denmark’s withdrawal of its previous reservation. The UN Convention on Contracts for the International Sale of Goods differs from German sales law in key respects, such as notice periods for defects and compensation for damages.

Denmark does not apply the European Rome I Regulation on the law applicable to contracts, but rather the earlier Rome Convention of 1980. Both allow for a free choice of law. We therefore recommend that contracts and terms and conditions expressly specify which law applies, whether the UN Convention on Contracts for the International Sale of Goods is excluded, and which court has jurisdiction.

Enforcing claims in Denmark

The European Regulation on Jurisdiction and Enforcement (Brussels Ia) also applies to Denmark by virtue of a 2005 agreement. A German judgment or enforcement order can therefore be enforced in Denmark without the need for a Danish court to first declare it enforceable. The Danish district court has jurisdiction over enforcement.

However, two European instruments are not available: the European Order for Payment Procedure and the European Small Claims Procedure do not apply to Denmark.

This makes a contractual agreement on the place of jurisdiction all the more important. Without such an agreement, under the Brussels Ia Regulation, the place of performance is decisive alongside the customer’s registered office: for the supply of goods, this is the place to which the goods are delivered; for the provision of services, it is the place where the services are performed. Anyone who delivers to Denmark or carries out installation work there will therefore usually have to bring a claim before a Danish court if no agreement has been made. We describe how we enforce outstanding claims against domestic and foreign customers on our page on Credit management.

Legal and tax services under one roof

Business dealings with Denmark involve value added tax, international tax law, employment law and contract law. A mistake in one area often has knock-on effects in the others: an assembly contract on an hourly basis can shift payroll tax liability to Denmark; a missing proof of delivery can result in the loss of tax exemption; and a lack of a designated place of jurisdiction can make it difficult to recover the invoice.

Ina Reese is a solicitor, a specialist in tax law and a tax adviser. We provide advice on German value added tax and double taxation agreements as part of our Tax advice and in the Tax law, draft supply and service contracts and general terms and conditions for business in Denmark, and review employment contracts for assignments abroad. A Danish adviser is required for registrations and declarations in Denmark. We liaise with them on behalf of the German side, including in English.

Frequently asked questions about doing business with Denmark

Do I need a Danish VAT number for deliveries to Denmark?

This is not usually the case for goods supplied to Danish companies. The supply is VAT-exempt in Germany; the customer pays VAT on the purchase in Denmark. You will need your German VAT number, the customer’s Danish VAT number and proof that the goods have arrived in Denmark. Registration in Denmark may be required for installation work for private customers or when using German subcontractors.

From what point do I have to pay tax on my profits in Denmark?

Only if you have a permanent establishment there. In the case of construction sites and installation work, under the double taxation agreement this is only the case if the individual project lasts for more than twelve months. A permanent office or workshop in Denmark may constitute a permanent establishment earlier than that, whereas a warehouse on its own does not.

Do I need to register my fitters in Denmark?

As a general rule, yes. Anyone posting workers to Denmark to provide a service must register the assignment with the RUT register no later than the start of the assignment. Exceptions for very short assignments do not apply to construction work. For social security purposes, an A1 certificate should be available for each employee.

Which law applies in the event of a dispute with a Danish customer?

That depends on the contract. In the absence of any specific provision, the UN Convention on Contracts for the International Sale of Goods applies to sales contracts between businesses. For all other matters, the law applicable is determined in accordance with the conflict-of-laws rules, and a Danish court will often have jurisdiction. By expressly choosing German law and designating a place of jurisdiction in Germany, you create clarity, and a German judgement can be enforced in Denmark.

In summary

Deliveries of goods to Danish companies are VAT-exempt provided that the VAT registration number, the recapitulative statement and the proof of arrival are correct.
Services provided to Danish companies are invoiced without German VAT and with a reverse-charge notice.
For installation work carried out for Danish companies, the customer is usually liable for Danish VAT; for private customers, registration in Denmark is often required.
Anyone posting workers to Denmark must register them in the RUT register.
A construction site only becomes a Danish permanent establishment after more than twelve months.
Work carried out on an hourly basis under the instructions of a Danish client may immediately trigger Danish payroll tax.
A choice of law and jurisdiction clause should be included in every contract with Danish customers, as otherwise Danish courts will often have jurisdiction and the European order for payment procedure will not be available.

Do you work in Denmark on a regular basis, or are you planning to start working there? During an initial consultation lasting around 15 minutes, we will identify which issues need to be addressed first for your business. Get in touch now