Denmark VAT Groups Guide (Fællesregistrering)

What is VAT Grouping?

Danish VAT grouping (fællesregistrering) allows two or more related companies to be treated as one VAT person (ML §47, stk. 4). This means:

• No VAT on intra-group supplies: Transactions between group members are disregarded for VAT purposes — no VAT needs to be charged, and no input VAT deduction is needed.
• Single VAT return: The group files one consolidated VAT return, combining all members' taxable supplies, input VAT, and net position.
• One VAT number: The group receives a single SE number (VAT number) for all members.
• Representative member: One member (typically the parent company) acts as the representative member and is responsible for filings and payments.

Eligibility Requirements

To form a Danish VAT group, all of the following conditions must be met:

• 100% ownership: One company must hold, directly or indirectly, 100% of the shares in all other group members. This is stricter than the EU minimum (which only requires control) — Denmark has opted for full ownership.
• Danish establishment: All group members must be established in Denmark. Foreign companies cannot be part of a Danish VAT group, even if they have a Danish fiscal representative. Only Danish-established branches of foreign companies may potentially participate.
• VAT-taxable activities: Generally, all members must carry on VAT-registrable activities (not exclusively VAT-exempt). However, SKAT may grant permission for groups with mixed activities under the 100% ownership structure.
• Application required: VAT grouping is optional and requires prior approval from SKAT. You cannot simply start treating the group as a single VAT person without approval.

Application Process

• Submit application: Apply to SKAT (Skattestyrelsen) at least 1 month before the desired effective date. The application must identify the representative member and list all proposed group members.
• Documentation: Provide documentation of the ownership structure (share registers, group charts) and confirmation that all members are established in Denmark.
• SKAT review: SKAT verifies that the ownership and establishment conditions are met. Processing time is typically 2-4 weeks.
• Approval: Once approved, SKAT assigns a joint VAT registration number. From the effective date, all intra-group supplies are VAT-free and a single consolidated return is filed.
• Partial groups allowed: The group does not need to include all companies in a corporate group — you can choose which entities to include, as long as the 100% ownership condition is satisfied for those included.

Joint and Several Liability

A critical consequence of VAT grouping is joint and several liability (ML §46, stk. 9):

• Every member of the VAT group is jointly and severally liable for the VAT debts and penalties of the entire group.
• Gældsstyrelsen can pursue any group member for the full amount of unpaid VAT, regardless of which member incurred the liability.
• This means a profitable subsidiary can be held liable for VAT debts of a loss-making sister company within the group.
• Risk management: Before joining a VAT group, each member should assess the financial health and VAT compliance of all other members. Intra-group agreements may allocate liability, but these do not bind SKAT or Gældsstyrelsen.

Binding Period and Termination

• Minimum period: The VAT group must remain registered for a minimum of 3 calendar years from the effective date.
• Termination: After the minimum period, the group can be dissolved by application to SKAT. The dissolution is typically effective from the start of a calendar year.
• Changes to the group: New members can join (and existing members leave) after the minimum period, subject to SKAT approval.
• Involuntary termination: If a member ceases to meet the ownership or establishment conditions, SKAT may terminate the group registration. The affected entity is then treated as a separate VAT person from that date.

Practical Considerations

• Cash flow benefit: Eliminating VAT on intra-group management fees, service charges, and interest improves group cash flow (no need to fund VAT on internal invoices and reclaim it later).
• Compliance simplification: One consolidated return instead of multiple individual returns reduces administrative burden.
• Partial exemption implications: If the group has both taxable and exempt activities, the partial exemption calculation is done at the group level. This can affect the recoverable VAT percentage for all members.
• Foreign branches: A Danish company's foreign branch may be treated as exiting the Danish VAT group if it joins a VAT group in its host country (SKM2019.480.SR, SKM2024.187.LSR).
• Annual review: SKAT expects group members to continuously meet the conditions. Changes in ownership or establishment should be reported promptly.

VAT Groups vs Other Simplifications

VAT grouping is distinct from other VAT simplifications:

• Joint registration (fællesregistrering): For unrelated businesses that want to register as one VAT person. Rare and requires all to have exclusively VAT-taxable activities.
• VAT refund scheme: Separate from grouping — group members are treated as separate units for VAT refund purposes.
• Cross-border VAT groups: Denmark does not recognise cross-border VAT groups. Only Danish-established entities can participate.

Related Guides

• VAT Registration Guide → — VAT basics, rates, filing
• Holding Companies Guide → — group structures, sambeskatning
• Business Tax Return Guide → — corporate tax filing
• Construction Industry Guide → — reverse charge VAT for construction
• Public-Private Partnership Guide → — PPP VAT and SPV treatment