New Danish export system may result in significant VAT claims

Replacing the e-Export

The Danish Customs and Tax Administration is introducing a new export system, DMS Export, which is gradually replacing the current e-Export system, and as a result, there is a need to tidy up e-Export and tie up all the loose ends.
Therefore, will the Danish Customs and Tax Administration be requesting that all companies with unfinished export declarations in e-Export to complete them ASAP.

The deadline for completing the declarations is March 31, 2023, for the period between January 1, 2017, and September 30, 2022. Companies that have exported goods during this period and have not completed the export declarations are urged to do so before the deadline to avoid potential financial consequences.

How can this affect your company?

The consequence of unfinished exports could be that the Danish Tax Administration reclaims Danish VAT on sales that are VAT-exempt exports. Therefore, it is essential for companies to complete their export declarations to ensure that they are not being charged 25% VAT on relevant export sales.

Depending on whether the company has a few or many unfinished exports, there may be a need for a structured approach to collect the exact documentation needed to complete exports correctly. It is important to be aware of the minimum documentation that companies need to obtain to meet the tax authorities' documentation requirements.

Companies that fail to complete their export declarations after March 31, 2023, will have their declarations invalidated. This could result in significant VAT claims from the tax authorities, as the goods have not been documented as VAT-free exports.

Interests and fees

In addition, the Danish Parliament passed a law on June 15, 2022, introducing interest on VAT corrections. The effective date has not yet been set, but it is coming. Therefore, in addition to a significant VAT claim, companies may also be liable to pay interest on this claim.

Documentation

To ensure that export declarations are not deleted in e-Export, companies must provide documentation for the export or submit a deletion request via e-Export by March 31, 2023.

The documentation required to document exportation out of the EU:

• Copy of the consignment note, signed, or confirmed by the recipient outside the EU's customs territory
• Invoice and proof of payment
• Consignment notes
• Document signed or confirmed by the economic operator who has taken the goods out of the EU's customs territory, such as a bill of lading
• Document processed by the customs authority in an EU country or a non-EU country in accordance with the rules and procedures of that country, such as an import declaration or an arrival document from a non-EU country
• The economic operator's accounts of goods delivered to ships, aircraft in international traffic, or offshore installations.

In conclusion, it is crucial for companies that have exported goods during the period from January 1, 2017, to September 30, 2022, to complete their export declarations by March 31, 2023. Failure to do so could result in significant VAT claims and interest charges. Companies must ensure that they provide the necessary documentation and meet the tax authorities' documentation requirements to avoid potential financial consequences.