VAT Declaration and Purchases of Services outside of Denmark

Attention: This article presumes that your company is registered in Denmark.

I just made my VAT Declaration for the third time this year and noticed that I was paying VAT on some purchases of services outside of Denmark.

What is going on?

Buying Services inside the EU

I have some different subscriptions at Google that I will use as an example here.

I noticed two different cases and I did not understand right away why they were different.

1) The invoice is in DKK with VAT.

  • YouTube Subscription from Google Commerce Limited
  • Google Storage Subscription also from Google Commerce Limited

2) The invoice is in EUR and without VAT with the mentioning “Services subject to the reverse charge.”

  • Google Workspace from Google Cloud EMEA Limited

It took me a little while to figure out what was going on, so I think it is worth talking about.

I have a number of different Google accounts for different purposes and their purpose has even changed over time. Some dates from my second company in France: Finn Pedersen in France SARL and others were private.

And this is the explanation.

Google Commerce Limited sees me as a private person and that is why I get the invoice in DKK and with Danish VAT.

On the other hand, Google Cloud EMEA Limited sees me as a Danish company: Finn Pedersen France. The invoice is in EUR, which I apparently cannot change to DKK, and with the mentioning of Services subject to the reverse charge.

When I tried to change the YouTube and Google Storage Subscription to add my VAT number, I could not. And I guess it makes sense. My mistake. If I want these services under my company, I have to subscribe to them from the company Google account. And that is also my recommendation to you. You should avoid this situation.

I corrected this, by “deleting” all these invoices from my accounting in Dinero. Then, with the help of Dinero, I corrected the three preceding VAT declarations. The way Dinero helps the user to correct the mistakes is very user-friendly. Also the correction on SKAT was quite easy and straight forward. I am actually impressed by how easy it was to fix the mistake. Just follow the instructions.

Requirements to the Invoice with reverse charge VAT

It is important that the invoice meets all the requirements for reverse charge VAT.

  • The invoice must be without VAT.
  • The VAT number of the vendor and the customer should be mentioned.
  • It mentions “Reverse charge VAT.”

This indicates that the two parties are both professionals and that they both know it.

Buying Services outside the EU

I have subscriptions for Heroku and ChatGPT. Heroku and OpenAI are both in the US and sends me an invoice in USD without VAT.

These invoices do not mention taxes or VAT. The VAT type is Purchase of Services outside the EU.

Accounting and Reverse Charge

When I do my accounting and post these purchases in Dinero, the result is the same.

Let us presume an invoice of 100 kr. from outside of Denmark. We post it on the account for purchase of software and match it against our payment. Then Dinero automatically post two VAT entries.

  • 25 kr. on account 64060 Purchase VAT (incoming VAT)
  • -25 kr. on account 64040 VAT on services from outside of Denmark

So that they cancel out.

Rubrik A - ydelser. Værdien uden moms af ydelseskøb i andre EU-lande

On the VAT declaration, I also found one extra information.

  • Rubrik A - ydelser. Værdien uden moms af ydelseskøb i andre EU-lande

This is just information since there is no special accounting entries behind it.

This is the sum of the invoices on services that I bought within the EU. The US invoices are absent from this list.

Conclusion

I hope this puts some light on the subject. Don’t hesitate to contact your accountant, if you need more information about what rules applies to your company and your situation.

Sources

If you want to dive further into this, then here are some good sources. Especially the ones on dinero.dk were easy to read and understand. I recommend that you start there.