As part of the agreement for next year’s budget the Danish government will take a first step to normalise Danish VAT rules that apply to the tourism sector. Current rules allow companies to deduct only 25 percent of the Danish VAT on hotel services. Same rules apply for restaurant services. These rules place the Danish tourism sector in unequal competition with other domestic industries and with foreign competitors in most other European countries where full deductibility apply. With the agreement for next year’s budget companies can deduct 50 percent of Danish VAT on hotel services.
On behalf of a number of tourist companies Copenhagen Economics has analysed the consequences of the loss of competitiveness for the Danish economy as well as the possible gains if VAT rules are normalised. Read the report here and note here
For further information contact Partner Martin Hvidt Thelle