Denmark's Tax Council ruled that companies selling goods directly from third countries to Danish consumers under DDU (Delivered Duty Unpaid) or DAP (Delivered at Place) terms are not liable for Danish sales VAT, provided the consumer acts as importer and pays import VAT.

The binding ruling addressed a fulfillment services provider whose clients sell goods online to EU consumers, with products shipped directly from non-EU countries to end customers without intermediate warehousing in the EU. Under the DDU/DAP model, consumers handle import formalities and pay all import duties including VAT upon delivery.

Key Findings

The Tax Council determined that when parties agree to DDU terms, the customer must be considered the importer under the natural linguistic understanding of the arrangement. The same applies to DAP terms where the customer specifically handles import procedures. Since the consumer pays import VAT under VAT Act Section 46(5), the place of supply is not Denmark for sales to Danish consumers.

The ruling confirmed that clients need not charge Danish sales VAT on these transactions, as the delivery location under VAT Act Section 14(1)(2) is where goods are dispatched from, not the destination country.

Registration Requirements

The Tax Council declined to answer questions about VAT registration obligations and accounting requirements, citing these as licensing matters outside the scope of binding rulings. The Danish Tax Agency referenced a 2023 Appeals Court decision establishing that VAT registration questions constitute licensing issues rather than tax consequences of specific transactions.

The ruling explicitly noted that clients must not use the Import One-Stop Shop (IOSS) system for these shipments, and that any client using IOSS would be required to apply it across all 27 EU member states for eligible goods under VAT Act Section 66n(4).

Context

This decision provides clarity for cross-border e-commerce operators using consumer-as-importer models, distinguishing it from IOSS arrangements where sellers collect and remit import VAT. The ruling aligns with similar interpretations in other EU jurisdictions and supports the principle that import VAT paid by consumers satisfies tax obligations in the destination state. The binding effect expires July 1, 2028, when EU Directive 2025/1539 takes effect, potentially changing relevant provisions in the VAT system directive.