Guidelines for Starting a Side Business Providing Services to Tourists in Denmark
In the burgeoning world of shared economy tourism, Denmark has established clear guidelines to ensure compliance and fair taxation. Digital platforms facilitating tours, transport services, and product sales are now required to file information about both private individuals and businesses earning money through these platforms.
For those considering starting a tourism-related business through shared economy platforms, understanding the tax landscape is crucial. First and foremost, registering your business and tax details accurately with the Danish tax authorities is essential. This includes providing relevant tax identification numbers and possibly a VAT registration if your turnover passes the threshold requiring VAT collection.
Income earned from shared economy platforms for tourism activities is taxable and must be declared in your annual income tax return. If your business involves VAT-liable services or sales, you are responsible for charging, collecting, and remitting VAT according to Danish VAT rules.
Recent tax regulations emphasise the importance of submitting projections of annual taxable income, past income tax returns, and VAT returns in prescribed formats when requested to support tax instalment calculations and compliance assessments. Denmark, like many countries, requires that platforms facilitating shared economy activities cooperate with tax authorities, often by reporting sellers' income or withholding taxes where applicable.
While the specifics for Denmark's shared economy tourism sector may not be detailed in existing search results, these principles are generally applicable and underscored by recent Danish tax administrative updates aiming at clearer processes and digital submission requirements. For precise compliance, it is advisable to consult Danish tax authority guidance on VAT, income tax, and any tourism-specific regulations that may apply to shared economy platforms.
Failure to comply with these regulations can lead to penalties, so proactive management and possibly professional advice are recommended. It's also essential to ensure proper insurance coverage for both the well-being of the business owner and the participants in the business, given the potential risk of accidents or illnesses involving them.
Foreign residents in Denmark may have an advantage in the tourist market due to their combination of local knowledge and foreign language skills. However, it's important to understand relevant rules before accepting bookings to avoid issues related to both tax and consumer laws. The introduction of EU directive DAC7 in 2023 made digital platforms like GoMore, Den Blå Avis (DBA), and Airbnb subject to new rules.
An exception to being considered a hobby business is if one has a VAT-registered company and conducts the tours through this business. Meeting certain criteria can make a 'side gig' in the tourism sector a 'hobby business,' which would mean consumer purchases have the protections that apply to sales of goods and services.
In essence, starting a shared economy tourism business in Denmark mandates proper tax registration, accurate income reporting, VAT compliance if applicable, and adherence to recent procedural requirements for tax filings and instalments. Proactive management and possibly professional advice are recommended to ensure a smooth and successful venture in Denmark's shared economy tourism sector.
- In the realm of personal-finance, it's crucial for entrepreneurs entering the shared economy tourism business to understand the Danish tax landscape, particularly concerning VAT registration, income tax, and taxable income from these platforms.
- The news surrounding tax regulations in Denmark underscores the need for shared economy platforms, such as digital tourism services, transport, and product sales, to cooperate with tax authorities in reporting sellers' income or withholding taxes where necessary.
- Those venturing into the shared economy business should ensure they file their tax details accurately, declaring relevant income in their annual returns, and adhere to VAT rules if their business involves VAT-liable services or sales.
