Excise duty refund on diesel for road transport: publication of new refund rates

A BRIEF INTRODUCTION TO SELLING ALCOHOL IN DENMARK

When selling alcohol in Denmark you should be aware of both the harmonized and national excise duties and their implementation in the Danish legislation, the marketing laws as well as challenges and opportunities in the Danish market.

Distance sales of alcohol in Denmark

Denmark allows for distance sales of spirits, wine, and beer if the seller provides security for payment of taxes on goods that are liable to tax in this country. The duties are connected to separate pieces of legislation (The Spirits Tax Act and The Beer and Wine Tax Act).

The foreign company, which conducts distance sales to customers in Denmark, can also choose to (but is not obliged to) appoint a fiscal representative to be responsible for the tax payment on alcohol. This fiscal representative must then provide the security.

However, for the national packaging tax, which also applies to most alcoholic beverages, it is not possible to appoint a representative and the seller must register and pay the excise duties directly.

Following the registrations for the distance sales the seller must declare the sales and pay the excise duties to the Danish tax authorities on a monthly basis.

B2B sales of alcohol

When foreign companies bring alcohol into Denmark, provided for business purposes, Denmark has implemented the EU directive 2020/262 and on the 13th of February 2023 two new registration types were introduced in Denmark: authorized consignor, and authorized consignee.

This means that the simplified accompanying document (SAAD) is no longer in use and instead the EMCS system is used when moving wine, beer and/or spirits B2B both duty suspended, and duty paid.

Direct delivery

Direct delivery is allowed in Denmark. Direct delivery is a shipping method that some EU countries allow in connection with shipments of goods liable to excise duties within the EU. This means that the seller of the alcohol (registered in Denmark) can appoint the place of delivery, for example the customer.

The alcohol duty rate in Denmark

The alcohol excise duty is harmonized in the EU, but Member States are allowed to raise the minimum duty rate, and Denmark is amongst the countries that have elected to do so. Denmark has set its rates for 2023/2024 of:

DKK 150/l 100 % ethanol strength (pure alcohol) for spirits with an ethanol content above 1.2 %, as well as wine and fruit wine etc. with an ethanol content above 22 %
DKK 5,18 /l for wine, ethanol content of over 1.2 %, but not more than 6 %
DKK 11,26 /l for wine, ethanol content of over 6 %, but not more than 15 %
DKK 15,08 /l for wine, ethanol content of over 15 %, but not more than 22 %
- In addition are the surcharges for sparkling wine of 3,35 kr./l
DKK 48,74 kr./l for beer per liters 100 % pure alcohol.
- Beer with an ethanol content of less than 2.8 % is exempt from excise duties.

Approaches to lowering the alcohol duty rates

Taxes and excise duties in Denmark are wide reaching. Different views on lowering and abolishing taxes and excise duties are always part of the political discussions following declarations of intent from the different political wings. In addition, certain industry organizations are pleading for reduced excise duties to be able to compete with cross-border trading. (It is common for Danish customers to purchase alcoholic beverages from Germany). This is a particular focus point for sellers of alcohol in Denmark.

The organization for wine and spirits in Denmark VSOD (Vin & Spiritus Organisationen i Danmark) advocates for reducing the excise duties on wine and spirits, based on the conviction that it will draw border trade home and reduce the incentive for illegal trade.

In 2017 the Danish liberal government put together a remediation committee to analyze the grounds for keeping different excise duties in Denmark. They found that there were grounds for abolishing or reducing certain excise duties.

In the committee’s report it was concluded that “the taxes on several goods sensitive to cross-border trade are higher than what is economically optimal (e.g., the taxes on chocolate and sweets, spirits, and wine.) It would be well justified from a tax revenue point of view to reduce these taxes."

The surcharge on alcoholic soft drinks was, amongst other duties, abolished in 2018, and a tax relief for small producers of spirits as well as a generally lower requirement for collateral for the payment of spirit tax helped put these businesses in a similar (fiscal) position to small producers of beer (breweries).

Further suggestions have been proposed from the liberal parties, in the latest 2021 proposal, to reduce excise duties in Denmark, but have been rejected by the socialist parties, (in power at the time of writing this).

In 2022 the newly formed government in Denmark released their declaration of intent. In their publication it says that “to the extent that the government makes a decision to raise taxes or duties, other taxes or duties must be correspondingly reduced, so that overall no more taxes or duties are collected. Tobacco and nicotine taxes are exempt from this principle.”

So, for now there is no indication if the alcohol excise duty will be changed.

Other factors to consider when selling alcohol in Denmark

Alcohol sales in Denmark have declined overall since the 1980s. But comparing recent years, the sales have increased. Between 2020 and 2021 sales of alcohol increased in Denmark. On average, Danes over the age of 18 bought:

9.2 liters of pure alcohol in 2020
10.4 liters of pure alcohol in 2021

In addition to declaring and paying the excise duties in Denmark, sellers must adhere to the marketing guidelines of The Danish Alcohol Advertising Board following the Law of Marketing, which states that marketing aimed at children and young people must not directly or indirectly encourage the use of drugs, including alcohol.

Also note in Denmark:

It is illegal to sell alcoholic beverages at 1,2 % alc. or more to people under the age of 16.
It is illegal to sell alcoholic beverages at 16,5 % alc. or more to people under the age of 18.

On a final note, it is worth mentioning that while in other Nordic countries the sale and manufacturing of alcohol is handled from a government monopoly, this is not the case in Denmark.