VAT for hairdressers: Benefits and common questions answered

What is VAT?

VAT is a tax that businesses must charge or pay when selling or purchasing goods or services. In Denmark, a VAT charge of 25% is added to the price of a product. A business must report both sales VAT and purchase VAT.

How do you calculate sales VAT?

Let’s say you need to have 2,000 kroner in the register for a treatment. To get that amount, you must add 25% to the price. In this case, that would be an extra 500 kroner. This means the price of the treatment must cost your customer 2,500 kroner, because you have to pay the 500 kroner in VAT to the tax authorities.

How do you calculate purchase VAT?

You do not have to calculate purchase VAT yourself. Purchase VAT must be stated regardless of where you shop and therefore does not need to be calculated. With us, the purchase VAT is shown, for example, in the cart and during checkout. If you shop as a business abroad, the VAT can be fully deducted – and thus not paid – by providing your CVR number. Note that you therefore cannot deduct purchase VAT in your accounting either.

What does it mean to be VAT liable as a hairdresser?

As a hairdresser, being VAT liable means you must charge VAT on your services and products. At the same time, you have the right to deduct the VAT on the expenses you have incurred in connection with your business. You still have to pay VAT.

What must be reported?

If you have earned more [salgsmoms] than you have used [købsmoms], you must pay the excess sales VAT to the tax authorities. If you have used more than you have earned, you should receive money back from the tax authorities.

How do hairdressers take advantage of VAT benefits?

If you have earned a lot of money and therefore need to pay your sales VAT, you can, for example, buy new equipment or furniture. This way, you pay your sales VAT and at the same time purchase furniture and equipment that can make your everyday work better.

Benefits of VAT registration

VAT registration allows hairdressers to deduct VAT on purchases, which can be a significant financial advantage. Additionally, it helps build professionalism and trust with customers.

Is there VAT on all treatments?

VAT on specific treatments depends on local VAT rules. Some treatments may be VAT-exempt, especially if they have health-related purposes. It is crucial to consult the specific VAT regulations in your region. For regular treatments in the hairdressing industry, there will always be VAT on your services.