VAT for Hairdressers: Benefits and Frequently Asked Questions Answered

What is VAT?

VAT is a tax that businesses must charge or pay when selling or buying goods or services. In Denmark, a 25% VAT charge 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 2.000 kroner in the till for a treatment. To receive that amount, you must add 25% to the price. In this case that would be an additional 500 kroner. That means the treatment price for your customer must be 2.500 kroner, because you must pay the 500 kroner in VAT to the tax authorities.

How do you calculate purchase VAT?

You do not need to calculate purchase VAT yourself. Purchase VAT must be documented regardless of where you shop and therefore does not need to be calculated. With us, 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 — upon providing your CVR number. Note that you therefore also cannot deduct the purchase VAT in your accounts.

What does it mean to be VAT-liable as a Hairdresser?

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

What needs to be reported?

If you have earned more in [sales VAT] than you have used in [purchase VAT], you must pay the excess sales VAT to the tax authorities. If you have used more than you have earned, you will 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 must pay your sales VAT, you can for example buy new equipment or inventory. That way you pay your sales VAT and at the same time purchase furniture and equipment that can make your daily work easier.

Benefits of VAT registration

VAT registration gives Hairdressers the opportunity to deduct VAT on purchases, which can be a significant financial advantage. In addition, 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 essential to consult the specific VAT rules in your region. For common treatments in the Hairdresser industry, there will always be VAT on your services.