Danish VAT Ruling on Christmas Calendars with Prizes

The Danish Tax Council issued a binding answer on the taxability of the supply of a Christmas calendar that combines discount vouchers and lottery tickets. The case was brought by the association, which plans to create and sell a Christmas calendar for 2025 containing twenty-four daily doors with small discounts or benefits provided directly by participating local shops, alongside daily prizes, Advent Sunday prizes, and several main prizes awarded through random draws.

Facts of the Case and the Final Verdict

The organization plans to create and sell a 2025 Christmas calendar with prizes valued at around DKK 184,000 (nearly EUR 20,000), while the potential value of all discounts, if fully redeemed, could reach DKK 4.8 million (around EUR 643,000). However, the association itself would not bear any costs or discounts, as each shop would administer and finance its own offer. 

Moreover, only shops that contribute a discount or benefit would be allowed to buy the calendars wholesale and resell them to customers. Therefore, the calendar would be marketed both as a chance to win prizes and as an opportunity to access discounts, and is expected to generate a modest profit of DKK 10,000 (around EUR 1,350) to DKK 20,000 (around EUR 2,700) for city-wide commercial activities aligned with the association’s purpose.

Based on this setup, the association believed that it was not selling discounts, arguing that those were offered and administered solely by the shops. Consequently, the association held that the sale of the calendars should fall outside VAT, and that no VAT deduction should be available in connection with what it viewed as lottery activity. 

Furthermore, even though it had doubts over whether the distribution of prizes would qualify as gambling without a stake, the association did not apply for a permit from the Danish Gambling Authority nor sought confirmation that its purpose met the criteria for charitable status. 

After carefully examining all the facts, as well as the established national and EU-wide case-law, the Tax Council determined that the Christmas calendar sales should be treated as a single, composite service rather than a mix of separate supplies. As a result of this conclusion, the association calendar is not subject to VAT, as the main element was the chance to win prizes, which falls under the VAT exemption for lotteries. Additionally, the association is not entitled to deduct VAT on production and marketing costs or on the purchase of prizes.

Conclusion

The provided Tax Council answers to raised questions emphasize that when a product or service consists of multiple elements, it is the overall economic reality, not the individual components or elements, that is critical for determining the VAT treatment. As the ECJ has repeatedly underlined, the Tax Council also confirmed that attempts to separate elements of a mixed supply will not succeed if such separation is artificial or does not reflect how the average consumer perceives the product.

Source: Danish Tax Administration