Denmark - Mediated Services Should be Considered Electronically Supplied Services

On June 18, 2024, The Danish Tax Council issued a binding answer in case 23-2139187 regarding the VAT on the sale of advertising space on the digital marketplace.

The Danish VAT-registered company that owns digital advertising signs raised the question that preceded this answer. This company uses a non-Denmark intermediary to facilitate advertising space on these digital signs through a platform. This platform operates so that advertisers auction for the advertising space. Once they win an auction, they upload their advertising material via the platform to the digital signs, which then display the material.

The Danish company (Questioner) raised the main question: Is the Questioner's delivery of advertising space on the Questioner's digital advertising spaces to the Intermediary an electronically delivered service?

Taxability Rule 

After a comprehensive assessment, the Tax Council found that mediated services should be considered electronically delivered services. 

The Tax Council determined that the services could be considered advertising services. Additionally, since the services could be regarded as advertising services, they should not be considered real estate services, regardless of whether the digital signs could be considered real estate. 

Furthermore, the Tax Council determined that according to established practice, the place of delivery rules for electronically delivered services precedes the place of delivery rules for advertising services in cases where both sets of rules can immediately cover a service. 

Therefore, the mediated services, in this case, the provision of the advertising space, should be considered electronically delivered services, as concluded by the Tax Council. The place of delivery and VAT taxation for the intermediary's purchase of the advertising space is the third country where the intermediary is established. 

Conclusion

The Danish Tax Council considered some previously made decisions and the ECJ's ruling in case C-69/92, Commission v Luxembourg. Based on the binding answer provided by the Tax Council, no VAT needs to be paid in Denmark, even though the digital signs are set up in Denmark. 

Source: Decision No. 23-2139187