Affiliate income in Denmark: tax, VAT and bookkeeping explained

If you earn money from affiliate links in Denmark, the income is taxable – whether it is DKK 800 or DKK 80,000, and whether or not you see it as a hobby. The short answer to "do I have to pay tax on my commission?" is always yes. The harder questions are how: as a hobby or a business, with or without VAT, with or without a CVR number (the Danish business registration number), and what documentation you need to keep along the way.

This guide gathers the practical overview. It ties together the glossary entries on tax on affiliate income, VAT on affiliate income and a CVR number as an affiliate into an order you can act on: first you settle your status, then your tax, then your VAT – and finally your bookkeeping. The rules are described as the Danish Tax Agency sets them out; what they mean for your particular situation depends on a specific assessment.

Hobby or business – the assessment everything else rests on#

The first question is not a VAT question but a status question: are you running a hobby or a business? There is no answer key and no amount that decides it automatically. The Danish Tax Agency makes an overall, specific assessment, and the most important criteria are: whether the activity is run to make money (profitability), whether it is run systematically and regularly, how large it is, whether you have the professional background, and whether it is organised professionally – for example with a budget, a plan and separate finances.

The tax liability is the same in both cases – the profit is taxed as personal income. The difference lies in everything around it: deductions, the labour market contribution (AM-bidrag) and what happens to losses. As a hobby, you can only deduct expenses directly linked to the income, and only up to the size of the income – a loss can neither be deducted from other income nor carried forward. As a business, you have full deductions for operating costs, can as a rule deduct losses, and in return pay the labour market contribution of 8 % of the profit.

If you start as a hobby – a niche site or a profile that throws off a bit of commission now and then – the activity can change character to a business as the income grows and you start working systematically on content, links and optimisation. That happens without you actively deciding anything. So revisit the assessment at least once a year, and whenever the income takes a clear jump.

B-income and the preliminary income assessment#

In Danish terms, affiliate commission is B-income: there is no employer withholding tax before the money reaches you. An affiliate network pays out the gross amount, and the responsibility for getting it taxed lies with you. The classic mistake here is not cheating, but forgetting that the tax does not happen by itself.

The tool is the preliminary income assessment (forskudsopgørelse) on skat.dk. If you enter your expected affiliate income as B-income (or as business profit if you run a business), the Danish Tax Agency includes the tax throughout the year – either through your withholding rate or through instalments. If you do not, the tax arrives as back tax with an interest surcharge when the annual tax return (årsopgørelse) is settled. The income must appear on the annual tax return in any case; check that it is in the right box when the year is over.

The VAT threshold: DKK 50,000 in a calendar year#

Affiliate commission is payment for a service – you deliver marketing and refer customers. Services are VAT-liable as a rule, but in Denmark you only have to register for VAT once your VAT-liable turnover exceeds DKK 50,000 within a calendar year (or exceeded the threshold the year before). The threshold applies to turnover, not profit, and it applies to all your VAT-liable activity combined – if you also sell other services on the side, they count in the same total.

Below the threshold you can choose not to register: you do not add VAT to your commission and, in turn, cannot deduct VAT on your expenses. Above the threshold you must register – and VAT registration requires a CVR number. From then on you charge 25 % Danish VAT on VAT-liable services supplied in Denmark and file VAT returns for the periods the Danish Tax Agency sets. The obligation applies from the sale that takes turnover over the threshold, so register when you can see you are approaching it.

Danish or foreign network – the VAT difference#

Where the network is based decides how VAT is handled. If you receive commission from a Danish network, you supply your service to a Danish business, and the ordinary Danish rules apply: if you are VAT-registered, 25 % Danish VAT is added on top of the commission; if you are below the threshold and unregistered, you invoice without VAT. Affilyflow is a Danish network, so payouts from us follow that model – we add the VAT on top once your VAT number is confirmed in the EU's VAT register VIES, and we check that ourselves. Note also that the commission itself is calculated on the order value excluding VAT (via the Shopify app on the value of the goods without shipping, where it is not yet confirmed whether VAT is deducted) – the VAT on the customer's purchase is a matter between the store and the tax authority, not an amount you earn commission on.

If, on the other hand, you receive commission from a network in another EU country, the reverse charge rules for business-to-business services apply: the place of supply is where the buyer is established, so you invoice without Danish VAT, and the network accounts for the VAT in its own country. That comes with obligations – the sale must be reported as an EU sale without VAT, which requires registration, even if you are below the DKK 50,000 threshold. Networks outside the EU generally follow the same place-of-supply principle: the service is supplied where the buyer is, without Danish VAT. Exactly which registration and reporting obligations apply to you depends on your situation – clarify it with the Danish Tax Agency before the first foreign payout arrives.

Self-billing – when the network writes your invoice

If the network issues a settlement document on your behalf instead of waiting for an invoice from you, it is called self-billing. It is legal and practical, but it does not move the responsibility: the document must meet the invoice requirements, and you are still the one answerable for the VAT treatment of your income being correct. So check that your details on the settlement are right – name, CVR number if you have one, and whether it was settled with or without VAT in line with your registration status.

Bookkeeping and receipts – what to keep#

If you run a business, you are covered by the Danish Bookkeeping Act: ongoing bookkeeping, reconciliation and keeping records for 5 years after the end of the financial year. But even as a hobby affiliate you must be able to document both income and the expenses you deduct. The documentation requirement does not disappear because the activity is small – it is only the bookkeeping obligation that does.

• Settlement documents and payout receipts from every network you have joined
• Bank statements showing the payouts arriving in your account
• Receipts for expenses: domain, hosting, ads, software and tools
• Documentation of your VAT status – proof of registration or a note that you are below the threshold
• A simple summary per year: total commission per network, total expenses, result

Your network's dashboard is a good reference, but it is not your bookkeeping. At Affilyflow you can see every sale, every approval and every payout – an event log is kept of the tracking events, and under payments you can follow your balance. But the responsibility for keeping the records and closing the year lies with you, whichever network you use. Download the settlements as you go instead of relying on them always being findable again in 4 years.

Your first payout is on its way – do this#

At Affilyflow we pay out automatically on the first banking day of the month once your approved commission reaches the payout threshold of DKK 100 – only approved commission counts, never pending. If you do not want to wait, you can press "Pay out now". If you are a private individual in Denmark, we report the payout to the Danish Tax Agency (eIndkomst), and you will find an annual overview in the dashboard. How payouts, your details and self-billing fit together is covered in the docs under payouts, and the whole journey from click to bank account in from click to payout. The first time it happens is the practical moment to get the tax in order. Take the points in order:

If you have not got started yet, the order is the reverse of what many fear: in Denmark you need neither a CVR number nor VAT registration to become an affiliate and earn your first commission. The obligations grow with the income – the point is to know the thresholds before you hit them, not to have all the paperwork in place from day one.