Hobby or business (Danish tax)

The Danish Tax Agency’s legal guidance (Den juridiske vejledning) lists a number of factors that are part of the assessment: whether there is a prospect of the activity eventually making a profit, whether a loss is temporary, and whether profitability was investigated before the activity started. Added to this is whether the activity has the necessary intensity and seriousness, and whether the owner has the necessary professional skills.

The Danish Tax Agency also looks at whether there are purposes other than commercial ones – a pure interest, for example – whether the owner uses the activity privately, whether its scale and duration are of a certain size, whether it is run in the way that is usual for that type of business and meets a commercial standard, and whether the activity could, if it came to it, be sold to someone else.

For an affiliate, in practice this means: occasional commissions from a few links on a personal blog point towards hobby. A site that is published on and optimised every month, generates stable commission and is run with a budget and separate finances points towards business – whatever the owner calls it.

As a hobby activity, the net income – the profit – is taxed as personal income. Only expenses connected with earning the income can be deducted, such as hosting, domain and tools, and the deduction cannot exceed the income from the activity. A loss can neither be deducted from other income nor carried forward to later years. No labour market contribution (AM-bidrag) is paid on hobby income, and the business tax scheme cannot be used.

As a self-employed business, an 8 % labour market contribution is paid on the profit. In return, operating expenses can be deducted under the ordinary rules, a loss can be deducted from other income, and the business tax scheme can be used if the other conditions are met.

Commission is paid out without tax withheld, so whatever your status, you have to make sure the income is included in your preliminary income assessment (forskudsopgørelse) and annual tax assessment (årsopgørelse). How to do this in practice is covered in the guide to tax and VAT as an affiliate.

The Danish VAT threshold is DKK 50,000 in taxable turnover within a calendar year. The rule has applied since 1 January 2025 – before that, the threshold was measured over 12 months. The obligation to register arises when the threshold is exceeded, and it is turnover, not profit, that counts. Below the threshold you can choose to register voluntarily.

You get a CVR number (the Danish business registration number) when you register a business at virk.dk with MitID – and VAT registration requires a registered business. So you need neither a CVR number nor VAT registration to earn your first commission, but regular earnings make the question relevant early on.

If you sell your service to a network in another EU country, special rules apply on the reverse charge and on reporting EU sales without VAT. Get them clarified with the Danish Tax Agency or an accountant before the first payout.