Denmark Tax Agency Explains VAT Treatment on Sale of CO2 Credits, Reverse Payment Obligation

The Danish Customs and Tax Administration Feb. 6 posted online Tax Council Decision No.SKM2023.62.SR, clarifying the VAT treatment of the sale of CO2 credits and reverse payment obligations. The taxpayer entered into a climate agreement with Danish companies for tree plantation services and climate adaptation work in Uganda. The taxpayer sought clarification on whether these services created reverse payment obligations, and should be treated as advisory services under the VAT Act with a place of delivery in Uganda. The tax council clarified that: 1) the transaction is subject to VAT, because the parties entered into an agreement for specific consideration, ...