Dropshipping rules in Denmark

Dropshipping has become a popular business model among Danish entrepreneurs who want to run a webshop without handling inventory and shipping. However, this model also comes with a number of legal obligations and responsibilities that you need to comply with to operate legally in the Danish market. In this article, we'll go through the most important rules and requirements you need to be aware of as a dropshipper in Denmark.

Legal requirements and registration

CVR registration

To run a dropshipping business in Denmark, you must register your business with The Danish Business Authority and get a CVR number. Creating a CVR number is free and only requires your MitID. You will need your CVR number when issuing invoices and in your communication with authorities.

When registering, you must choose an appropriate business form, such as sole proprietorship or limited liability company (ApS), which can affect both tax matters and personal liability.

VAT registration

If your turnover exceeds DKK 50,000 annually, you must VAT registration. This is based on your total turnover (the amount you sell for) and not your profit. VAT registration is mandatory above this threshold, regardless of whether you sell to Danish or foreign customers.

From July 2021, new rules will apply to cross-border e-commerce in the EU. The previous country-specific distance selling limit has been replaced by a single limit of €10,000 for sales to all EU countries. Above this limit, you must either register for VAT in each country you sell to or use the EU's One Stop Shop (OSS)-order.

With an annual turnover above DKK 50,000, VAT registration is mandatory. From July 2021, the EU's One Stop Shop (OSS) scheme will simplify VAT reporting for cross-border sales. For sales to other EU countries above EUR 10,000 annually, businesses must either register in each country or use OSS for centralised reporting. This eliminates the need to open foreign VAT accounts, but requires accurate traceability of sales data per member state.

EORI number for import

If you're importing goods from outside the EU, you need a EORI number (Economic Operators' Registration and Identification). In Denmark, the company's CVR number is used as the EORI number. This number is necessary for importing goods and handling customs declarations.

Consumer rights and your obligations

Right of cancellation

In Denmark, consumers who shop online have, 14 days right of cancellation. This period only starts when the customer has received the item, not from the time of the order. As a dropshipper, you are obliged to inform your customers about this right and ensure that it is respected.

The customer does not need to give a reason to exercise the right of cancellation. If the customer cancels the purchase, you as the seller must refund the full purchase price, including delivery costs.

It's important to note that although your dropshipping supplier may not accept returns, you are still obligated to comply with Danish consumer rights. This can result in you tying up capital in returned goods that your supplier won't take back.

As a general rule, consumers who shop online have a 14-day right of cancellation. The webshop must instruct the customer about the right and receive a written notice of cancellation within 14 days after the customer has received the goods. The customer then has a further 14 days to return the goods. Once the webshop has received the notice or the goods, the purchase price (including the cheapest shipping to the customer) must be refunded within 14 days after this time.

The consumer pays for the return shipment themselves unless otherwise agreed or the item is delivered defective. As a dropshipper, you need to build in a returns process: either you receive the item first and have the supplier refund you, or in some cases the customer can send the item directly back to the supplier. In any case, the Danish webshop is responsible for complying with the right of cancellation, even if the item is physically shipped from abroad.

Right of complaint

Danish customers have Two-year warranty on all goods. This means they can complain about defects that were present at the time of purchase for up to two years after purchase.

For the first six months after the purchase, it is your obligation as the seller to prove that the defect was not present at delivery if you want to reject a complaint. After six months, the burden of proof shifts and it becomes the customer's responsibility to prove that the defect was present at delivery.

It's worth noting that although your dropshipping supplier may offer a shorter warranty period, you cannot limit the customer's statutory two-year warranty.

For sales to Danish consumers, the Danish Sale of Goods Act's 2-year warranty applies. The customer can complain about defects that appear within two years from the time of purchase. If the defect appears within 6 months after delivery, it is generally assumed that the defect was already present at the time of delivery (the seller has the burden of proof to the contrary).

After the first 6 months, the seller can only avoid liability if they can prove that the defect was caused by the customer. As a webshop, you are therefore obliged to remedy the defect (repair or replacement) or offer a refund/cancellation if the product is defective.

Customs and tax rules

Imports from countries outside the EU

If you choose to work with suppliers outside the EU, e.g. in China, you should be aware that you will have to pay customs, VAT and any other taxes on imported goods.

As a dropshipper, it is your responsibility to ensure that these taxes are paid correctly. If you haven't made special arrangements with your supplier, your customers may be faced with unexpected customs fees, VAT charges and handling fees upon delivery, which can lead to dissatisfaction and returns.

When goods are shipped directly from countries outside the EU to Danish customers, the general customs and VAT laws apply. As a rule, the buyer must pay customs duty and Danish VAT upon import, provided the value of the purchase exceeds the specified limits. According to the Danish Customs Agency, duty must be paid on shipments over €150 (approx. DKK 1,100). Furthermore, 25 % Danish VAT must always be paid on all goods from third countries - VAT is calculated on the price of the goods including freight and any customs duties.

Postal and freight companies declare the goods to customs and charge the VAT (and possibly customs duties) to the customer upon delivery. Customers are also charged a carrier fee for this service, which the merchant should disclose so that the customer is not unpleasantly surprised.

One Stop Shop (OSS)

To ease the administrative burden of selling to consumers in other EU countries, you can register in EU's One Stop Shop (OSS)-system. This system makes it possible to report and pay VAT for sales to all EU countries through a single online portal, instead of having to register for VAT in each individual country.

OSS applies to B2C sales of goods and services across EU borders. For EU-based businesses, the 'Union OSS' scheme applies, while 'Non-Union OSS' is for businesses outside the EU.

IOSS/ESS scheme

For dropshippers, it is possible to register as an importer with SKAT, which formally makes the webshop the importer of the goods. If you register with the IOSS/ESS (One-Stop-Shop) scheme, you can charge Danish VAT on sales to private individuals for goods under €150 and pay this to the tax authorities via a special scheme. The advantage is that the customer avoids having to pay VAT at the border.

Product liability and safety

CE labelling

Many products require CE labelling before they can be sold in the EU. The CE mark shows that the product has been assessed by the manufacturer and fulfils EU requirements for safety, health and environmental protection.

As an importer or distributor, you are responsible for ensuring that the products you sell comply with these requirements. This is especially true if you import goods from outside the EU.

As a dropshipper, you should check that your suppliers can prove that the goods comply with e.g. the Machinery Directive, Toys Directive or REACH/CLP requirements. Compliance reduces the risk of product liability and ensures you don't inadvertently sell illegal or dangerous goods.

Liability for defective products

According to Product Liability Act As an intermediary, you can be held liable for damage caused by defective products you sell. This applies even if you never physically handled the product.

You may be liable if a defective product causes damage to people or property. For example, if a defective mobile charger catches fire and damages the customer's home.

Products purchased within the EU often have higher quality standards due to strict EU regulation. If you're importing products from outside the EU, you have increased responsibilities as an importer.

Dropshipping often involves importing products while the manufacturer is located in a third country. However, under Danish law, the seller can be held liable for damages caused by a defective product. According to the Product Liability Act, a company that imports a product into the EU for the purpose of resale is also formally considered a "producer" of the product.

This means that your webshop (as an importer) can be held liable if a defective product damages a consumer or their property. This legislation is mandatory - the seller cannot exempt themselves from this liability.

A Nordic study found that dropshipping companies in particular (often with goods shipped directly from China) are largely violating EU rules on chemicals and lack proper labelling. Many products that should have CE marking and safety documentation were missing.

GDPR and terms of trade

Requirements for terms of trade

As a webshop, you need to have clear and accessible terms and conditions, which describes the terms that apply to the sale of your products. The terms and conditions should be freely available on the website and include:

Company information (name, address, company registration number)
Pricing and payment (currency, VAT, payment methods)
Delivery (method, time, cost)
Right of cancellation and complaints
Responsibilities and limitations

Personal data protection (GDPR)

As a dropshipping company, you must also comply with GDPR (General Data Protection Regulation), which sets rules for how you collect, process and store personal data.

This means that you must inform your customers about what personal information you collect, why you collect it and how you process it. You should also have a privacy policy that clearly states how you handle personal data.

Prices and sold out items

Price information

The Danish Marketing Practices Act and the Consumer Ombudsman's guidelines set strict requirements for price transparency. In your webshop, all costs (item price, VAT, taxes and any fixed fees) must be clearly stated in the first instance when the consumer is presented with the price. This means, among other things, that the stated price must always include VAT and fees.

Hidden fees or unreasonably high options are prohibited - the customer should not be presented with extra payments only at the end of the purchase flow. For example, you must clearly display shipping rates or any payment fees already on the item overview or in the basket. It is also prohibited to pre-select payment options or pre-ticked additional services that result in extra payment.

Sold out items

A particular challenge with dropshipping is the risk of the supplier suddenly being out of stock and unable to deliver on time. For the consumer, an order is in principle considered a binding contract; therefore, it is problematic if you only realise you are out of stock after you have confirmed the order. According to the Consumer Ombudsman, it is an unfair contract term if the webshop reserves the right to cancel an order due to out of stock.

In other words, you can't voluntarily withdraw from the sale just because the supplier is suddenly out of stock. If the out-of-stock situation occurs, you must contact the customer immediately and offer a solution - such as cancelling the purchase with a full refund, exchanging the item for another product or delivering the item as soon as the stock is replenished. In practice, the customer is entitled to either delivery or a refund; if you cannot fulfil the order, the contract must be cancelled in favour of the consumer.

Technical integration

To manage dropshipping operations more efficiently and minimise errors, technical integration is often necessary. The webshop can be connected to the supplier's system via APIs, EDI exchange or common data files. This way, important information can be synchronised automatically: product data (descriptions, images, prices, variants) and especially stock numbers can be continuously updated from the supplier to the webshop.

In a technical solution, you typically set up categories or product ranges with the supplier so that new items are automatically imported as inactive items in the webshop, ready for approval. Important data fields include title, image, weight, variants, price (including discounts) and stock count. Stock count is especially critical: If the supplier has 0 pieces, the webshop should not offer the item, which the integration can ensure in real-time.

Another benefit of integration is automatic order management. When a customer places an order in the webshop, the order can - after your approval - be immediately transferred to the supplier's system via the technical solution. This avoids manual entry and delays. The supplier can typically pull the shipping label with your brand or send the parcel under the supplier's name.

How to avoid being seen as a rogue operator

Dropshipping is a legitimate business model, but unfortunately, it is also being exploited by rogue actors. Consumer Europe has reported an increasing number of complaints about rogue dropshipping companies in 2024.

Typical characteristics of rogue dropshipping webshops include:

Excessively long delivery times, which may indicate direct shipping from distant suppliers
Missing or unreliable business address and contact information
Misleading product images that do not reflect the actual product
Hidden fees and taxes that are only disclosed upon delivery
Requirement to return goods to suppliers abroad (e.g. China) when using the right of cancellation

Best practices for serious dropshipping

To run a serious and legal dropshipping business in Denmark, you should:

Choose reliable suppliers, preferably from the EU to avoid customs and tax issues
Ensure all products comply with EU safety and quality standards
Have clear and transparent terms of trade and return policies
Inform your customers correctly about delivery times, prices and potential taxes
Establish effective procedures to handle complaints and returns

Conclusion

Dropshipping can be an attractive business model for Danish entrepreneurs looking to start an e-commerce business with limited capital. But success requires that you understand and comply with the relevant laws and regulations.

As a dropshipper in Denmark, you are responsible for ensuring that your business is properly registered, that your products comply with safety requirements, and that you respect customer rights under Danish and European law. By understanding these obligations and implementing best practices, you can build a legal, ethical and successful dropshipping business.

Remember that even if you don't physically handle the products, you are still legally responsible for them and your customers will hold you accountable for quality, delivery and any issues. Therefore, choosing reliable suppliers and thoroughly understanding your legal obligations is essential for long-term success in the dropshipping industry.