VAT for hairdressers: Benefits and common questions answered

What is VAT?

VAT is a 25% tax that businesses must charge on sales and pay when purchasing goods and services. As a hairdressing business, you must report both output VAT and input VAT.

How to calculate output VAT

If you need DKK 2,000 in the till for a treatment, you must add 25%, or DKK 500. The price the customer actually pays is therefore DKK 2,500, because the DKK 500 must be paid to the tax authorities as VAT.

How input VAT works

You do not need to calculate input VAT yourself; it is always shown at the time of purchase. With us, you can see it directly in the cart and throughout checkout. If you make a business purchase abroad and provide your VAT number, the VAT can often be deducted entirely at the time of purchase. However, you then cannot deduct it again in your accounts.

What does it mean to be VAT liable?

As a VAT-registered hairdresser, you must charge VAT on your services and products, but in return, you are allowed to deduct the VAT on the business expenses you have incurred yourself. You do not avoid paying VAT, though—it is a balance, not an exemption.

What do you actually report?

If you have charged more in output VAT than you have paid in input VAT, you must pay the difference to the tax authorities. If the opposite is true, you will receive a refund.

How to make the most of VAT

If you are going to pay a larger amount of output VAT anyway, this is when many people choose to invest in new salon furniture. You either pay the VAT to the tax authorities or use it on new furniture that makes your working day better, so why not put it to work for you?

Is VAT charged on all treatments?

For ordinary hairdressing services, yes, VAT always applies. Certain treatments with a specific medical purpose may be exempt, but this depends on the exact rules for that particular service. Always check with your accountant if you are unsure about a specific treatment.

Final thoughts

VAT often feels like bureaucracy, but in reality, it is simply a calculation you can plan for. If you are unsure how it fits in with the rest of your finances, write to me—I will be happy to help you calculate how a new purchase works together with your VAT.