In EU VAT legislation, there are exemptions for certain areas of education and culture.
Some countries, including Denmark, also exempted activities such as sports training or music if they were presented in special ways.
However, the European Court of Justice issued several rulings clarifying that these recreational and commercial activities are not within the scope of exemptions, and therefore must be subject to value-added tax.
Since the court’s decisions are binding on all member states, Denmark had to amend its domestic laws to comply with this interpretation. Therefore, the Danish government announced the application of value-added tax on related activities, and at the same time, the government, through the Ministry of Taxes, announced a tax credit (fradrag) to ease the burden on citizens and residents.
Apply the new tax and then grant a tax discount in return.
The Danish government has announced that value-added tax (VAT) will be levied from January 1, 2026, on a wide range of privately offered leisure and sporting activities. This includes group fitness classes, the use of personal trainers, yoga, dance, singing, music instruction, and other creative activities.
The decision came in response to rulings issued by the European Court of Justice (EU-Domstolen), which require Denmark to bring its tax legislation into line with European laws.
Tax deduction to ease the burden
The Swedish Tax Ministry, through Tax Minister Rasmus Stoklund, announced that the government will introduce a new tax deduction allowing adults to deduct their expenses on sports and music education from their taxes. The ministry emphasized that the aim of this measure is to mitigate the impact of the new tax.
The Danish tax ministry also clarified that sports activities organized through local associations, as well as municipal music schools, will not be subject to this tax and will remain exempt as before.
According to local media, the tax minister stated: "We have decided that the money we receive will be returned to citizens, so that they can receive a discount that can mitigate the price increases caused by the value-added tax," according to Tax Minister Rasmus Stocklund in a press release, as reported by Ritzau.
Business sector welcomes new tax deduction
The business sector welcomed the decision, with SMVdanmark's Executive Director Jakob Brandt stating in a press release: “Although the decision was made under less than ideal circumstances, it is very good news that Tax Minister Rasmus Stoklund is now proposing a tax deduction for sports. This means that many Danes who exercise at fitness centers, or take yoga or dance classes, will not be affected by the price increases. It is a clear victory for both the sector and public health. I would like to express my sincere thanks to the Minister and the government for this step.”.
Brandt added that the organization had warned for years about the consequences of the European ruling and had presented the tax credit proposal as a “simple and effective” solution. He continued: “We have long advocated for compensation. I am very grateful that the government and the minister have finally listened and decided to return the additional VAT revenue to citizens through the tax credit. We look forward to discussing the details, but it is essential that Danes receive full compensation of 100% for the new tax.”.
