New VAT rules for yoga, fitness, and dance from 2026

From January 1, 2026, a number of leisure activities will be subject to VAT in Denmark.

Overview of the rule change

From January 1, 2026, a number of leisure activities will be subject to VAT in Denmark. Following several EU rulings on VAT exemption, the Danish Tax Agency has decided that commercial instruction in fitness, spinning, crossfit, yoga, dance, and similar activities will be subject to 25% VAT. The VAT liability affects private providers such as fitness centers, yoga studios, dance schools, and personal trainers, while associations and sports clubs remain exempt. The change is based on the EU Court of Justice's interpretation of the VAT exemption for teaching. In short, it was established that, for example, recreational team training cannot be considered VAT-exempt education under the previous rules. The Danish Tax Agency has therefore changed its practice so that Danish rules now follow the EU line.

It is worth noting that teaching children and young people up to the age of 29 will continue to be exempt from VAT. The government has decided that exercise and leisure activities for this age group must not become more expensive as a result of the new VAT rules. In concrete terms, this means that, for example, a yoga class for children can still be offered VAT-free, while classes for adults aged 30 and over must be subject to VAT. For the businesses affected, the VAT liability also means that they will in future be able to deduct VAT from their expenses and will no longer have to pay payroll tax on these activities.

VAT deduction: When can your company deduct VAT?

The new rules raise the question of when companies can claim input tax deductions in connection with these services. Here is a brief overview of typical scenarios:

Commercial use, employee training, events, etc.:

If the expense for fitness, yoga, dance, etc. has a clear business purpose, the VAT can generally be deducted. For example, you can hire a yoga instructor for a team-building event or hold a dance workshop as part of a customer or branding event. In this case, the expense is considered part of the operation or marketing, which gives full VAT deduction rights, subject to the usual restrictions for things like catering. In short, when the activity is part of the company's activities, training, advertising, etc., the purchase VAT is normally deductible.

Employee benefit, private fitness for employees:

However, if the company covers employees' private exercise expenses, for example, paying for a fitness or yoga membership for employees at an external center, the VAT cannot be deducted. Such expenses are considered taxable employee benefits, private consumption, and there is no VAT deduction, as the training takes place outside the workplace and is not part of the work. In other words, VAT on the employee's own fitness subscription will not be deductible for the company.

Sponsorships and external activities:

If the company sponsors or pays for participation in external exercise activities for branding or PR purposes, the deduction depends on the situation. Expenses for registering employees for, for example, a fun run or a public event may be partially VAT deductible if it is considered an advertising expense, part of marketing, or a personnel expense for the company. However, if the event is primarily of a private nature for the participants or is classified as entertainment, the right to deduction typically lapses. Always assess the purpose. The more the expense benefits the company externally, in terms of branding and networking, the greater the likelihood of a VAT deduction, and vice versa for pure staff entertainment.

Deductions on your personal tax return

To compensate ordinary citizens for the fact that a number of leisure activities will be subject to VAT from 2026, a new exercise deduction will be introduced. People over the age of 30 can receive a tax deduction of up to DKK 1,750 per year for documented expenses for fitness, yoga, dance, music lessons, etc.

The deduction is a tax deduction with a tax value of approximately 26%, which corresponds to a saving of around DKK 450 when the deduction is fully utilized. It only covers part of the expected price increase, but may be relevant for those who will have to pay VAT on their leisure activities in the future.

Persons under the age of 30 are still exempt from VAT and therefore do not need to use the exercise deduction.

Conclusion

The new VAT rules effective January 1, 2026, mean that companies within fitness, yoga, dance, etc. must charge VAT to adult participants. As a customer company, you can generally deduct the VAT when the activity is part of your business activities, while VAT on pure employee benefits must be considered a non-deductible expense. Consider your setup for employee exercise and events in light of the new rules so that you both comply with the VAT rules and make optimal use of the deduction options. The Danish Tax Agency justifies the change with the need to comply with EU rules, and with deductions on the business side and a new exercise deduction for citizens, it is attempting to ease the transition to the VAT regime.