In the article, an analysis is made of the Danish rules on VAT grouping including case law and administrative practice related thereto, specifically in relation to the substantive conditions and the territorial condition for VAT grouping. Danish VAT grouping is voluntary upon request or application, generally applicable for all business sectors, and an option for taxable persons who exclusively perform taxable activities, or, for VAT-registered persons together with VAT-exempt and non-taxable persons within a group of companies. Denmark has only implemented the financial link, which may not be compatible with Article 11 of the VAT Directive stating three links, i.e. financial, economic and organisational links. As for the territorial condition, Denmark follows the narrow territorial approach to VAT grouping based on the Skandia America case, consequently, a VAT group constitutes a new taxable person superseding the FCE Bank principle applicable between a main establishment and its branch. Many discussions on VAT grouping take place in Denmark concerning inter alia the right to input VAT deduction, the potential risk of abuse and avoidance, the effect of VAT grouping as a “merger” e.g. in connection with the sale of shares or transfer of a going concern etc.