About Value Added Tax (VAT)

The fundamental principle of the Danish VAT rules is that VAT is addedas a fixed percentage on sales. The present rate in Denmark is 25%,abroad the rate is slightly lower. Your company must pay VAT to thecentral authorities similar to tax.An example:
Price of service: 200 Dkr.
+ 25% VAT: 50 Dkr.
= Customer’s price: 250 Dkr.

Eventually, the 50 Dkr. VAT must be paid to the central authorities.

Purchasinggoods for distribution or private consumption the VAT registeredcompany can set the VAT it pays to its suppliers off against the VATreceived from the company’s sales.
Thus, only the net VAT, and not the total VAT from sales, must be settled.

An eksample



VAT Registration
Mostcompanies are obliged to keep VAT accounts. There are few exceptionsfrom the VAT duty, e.g. general practitioners, dentists, cab drivingand education.

Many people see registration for VAT equal to”starting business”. In a sense this is correct, as VAT registration isthe single formal thing you under all circumstances must do to “get inbusiness”.
You get your VAT registration number at the same time as you get your CVR (VAT) number.

Output Tax
Outputtax is the VAT you charge on your sales and which you have to pay toSKAT (the Danish Central Customs and Tax Administration). Earlier knownas output VAT. When you sell a commodity at, say, 100 Dkr. you must add25% to the amount.

When must output tax be added? If you arein doubt you should consult SKAT or your accountant, but usually it isvery easy: Most companies must charge output tax on their total sales.

Input Tax
Inputtax is the VAT you pay to your suppliers which is set off against theoutput tax payable. If you buy at 60 Dkr. + VAT, you pay a total of 75Dkr., but the 15 Dkr. Are returned from SKAT, either directly or bysetting off against the output tax payable.

The fundamentalprinciple is as logic as for output tax. Just like most companies areliable to charge output tax on all sales, the input tax on theirexpenses is allowable against the VAT accounts.

SKAT Help and Assistance
Anumber of rules apply to retailing. Any VAT registered company canconsult their local SKAT office who will offer their help andassistance in answering questions.
SKAT has published a series of pamphlets on various aspects of the legislation. These pamphlets are free of charge upon request.

Thomsen
- Registrer din virksomhed direkte på internettet
- SKAT´s hjemmeside
- Basic Accountancy

On a regular basis, you must settle VAT with SKAT.VAT period
When you are a registered company SKAT will send you the required invoices for paying the VAT.

Newly started businesses must declare VAT quarterly.

SKAThave various thresholds for payment. Thus, companies with an annualturnover not exceeding 1 million Dkr. only have to declare VATbiannually, while all newly started businesses have to declare VATquarterly, unless specific circumstances stipulate monthly declaration.Only upon SKAT´s verification of your annual turnover being under 1million Dkr. (based on 1-2 years´ VAT returns) you will be shifted tobiannual VAT return. SKAT does this unsolicited.

VAT must be declared and paid no later than 10 days following the end of a quarter.
The present VAT rate in Denmark is 25%

Principles of VAT return
Output tax (salgsmoms) and input tax (købsmoms)must be declared individually usually by accumulation in your accounts.

Output tax is the VAT you charge on your sales on behalf of the authorities and which you have to pay to SKAT,
Input tax is the VAT you have disbursed and will be reimbursed by the authorities.
TheVAT payable is found by setting the two amounts off against each other- the difference is paid to SKAT. If your input tax exceeds your outputtax you will get a VAT rebate.

Eksempel:

• You sell goods for 80.000 kr + salgsmoms at 20.000 kr
• You purchase goods for 60.000 kr + købsmoms at 15.000.
• Your surplus are 20.000 kr (80.000 - 60.000) and you have to pay 5.000 in value addede tax to SKAT (20.000 - 15.000)

Green taxes
Besidesinput and output tax, the VAT accounts have space for entering a seriesof green taxes on such supplies as power, oil and water.
You maybe paying such indirect taxes in connection with your businessoperations (e.g. the tax featured on your power bill). In some cases,you are entitled to a partly or a full refund of such taxes. It is allin the VAT accounts.

Green tax rebate rules are quite complexand you do not necessarily have to calculate green taxes in connectionwith each individual VAT settlement. You are allowed - and in somecases this is a convenient way of handling it - to set the green taxesaside on the current VAT returns, and wait until you, or youraccountant, make(s) your annual accounts.

VAT return misentries
Ifyou forget to enter some input tax amounts into a VAT return, thussettling too much with SKAT, all you have to do is to include it in thenext VAT return. However, if it is a considerable amount you cancontact SKAT and ask them to correct the mistake.

Short-payment
Ifyou find out that you have forgotten some output tax amounts,short-payment, you must immediately contact SKAT and have the mistakecorrected. If it is an insignificant mistake you can notify SKAT,stating that, unless you hear from them, you will include the amount inthe next VAT return. You have thus offered SKAT an option to demand animmediate settlement of the discrepancy - furthermore, you are in goodfaith.

Rose- Link til SKAT

To obtain VAT rebate of an expense you have incurred, you must meet three requirements:1. The expense must relate to an action subject to VAT in the company
Often,this requirement is met automatically, but if a company carries outboth activities exempt from VAT as well as subject to VAT, therequirement becomes relevant. E.g. a newsagent who, besides magazines,convenience goods, etc., handles pool betting and lottery tickets whichare activities exempt from VAT. In such cases, VAT accounts must bekept in a special way. You need to consult SKAT or your accountant formore info on this.

2. Expenses must include VAT
Manyof the day-to-day expenses defrayed in a company, are exempt from VAT.E.g. stamps, insurance, newspapers, some courses, some subscriptions,train tickets and air fares. To meet the VAT inclusion requirement,supplier invoices must indicate VAT amounts or read "VAT included" orsimilarly.

3. Exceptions
The politicians have passed anumber of rules, according to which VAT will not be rebated even whenthe first two requirements are met. The primary exceptions: Expensesrelating to purchase and maintenance of passenger cars, staff care,hotels and meals. In some instances, ¼ of the VAT expenses for hotelsand meals will be rebated.

Thus, VAT on operating costs such aspetrol and garage bills related to a car exclusively used as a companycar, is non-rebatable. This does not, however, prevent you fromentering the purchase of the car into your tax accounts - other rulesapply to this aspect.

Special rules apply to commercial vehicleswith yellow low-tax licence plates. In some cases VAT on theseoperating costs is rebatable, even when you do not enter thecorresponding expenses directly into your tax accounts. You are allowedto enter the total VAT on such commercial vehicle operating costs intoyour VAT accounts, also if you partly use the car for private purposes.

Rose
- Læs om moms generelt
- Læs om momsopgørelse
- Samling af skatteregler
- Gå til SKAT

The fundamental principle of the Danish VAT rules is that VAT is addedas a fixed percentage on sales. The present rate in Denmark is 25%,abroad the rate is slightly lower. Your company must pay VAT to thecentral authorities similar to tax.An example:
Price of service: 200 Dkr.
+ 25% VAT: 50 Dkr.
= Customer’s price: 250 Dkr.

Eventually, the 50 Dkr. VAT must be paid to the central authorities.

Purchasinggoods for distribution or private consumption the VAT registeredcompany can set the VAT it pays to its suppliers off against the VATreceived from the company’s sales.
Thus, only the net VAT, and not the total VAT from sales, must be settled.

An eksample



VAT Registration
Mostcompanies are obliged to keep VAT accounts. There are few exceptionsfrom the VAT duty, e.g. general practitioners, dentists, cab drivingand education.

Many people see registration for VAT equal to”starting business”. In a sense this is correct, as VAT registration isthe single formal thing you under all circumstances must do to “get inbusiness”.
You get your VAT registration number at the same time as you get your CVR (VAT) number.

Output Tax
Outputtax is the VAT you charge on your sales and which you have to pay toSKAT (the Danish Central Customs and Tax Administration). Earlier knownas output VAT. When you sell a commodity at, say, 100 Dkr. you must add25% to the amount.

When must output tax be added? If you arein doubt you should consult SKAT or your accountant, but usually it isvery easy: Most companies must charge output tax on their total sales.

Input Tax
Inputtax is the VAT you pay to your suppliers which is set off against theoutput tax payable. If you buy at 60 Dkr. + VAT, you pay a total of 75Dkr., but the 15 Dkr. Are returned from SKAT, either directly or bysetting off against the output tax payable.

The fundamentalprinciple is as logic as for output tax. Just like most companies areliable to charge output tax on all sales, the input tax on theirexpenses is allowable against the VAT accounts.

SKAT Help and Assistance
Anumber of rules apply to retailing. Any VAT registered company canconsult their local SKAT office who will offer their help andassistance in answering questions.
SKAT has published a series of pamphlets on various aspects of the legislation. These pamphlets are free of charge upon request.

Thomsen
- Registrer din virksomhed direkte på internettet
- SKAT´s hjemmeside
- Basic Accountancy

As an ordinary consumer and employee you do not really notice VAT.
Not until you start up your own business - then VAT becomes an important issue.Business to business
When two businessess are negotiatingprices, they always do so exclusive of VAT. This is because VAT has noinfluence on a company´s internal accounts. Companies know, that VATpaid to another company is deductible in the VAT accounts.

However,if you sell products or services to consumers you should remember toadd 25% to the amount you have estimated as the optimum price. Failingto do so, entails that you must pay the VAT out of your own pocket.

Your biz and consumers
If you own a shop, restaurant, or service business approaching consumers, you must always state your prices inclusive of VAT.  
Ifyour business deals with consumers and businesses, you must indicateclearly whether the prices are inclusive or exclusive of VAT.