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The fundamental principle of the Danish VAT rules is that VAT is added as a fixed percentage on sales. The present rate in Denmark is 25%, abroad the rate is slightly lower. Your company must pay VAT to the central 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.
Purchasing goods for distribution or private consumption the VAT registered company can set the VAT it pays to its suppliers off against the VAT received from the company’s sales.
Thus, only the net VAT, and not the total VAT from sales, must be settled.
An eksample
VAT Registration
Most companies are obliged to keep VAT accounts. There are few exceptions from the VAT duty, e.g. general practitioners, dentists, cab driving and education.
Many people see registration for VAT equal to ”starting business”. In a sense this is correct, as VAT registration is the single formal thing you under all circumstances must do to “get in business”.
You get your VAT registration number at the same time as you get your CVR (VAT) number.
Output Tax
Output tax is the VAT you charge on your sales and which you have to pay to SKAT (the Danish Central Customs and Tax Administration). Earlier known as output VAT. When you sell a commodity at, say, 100 Dkr. you must add 25% to the amount.
When must output tax be added? If you are in doubt you should consult SKAT or your accountant, but usually it is very easy: Most companies must charge output tax on their total sales.
Input Tax
Input tax is the VAT you pay to your suppliers which is set off against the output tax payable. If you buy at 60 Dkr. + VAT, you pay a total of 75 Dkr., but the 15 Dkr. Are returned from SKAT, either directly or by setting off against the output tax payable.
The fundamental principle is as logic as for output tax. Just like most companies are liable to charge output tax on all sales, the input tax on their expenses is allowable against the VAT accounts.
SKAT Help and Assistance
A number of rules apply to retailing. Any VAT registered company can consult their local SKAT office who will offer their help and assistance 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
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