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If your business is registered for VAT, you must keep records of your purchases and sales of goods and services and in this way keep your accounts. At the end of each VAT settlement period you need to calculate your VAT and file your VAT return with the Danish Tax Agency (Skattestyrelsen).

File your VAT return

VAT accounts must reflect the amount of VAT you need to declare and pay. As a minimum, your business accounts must include two VAT accounts:

  • an account for input VAT (here you enter VAT paid on your purchases)
  • an account for output VAT (here you enter VAT received on your sale)

If you do business with customers abroad

If you do business with customers abroad, your VAT accounts must also include the following:

  • an account for VAT on goods purchased abroad
  • an account for VAT on services purchased abroad subject to a reverse charge
  • an account for goods purchased in other EU countries (box ‘A - varer' (A - goods) in the VAT return)
  • an account for services purchased subject to a reverse charge in other EU countries (box ‘A - ydelser' (A - services) in the VAT return)
  • an account for the sale of goods to other EU countries (the two B boxes ‘B - varer' (B - goods) in the VAT return)
  • an account for services sold subject to a reverse charge in other EU countries (field ‘B - ydelser' (B - services) in the VAT return)
  • an account for exports to countries outside the EU etc. (box C in the VAT return)

The basis for VAT accounts

The amount to be filed in the VAT return appears from your ordinary business accounts. Your business accounts must be updated before you file your VAT return. Remember to include all vouchers dated within the settlement period. This also applies to unpaid invoices.

To ensure that all vouchers are included in your accounts, you regularly need to balance the funds in for example the till or in the bank, which are listed in the accounts, with the actual funds (for example listed on bank account statements or contained in the till).

Bookkeeping software

If you use bookkeeping software, your VAT will be recorded automatically when you enter your vouchers.

It is your responsibility to calculate VAT on the credit purchases and credit sales in the VAT period if it is not done automatically by the bookkeeping software.

If your bookkeeping software has a debtors' ledger and a creditors' ledger, VAT on your credit purchases or credit sales will be recorded automatically.

Bookkeeping guide

If your business is a sole proprietorship registered for VAT, you may find our Bookkeeping Guide useful (unfortunately it is currently only in Danish).

The guide helps you to do your bookkeeping so that you are sure that your deductions are calculated correctly and that you pay the right tax and VAT.

It is a special guide for sole proprietorships with or without employees.

What is accrual?

Accrual of expenses and income means that they are recorded in the correct VAT periods. As a business, you need to calculate and report your VAT for each period (month, quarter or half-year). For that purpose, you include the VAT from all the sales and purchase invoices and expense vouchers dated in the period covered by your VAT return. This also includes any unpaid invoices. It is the invoice date that counts. In case an early payment is made before delivery or invoicing, VAT liability arises at the time of payment.

VAT liability for deliveries sold arises on the date of delivery. Most of the time, the delivery date and the invoice date are the same. As a result, the invoice date usually determines the VAT period in which the output VAT is to be included. 

The same applies to purchases where the invoice date determines in which VAT period a deduction can be made.
 
The time when the supplier is to include VAT on the invoiced goods is therefore the same as the time when the buyer has the right to deduct input VAT.
  
It has no significance when a sale or a purchase is paid, except in cases of advance payments without an invoice where VAT liability, as an exception, arises at the time of payment. In all other cases, it is the invoice date that determines in which VAT period you need to record your output or input VAT. 

Reduced ability to pay  

Incorrect accrual may impact the liquidity of your business, meaning your ability to pay. If you do not claim your VAT deduction until the date you pay instead of the invoice date, your VAT deduction could be included in a later VAT period. 

Impact on annual accounts 

Accrual errors could also impact your annual accounts. When you calculate tax for the individual accounting years, it is important to record expenses/income in the correct accounting year to ensure that your depreciation and amortisation for tax purposes is correct. 

Increased risk of tax inspection 

Accrual errors could make your accounts look wrong. As a result, this could cause us to select you for a tax inspection, which you could have avoided if your accruals were correct. 

If you discover that you have made an accrual error, you need to correct it. It is particularly important that the accrual is correct at the end of each reporting period. You correct your VAT return in E-tax for businesses for the VAT period in question.

All entries in your accounts must be documented in the form of vouchers. If a voucher does not meet the requirements, you may lose the right to deduct the VAT of the relevant voucher.

Invoice or till receipt requirements

Invoices

  • invoice date (the invoice date decides in which VAT settlement period you can deduct the VAT)
  • sequential invoice number
  • your VAT registration number (CVR no./SE no.)
  • name and address of your business
  • name and address of the buyer
  • quantity and nature of the goods or services supplied
  • delivery date if it differs from the invoice date
  • price of the goods/services exclusive of VAT, possible discounts, bonuses or rebates, unless these are included in the unit price
  • current VAT rate
  • VAT amount
  • If you have sales that are subject to VAT and sales that are exempt from VAT in respect of the same customer, the invoice must clearly state for which amount VAT is calculated.

Till receipts

If you use a till, it must be auditable. This means that the till must be a double roll model as it needs to contain an audit roll in addition to the till receipt.

  • name or registration number (CVR/SE no.) of your business
  • date of issue
  • type of goods
  • the specified VAT amount or the total price is inclusive of VAT

It is important that you comply with these invoicing requirements as the buyer's right to deduct VAT is conditional, among other things, on the vouchers complying with the rules.

You must keep your accounting records for five years - even if you close your business. You must keep accounting records relating to acquisition and conversion of property for ten years.

Accounting records is any written records relevant to the business's operations, for example:

  • invoices
  • delivery notes
  • contracts
  • order sheets
  • appointment books
  • financial statements

Please see our legal guide (in Danish) for further legal information.