How to file your last VAT return

If you sell all your business or an independent part of it, we also call this a transfer of business. You are not entitled to charge VAT when you transfer all or part of your business. However, if you do transfer all or part of your business, you should state the selling price of your inventory, machinery, services and facilities at www.virk.dk when you deregister your business for VAT. Please also state the name and CVR no. of the buyer.

In order to qualify as a full or partial transfer of business, the sale has to include tangible assets such as inventory and machinery and possible intangible assets such as production rights. Combined, this should form the basis of the operation making it a business. Moreover, the buyer must want to continue running the business subject to VAT. 

If the selling price of the assets (such as machinery and vans) exceeds DKK 100,000, the assets are considered capital goods. Please note that special VAT rules apply to capital goods. This means that certain situations may require that you refund VAT that you deducted when you bought the capital goods (a van for example). This is called a VAT adjustment obligation.

Read more about the rules of deduction for VAT on capital goods.

If you are selling all or a part of your business, it may be a good idea to have an accountant or other professional help you do that. Please call us on (+45) 72 22 28 67 if you have any questions about selling your business or about capital goods.

Below, we will guide you through what you need to pay attention to when you file your last VAT return in relation to inventory, machinery and services, for example. 
These rules apply when you are entitled to the full deduction. Please note that if you were only entitled to a partial deduction when you bought your inventory, machinery and services for your business, other rules apply. You can call us on (+45) 72 22 28 67 if you have any questions about the rules applying to partial deduction.

Inventory

If you sell all or part of your business inventory, you always have to charge, file and pay VAT on goods you sell. 
If, on the other hand, you remove inventory for private use, you have to repay the VAT on the goods on which you originally deducted VAT when you purchased them. You calculate the VAT based on the price of the goods when you purchased or produced them.  

Machinery, computers, telephones, etc.

If you sell capital goods of your business, such as machinery, computers or telephones, you should always charge, file and pay VAT on the goods you sell.
If, on the other hand, you remove goods, such as a computer, to yourself within five subsequent accounting years after you bought it, you should repay the part of the VAT that your business originally deducted when you bought the computer. If you remove the computer for private purposes within the same accounting year as you bought it for your business, you will have to repay the entire VAT amount. 

Example:

You bought a computer for your business in 2017 for DKK 10,000. (DKK 8,000 VAT of DKK 2,000) and you claimed a full VAT deduction of DKK 2,000. If you want to keep the full VAT deduction of DKK 2,000, the computer must have been used for business purposes for five subsequent accounting years at the time you close your business. This means from 2018 to 2022. If you remove the computer for private purposes in 2020 as you want to close your business, you have to repay the VAT amount. As the computer has only been used for business purposes in accounting years 2018-2020, you will have to calculate the deduction for the remaining two years. VAT is calculated based on the value of the computer, which is reduced by 20% each of the five years. As the computer has not been used for business purposes in two of the five years, you will have to repay 40% of the deduction of DKK 2,000. This means a total of DKK 800. You should declare this amount as output VAT when you file your last VAT return. You can also see the same example in the below table:

Example of sale of computer when a business is closed

Note	Year of purchase	1st accounting year	2nd accounting year	3rd accounting year	4th accounting year	5th accounting year
The years the business has owned the computer as it was bought in 2017	2017	2018	2019	2020	2021	2022
Calculated value of the computer (exclusive of VAT)	DKK 8,000	DKK 6,400	DKK 4,800	DKK 3,200	DKK 1,600	DKK 0
VAT to be repaid if the computer is removed for private purposes	DKK 2,000	DKK 1,600	DKK 1,200	DKK 800	DKK 400	DKK 0

Read more about how you calculate the VAT on goods or assets (VAT on self-supply) that you remove for private purposes.

If you have bought a machine, a van or similar for more than DKK 100,000 (exclusive of VAT) and you sell it or remove it for private purposes, it is considered capital goods. Read more about capital goods below on this page.

Services

Services could include copyrights or patents. If you provide a service, you should always charge VAT, file a VAT return and pay your VAT.
If you remove services for less than DKK 100,000 for private purposes, you are required to repay the entire VAT amount if your business deducted the VAT when you bought the services. You calculate the VAT based on the price of the services at the time of purchase. 

Please call us on (+45) 72 22 28 67 if you have any questions about VAT on services.

Real property

If you want to sell real property on behalf of your business or if you want to take over real property, you can call us on (+45) 72 22 28 67 if you are unsure of the VAT rules in this case. 

Other capital goods

If you have bought a machine, a van, rights or similar goods or services for more than DKK 100,000 (exclusive of VAT) and you sell or remove it for private purposes, it is considered capital goods. Please note that special VAT rules apply to capital goods.

Read more about the rules for deduction of VAT on capital goods.

If you close your business completely and sell goods and assets or remove them for private purposes, certain VAT rules apply. Below, you can read about the rules that apply if you have a full deduction.

Partial right to deduction

If you have a partial right to deduction on acquisitions, other VAT rules apply. Please call us on (+45) 72 22 28 67 if you have any questions about the rules for declaring VAT related to partial deduction.

If you are selling goods belonging to your business

When you close your business, you can sell the inventory, machinery, equipment and so on. However, you need to add VAT on the sale and include the amount as output VAT in your final VAT return.  

If you sell all of or an independent part of your business, however, you cannot charge VAT from the buyer, see the above section ‘Selling all or some of your business’.  

Removing goods from your business for private purposes

If you remove some of the goods of the business (inventory, machinery, equipment etc.) for private purposes when you close your business, you need to calculate the value and VAT on it. You must include the VAT you have calculated as output VAT in your final VAT return.

How to calculate VAT on inventory removed for private purposes

Valuation of goods bought by the business

The value of goods bought by the business is the remaining value of the original purchase price at the time of closing your business. This corresponds to the market value at the time of removing the goods. In other words, the price at which your business could buy the goods in a market between independent parties. If you remove purchased goods for private purposes, you must calculate VAT on the value.

For unused goods or goods that have been used, but that were bought not long before you remove them, the remaining value should be close to, or even the same as, the original purchase price.

Valuation of own products

The value of goods produced by your business is the purchase price of similar goods corresponding to the market price at the time you remove them. In other words, the price at which your business could buy the goods in a market between independent parties. If you remove such goods for private purposes, you must calculate VAT on the value.

You therefore need the price of a similar item with similar characteristics and in a similar condition etc.

In case it is not possible to find a similar item, you must use the cost price. The cost price is the total price of producing the item, including materials and labour costs. However, if you are the owner of the business, you do not include your own labour in the cost price.

Example of calculating VAT

Maria owned a yarn shop that also sold jumpers she knitted herself. The market price of her stock of yarn and knitting needles etc. is estimated at the remaining value of the goods, that is the price at which Maria could buy the goods in a market between independent parties at the time she chooses to close her business.

The market price of the jumpers she has knitted is estimated at the price of similar jumpers bought at the time when she chooses to close her yarn shop. As there are similar knitted jumpers on the market, Maria cannot estimate the value at cost price.

Maria closes her business 

	Inventory
	Yarn, knitting needles etc.	Own products/knitted jumpers
Market price excluding VAT	DKK 20,000	DKK 40,000
Output VAT 25%	DKK 5,000	DKK 10,000
Costpris excluding VAT *		DKK 30,000 *
Output VAT 25%		DKK 7,500

 

* As there are similar knitted jumpers on the market, Maria cannot estimate the value at cost price.

Calculation of VAT

Maria calculates the inventories at DKK 5,000 and her own production of knitted jumpers at DKK 10,000. In total, DKK 15,000 which she includes in the output VAT in her final VAT return.

How to calculate VAT on machinery and inventory removed for private purposes

Valuation of machinery, computers, telephones, etc., with a purchase price of less than DKK 100,000

The value of operating equipment or assets of a value of less than DKK 100,000 per item is the remaining value of the original purchase price at the time of closing your business. This corresponds to the market value at the time of removing the goods. In other words, the price at which your business could buy the goods in a market between independent parties. If you remove operating equipment, such as machinery, computers and phones for private purposes, you must calculate VAT on the value.

The market price of operating equipment, such as machinery, office furniture, computers and phones, that you bought and started using shortly before you remove them for private purposes, should be close to, or even the same as, the original purchase price.  

Example of calculating VAT

Peter has decided to close his carpentry business. He removes the operating equipment of the business for private purposes. The following operating equipment is removed:  

1. A 6-year-old PC. The PC was bought by the business for DKK 12,000. A PC of the same quality and in the same condition costs DKK 400.
2. Scaffolding that is 4 years old. Scaffolding of the same quality and in the same condition costs DKK 25,000.
3. A special saw that is 2 years old. A special saw of the same quality and in the same condition costs DKK 15,000.

The market price of the three pieces of operating equipment is estimated at the remaining value, that is the price at which Peter could buy the goods in a market between independent parties at the time he closes his carpentry business.

Peter closes his business

	Operating equipment
	Scaffolding	Special saw	PC with equipment
Purchase price excluding VAT	DKK 50,000	DKK 20,000	DKK 12,000
Market value excluding VAT	DKK 25,000	DKK 15,000	DKK 400
Output VAT 25%	DKK 6,250	DKK 3,750	DKK 100

                   
Calculation of VAT

Peter calculates DKK 10,100 in total. (DKK 6,250 DKK 3,750 DKK 100), which he includes as output VAT in his final VAT return.

Valuation of machinery and operating equipment etc., with a purchase price of more than DKK 100,000

If your business owns machinery, a van or similar with a purchase price of more than DKK 100,000 (excluding VAT) it is considered capital goods.  

If you remove operating equipment or assets worth more than DKK 100,000 per unit for private purposes, you need to calculate VAT based on the market value at the time of closing. This corresponds to the price at which your business could buy the item in a market between two independent parties.  

The market price of operating equipment, such as machinery, that you bought and started using shortly before you remove them for private purposes, should be close to, or even the same as, the original purchase price.

Please call us on (+45) 72 22 28 67 if you have any questions about VAT on capital goods.

Other assets - sale and removal

Intangible property (services)

Sale of intangible property  

You must always add VAT if you sell intangible property. Examples of intangible property are copy rights, patents or an IT programme specifically developed for your business.

Removal of intangible property for private purposes

If you remove intangible property for private purposes, you must calculate VAT on the open market value. Examples of intangible property are copy rights, patents or an IT programme specifically developed for your business.  

The open market value is the amount which a customer at the same marketing stage and under conditions of fair competition would have to pay for the intangible asset at the time when you close your business. If it is impossible to find the price of a similar asset, the price must be fixed at the value of the expenses incurred by the business in connection with the service.

Please call us on (+45) 72 22 28 67 if you have any questions about VAT on services.

Real property

Sale or removal of real property for private purposes

If you want to sell real property on behalf of your business or if you want to remove real property for private purposes, you can call us on (+45) 72 22 28 67 if you are unsure of the VAT rules that apply.