How to get your VAT deductions
When can I get VAT deductions?
If your business is registered for VAT, you are entitled to deduct the VAT when you buy goods or services that you resell or use to run your business
But you have to meet some conditions - read more under 'Can I get VAT deductions?' below.
How do I get my VAT deductions?
To get your VAT deductions, you have to add up the total input VAT of your business for the period. You do that in your business accounts. When you file your VAT return, you state the total input VAT for the period under 'Købsmoms' (Input VAT). See our guide on filing your VAT return.
We deduct the input VAT you have filed from the output VAT you have filed. This way, the VAT you owe is reduced. So, you will only get a VAT refund if your total input VAT is higher than your total output VAT.
Generally, you are entitled to VAT deductions for goods or services you buy for resale or for running your business that is registered for VAT.
But - you have to pay special attention to the following:
- For you to be entitled to VAT deductions, both your business and the seller have to be registered for VAT and you have to document the purchase by means of an invoice.
- Goods and services considered for business purposes in one business are not necessarily so in other businesses. A carpenter, for example, is entitled to VAT deductions for tools he has bought for use in his business that is registered for VAT. That isn't the case for a business consultant, as tools would be considered a private purchase.
- Goods or services related to you as a private individual is considered private purchases. It could be reading glasses. Goods or services that relate to you as a private individual are considered private consumption and as a result you can't get VAT deductions
You can get a deduction for goods and services that you use for both business and private purposes
If you buy goods that you use both for running your business and for private purposes, you can get VAT deductions for the part you use for business purposes.
Goods or services that you use for private purposes only don't entitle you to VAT deductions.
Read more below "Video: If you buy goods that you use both business and private purposes (partial deduction).
You can get a deduction for good and services that you use in your business subject to VAT and your business that is exempt from VAT
If you buy goods or services that you use for sales subject to VAT and sales exempt from VAT, you can get VAT deductions for the part you use for sales subject to VAT.
Goods or services that you strictly use for sales exempt from VAT, don't entitle you to VAT deductions.
Read more below "Video: If you buy goods and services that you use for sales subject to VAT and sales exempt from VAT (partial deduction).
If you use the goods or services for both running your business and for private purposes, you are only entitled to deduct VAT on the part that you use in your business.
And to do so, both your business and the seller must be registered for VAT and you have to be able to document the purchase by means of an invoice.
Note that goods or services related to you as a private individual, including clothing and glasses, are considered private purchases. As a result, such purchases don't entitle you to partial VAT deductions.
How do I get my partial VAT deductions?
You are entitled to deduct VAT on the part you use in your business.
As a result, you have to assess how much you use the goods or services for private and business purposes. You calculate the input VAT on the part that is used for business purposes and enter it in your accounts under input VAT.
Next time you file your VAT return, you enter the total input VAT for the period. In this way, you get your partial deduction.
Get help to do your bookkeeping with our Bookkeeping Guide (in Danish only)
Example: You use your pc both in your business and for private purposes
Samira bought a pc that she uses for administrative business purposes.
Now and again, she also uses it to check her private SoMe and watch movies after work.
Samira assesses that 75% of the time she uses the pc it's for business purposes and 25% of the time it's for private purposes. So, she is entitled to deduct 75% of the VAT she paid when she bought the pc.
| Pc purchase price, including VAT | DKK 5,499 |
| Input VAT: DKK 5499 /100 x 20 = | DKK 1,099.80 |
| 75 % on input VAT: DKK 1,099.80 / 100 x 75 = | DKK 824.85 |
Samira enters DKK 824.85 as input VAT in her accounts and includes the amount when she files the VAT return for the period.
Video: 3 things to remember when you decide if your expenses are private or for business purposes (Currently in Danish)
Duration 4:15 minutes
Currently only in Danish.
If you use the goods or service you have bought for your business subject to VAT and your business exempt from VAT, you can only get a deduction for the part of the VAT that you use in your business subject to VAT.
Both your business and the seller have to be registered for VAT and you must be able to document the purchase by means of an invoice.
The expenses included in the partial VAT deduction are called shares expenses as they are expenses for both the VAT-liable part and the VAT exempt part of your business.
Shared expenses may be expenses for office supplies, furniture, IT equipment, phones, cleaning and accounting services.
How do I get my partial VAT deduction?
You're entitled to a deduction for the part of the VAT that is used for your sales subject to VAT.
In order for you to calculate how much of the VAT you can deduct you have to calculate your deduction rate.
You do so by dividing your sale subject to VAT with your total sales and multiply by 100. Now you have found your deduction rate. You need the rate when you calculate the part of your input VAT that you need to enter in your accounts under input VAT.
Have you just started your business?
If you have just set up your business, you have to calculate your deduction rate based on the turnover of the individual VAT periods over the first year.
Once a year, you have to report the provisional deduction rate and you do so when you file your VAT return for the 1 September deadline.
On the same occasion, you report the end date of the accounting year that you use for your deduction rate. If, for example, you have calculated the provisional deduction rate based on your revenue of the second quarter, you have to state 30 June as the end date of the accounting year as it's the end date of the second quarter.
At the end of the year, and you know your total revenue for the entire accounting year. your deduction rate will be more constant and easier to calculate. All subsequent years you have to use the revenue of the past year to determine your provisional deduction rate.
Read more about Services exempt from VAT: How you report your sales
Get help to do your bookkeeping with our Bookkeeping Guide (Currently only in Danish)
Example: You use the computer for both business and private purposes
Samira has bought a computer that she uses for business administration.
She uses it for sales subject to VAT in her business and for sales exempt from VAT.
Samira calculates her deduction rate by dividing her sales subject to VAT (DKK 25,000) with her total sale (DKK 50,000) and multiplying with 100. This gives her a deduction rate of 50%. As a result, she can deduct 50% of the VAT she paid when she bought the computer.
| Purchase price of computer, including VAT | DKK 5,499.00 |
| Input VAT: DKK 5,499 /100 x 20 = | DKK 1,099.80 |
| 50% of input VAT: DKK 1,099.80/ 100 x 50 = | DKK 548.40 |
As a result, Samira records DKK 548.40 under input VAT in her accounts and reports the amount as part of her VAT file for the period.
Video: Guide to partial VAT deduction in the first year
Duration: 2:42 minutes
You can check if your business partners are registered for VAT at Check VAT numbers and other registrations of your business partner (currently in Danish)
In order to document the input VAT you need to be able to provide invoices, indluding simple invoices, or payment vouchers that meet the requirements.
Read more and watch a video on how you generate an invoice or a simple invoice.
Find help to do your bookkeeping as a newly registered business (Currently in Danish).
For further legal information in Danish see our legal guide .