VAT deductions for vehicle expenses

In terms of VAT, vehicles are divided into three categories:

• cars and motorbikes
• vans up to three tonnes
• vans above three tonnes

If the vehicle has white plates, VAT is not deductible.

Deductible expenses and the VAT amount payable depend on how you use the vehicle and on the type of vehicle.

Deductible expenses and VAT payable

Purchase, rental, operation and sale	Deduction rights
Deduction right, purchase	No deduction.
Deduction right, rental	No deduction if the rental period is less than six months. If the rental period is more than six months and at least 10% of the vehicle’s use relates to business activities subject to VAT, a limited deduction is possible. The size of the deduction is stated in the invoice issued to you by the rental company.
Deduction right, operation	No deduction. However, you may deduct VAT from the bridge toll if you cross the Oresund.
VAT, sale	You are not required to charge VAT on a sale.

Special rules apply if you rent out cars or have a school of motoring.

You only use the vehicle for business purposes that are subject to VAT:

Purchase, rental, operation and sale	Deduction rights
Deduction right, purchase	Full deduction.
Deduction right, rental	Full deduction.
Deduction right, operation	Full deduction.
VAT, sale	You must charge VAT on the full selling price.

You only use the vehicle for business purposes subject to VAT and business purposes exempt from VAT (and never for private purposes):

Purchase, rental, operation and sale	Deduction rights
Deduction right, purchase	No deduction.
Deduction right, rental	A partial VAT deduction is possible if your business’s annual sales of goods and services subject to VAT exceed DKK 50,000. The partial deduction is a third of the VAT you pay on the rent.
Deduction right, operation	A full VAT deduction is possible for all expenses that are subject to VAT if your business’s annual sales of goods and services subject to VAT exceed DKK 50,000.
VAT, sale	You are not required to charge VAT.

You use the vehicle for both business purposes subject to VAT and private purposes (’parrot plates’):

Purchase, rental, operation and sale	Deduction rights
Deduction right, purchase	No deduction.
Deduction right, rental	A partial VAT deduction is possible if your business’s annual sales of goods and services subject to VAT exceed DKK 50,000. The partial deduction is a third of the VAT you pay on the rent.
Deduction right, operation	A full VAT deduction is possible for all expenses that are subject to VAT if your business’s annual sales of goods and services subject to VAT exceed DKK 50,000.
VAT, sale	You are not required to charge VAT.

Read more about Yellow plates and ’parrot plates

You only use the vehicle for purposes that are subject to VAT:

Purchase, rental, operation and sale	Deduction rights
Deduction right, purchase	Full deduction.
Deduction right, rental	Full deduction.
Deduction right, operation	Full deduction.
VAT, sale	You must charge VAT on the full selling price.

The vehicle is regarded as an investment asset and is used both for business purposes subject to VAT and business purposes exempt from VAT (and never for private purposes):

Purchase, rental, operation and sale	Deduction rights
Deduction right, purchase	A partial VAT deduction is possible. The relationship between your business’s revenue subject to VAT and exempt from VAT determines the size of the deductible amount (deduction rate). See an example under ’VAT deductions for fixed costs’.
Deduction right, rental	A partial deduction is possible at the rate used in the business. The relationship between your business’s revenue subject to VAT and exempt from VAT determines the size of the deductible amount (deduction rate). See an example under’VAT deductions for fixed costs’.
Deduction right, operation	A partial deduction is possible at the rate used in the business. The relationship between your business’s revenue subject to VAT and exempt from VAT determines the size of the deductible amount (deduction rate). See an example under ’VAT deductions for fixed costs’.
VAT, sale	You must charge VAT on the full selling price. There may be cases, however, where you are entitled to further VAT deductions. See an example under ’VAT on investment assets’.

The vehicle is regarded as an investment asset and is used for private purposes as well as purposes that are subject to VAT

Purchase, rental, operation and sale	Deduction rights
Deduction right, purchase	A partial deduction is possible for the share of the VAT which is estimated to concern your business activities subject to VAT. You must be able to document how you arrived at the estimate, for example by keeping a daily logbook.
Deduction right, rental	A partial deduction is possible for the share of the VAT which is estimated to concern your business activities subject to VAT. You must be able to document how you arrived at the estimate, for example by keeping a daily logbook.
Deduction right, operation	A partial deduction is possible for the share of the VAT which is estimated to concern your business activities subject to VAT. You must be able to document how you arrived at the estimate, for example by keeping a daily logbook.
VAT, sale	You must charge VAT on the full selling price. There may be cases, however, where you are entitled to further VAT deductions. See an example under ’VAT on investment assets’.

If you do not pay for private use of the vehicle, but you or your employees occasionally want to use the vehicle for private or other purposes, you may purchase a one-day permit. You may purchase a maximum of 20 one-day permits per year per vehicle.

You use the vehicle for both private purposes and purposes that are subject to VAT:

Purchase, rental, operation and sale	Deduction rights
Deduction right, purchase	No deduction.
Deduction right, rental	A partial VAT deduction is possible if your business’s annual sales of goods and services subject to VAT exceed DKK 50,000. The partial deduction is a third of the VAT you pay on the rent.
Deduction right, operation	A full VAT deduction is possible for all expenses that are subject to VAT if your business’s annual sales of goods and services subject to VAT exceed DKK 50,000.
VAT, sale	You are not required to charge VAT.

Whenever you use the vehicle for private purposes, you must pay a private use tax.

If you use a vehicle for purposes subject to VAT, you may be entitled to deduct certain vehicle expenses. Above you can read more about which rights of deduction apply to your vehicle. When you use your vehicle for purposes subject to VAT you are entitled to deduct vehicle expenses such as:

• Petrol and diesel
• Bridge toll payable when crossing the Great Belt bridge (Storebæltsbroen)
• Bridge toll payable when crossing the Oresund Bridge (Øresundsbroen)
• Parking fees
• Repairs and maintenance

You are also entitled to deduct part of ferry expenses if you travel in your vehicle. However, you cannot deduct the entire amount as passenger transport is not subject to VAT. The total amount of VAT will appear from your ticket.

You cannot deduct fines or expenses for insurance as insurance is not subject to VAT.