If you occasionally rent out your car, boat or caravan, for example through GoMore or SnappCar, you must pay tax and possibly VAT on your income. This applies no matter how it is arranged.

You may get a tax deduction either by:

  • using the standard deduction where you pay tax on 60% of any income exceeding the standard deduction of DKK 10,500 (DKK 10,200 in 2019).
  • or using the accounting deduction where you pay tax on the part of your income exceeding your expenses.

Taxable income

You must declare the taxable income in field 250 of your preliminary income assessment and in box 20 of your tax assessment notice when this is ready in the middle of March.

If you are using the standard deduction, you will find the taxable income by deducting DKK 10,500 in 2020 (DKK 10,200 in 2019) from the total.

If you are using the accounting deduction, you will find the taxable income by deducting the expenses related to renting out from the total income.

If you deduct the expenses, you need to keep accounts of your income and expenses. You can read about which expenses you can deduct and what else you should do in the section on Accounting deduction.

Changing your tax assessment notice:

  1. Log on using your NemID.
  2. Click ‘Ret årsopgørelsen/oplysningsskemaet’ (Change your tax assessment notice/tax return).
  3. Enter the taxable income in box 20 (Other personal income). 
  4. Decide whether you have other information to correct. 
  5. Approve your tax assessment notice at the bottom of the page.
  6. You will be shown a receipt and can then access your tax assessment notice.

How to get the standard deduction

If you choose the standard deduction, you first deduct DKK 10,500 in 2020 (DKK 10,200 in 2019) from the total rental income and you then deduct 40% before entering the taxable income on your preliminary income assessment or tax assessment notice. This means that you pay 60% tax on the income you earn from renting out your car, boat or caravan exceeding the standard deduction.

If you are using the standard deduction, it applies to your total income from renting out your car, boat or caravan. This means that you cannot use the standard deduction for income from renting out your car, for example, and then use the accounting deduction for income from renting out your boat, for example.

The standard deduction applies from 2018.

Example: Taxable income with standard deduction

Casper has rented out his car and made an annual rental income of DKK 21,000 in 2019. He chooses to use the standard deduction. The calculation for the taxable income he should enter in his tax assessment notice is as follows:

Annual rental income 

DKK 21,000

Standard deduction

DKK 10,200

Amount left after standard deduction 

DKK 10,800

40% reduction

DKK -4,320

Taxable income
(income after standard deduction and 40%)

 DKK 6,480

So Casper needs to enter DKK 6,480 in box 20 of his tax assessment notice if he uses the standard deduction method.

From 2021, you can only use the standard deduction if you rent out through an agency

Everyone can use the standard deduction until 2020, but from 2021 you can only use the standard deduction if you rent out through an agency. The agency will then report the income to be used in your tax assessment notice.

How to get the accounting deduction

If you choose to use the accounting deduction, you must deduct the expenses related to the total rental income before entering it in your preliminary income assessment or your tax assessment notice. You can only deduct the rental expenses, which means that you cannot deduct expenses related to your own use of the car, boat or caravan.

If you use the accounting deduction, it applies to your total income from renting out your car, boat or caravan. In other words, you cannot use the accounting deduction for income from renting out your car and then use the standard deduction for income from renting out your boat.

Keep accounts and a mileage log

You must keep accounts and save receipts for all your expenses during the income year as well as keep a mileage log. That will be your documentation proving that you are entitled to the deduction. You have to submit your accounts, if we ask for them.

You must use the mileage log to calculate which part of the expense the rental activity concerns. In the mileage log, you register the mileage at the beginning and the end of the income year, and the mileage before and after each rental activity.

Get a mileage log template here (Danish only)

Deductions for operating and maintenance expenses

You are entitled to deduct the part of your operating and maintenance expenses for your car relating to the rental activity. You calculate the proportionate expenses which the rental activity represents of the total annual mileage.

This means that if the rental activity only makes up 10% of your total annual mileage, you are only entitled to deduct 10% of your expenses for ongoing maintenance, tires, green vehicle tax, insurance, etc.

You cannot deduct expenses for petrol as the person renting normally pays for petrol.

Deduction for expected annual loss of value

You may deduct a proportionate part of the expected annual loss of value of your car, boat or caravan. You calculate the proportionate expenses which the rental activity represents of the total mileage.

The rules of the Danish Act on Amortisation and Depreciation (Afskrivningsloven) do not apply - it is only possible to apply these rules if you run a business.

No deduction for loss

You cannot get a deduction for any loss you may have. This means that if your annual expenses exceed your annual income, you should not enter anything in your tax assessment notice.

If your income from occasional rental activity exceeds DKK 50,000 within a period of 12 months, you must register for and pay VAT.

If you know from the first time you rent out that your income will exceed DKK 50,000, you must register for and pay VAT from the beginning.

Once you are registered for VAT, you should enter your rental income exclusive of VAT minus your expenses in your tax assessment notice.

You register for VAT at www.indberet.virk.dk (Danish only)

VAT deduction only for rental cars already registered

Generally, you are not entitled to deduct VAT on the purchase and running of personal vehicles. However, if your personal vehicle was registered and insured as a rental car, you are entitled to a VAT deduction.

Special rules apply for VAT deductions if the personal vehicle was registered and insured as a rental car and you also use the car for private purposes.

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