How to get your VAT deductions

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:

1. 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.
2. 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.
3. 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

Goods/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. Read more below under 'How do I get my partial VAT deductions?'

Goods or services that you use for private purposes only don't entitle you to VAT deductions.

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)

Video: 3 things to remember when you decide if your expenses are private or for business purposes (Currently in Danish)

(4:15 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)