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Published:November 23, 2022

The cost of correction: Danish VAT return errors subject to a 30% interest surcharge

Confident in your Danish VAT return? Confident enough to risk paying a 30% error and correction surcharge? New Danish legislation encourages businesses to take another look at their VAT returns to ensure that it’s 100% error-free or risk bearing the cost.

The cost of correction: Danish VAT return errors subject to a 30% interest surcharge

On June 9th, 2022, the Danish Parliament approved a change in the VAT collection law - increasing the stakes for businesses when filing their VAT returns. This change confirms that businesses are subject to an interest charge if there are any errors in their VAT return. 

The question is; is your business confident in its ability to file an error-free VAT return? Are small mistakes left unnoticed? With the new correction surcharge, errors are no longer tolerated, and fines are looming. Here’s what you need to know.

New consequences for incorrect VAT filing

Where VAT corrections are concerned, an interest surcharge of approximately 30% could apply to corrections relating to the oldest period (36 months). However, before the effective dates are set in stone, businesses may be able to make corrections without incurring an interest surcharge. 

So, when should businesses start being more cautious when submitting their VAT returns?

After much consideration by Parliament, certain provisions came into effect on June 15th, 2022. However, this only affects businesses that have incorrectly, not yet registered for VAT, or have not yet reported their VAT for the applicable tax period.

The implementation date for the interest surcharge, imposed on corrections of VAT and other taxes, is yet to be decided. However, the expected date for these provisions to be implemented is between October 2022 and the beginning of 2023. 

What constitutes a correction? 

A VAT correction can constitute anything from an under-declaration or over-declaration to making an administrative error when submitting the correct documentation. Therefore, to ensure that you file a faultless return, you must submit the correct supporting documentation and forms. 

Can you bypass the interest charge? 

The only way to ensure you completely mitigate interest charges is to file an error-free VAT return. Even if businesses have had no sales or purchases during the applicable tax year, they are still obligated to file a zero VAT return. 

If you do not file your VAT return for a certain period, the Danish Tax Office will calculate your VAT based on an estimate. However, this will only result in additional work, as it will be your responsibility to amend the return to reflect the correct VAT amounts.

In addition, if the tax office calculates your VAT, based on an estimate, they will charge you a fee of approximately DKK 800, and interest will be due for the period in which you have failed to file your VAT return on time. Therefore, your business will be liable to pay the fee of DKK 800, interest, and the correct VAT amount. 

A look at the motive

A correction surcharge mitigates any potential reason for companies to make false declarations and to benefit from their errors financially. Not only does this encourage correct VAT filing, but it also ensures that the VAT process and rules are applied effectively without causing an unnecessary waste of time and resources. 

Don’t let surcharges keep you up at night

If you have any additional questions about Danish VAT rates, browse our VAT Refund Guide to Denmark. Alternatively, get in touch with our VAT IT professionals and benefit from our extensive experience and knowledge to ensure that your VAT returns don’t leave anything up to chance.

 

 

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