VAT surcharges in Denmark. Essential Information

No business is completely safe from errors in VAT returns. While in some countries, these errors can be easily amended, others implement more stringent measures to ensure flawless VAT compliance. Among them is Denmark. The Danish legislators adopted legislation that confirms that a correction surcharge must be applied once a faulty VAT return is submitted for correction.

The Danish Parliament approved the legislation on 9 June 2022, stating that Danish VAT return errors must be subject to as much as a 30% interest payment. The aim of this legislation is to increase the risk for businesses that do not do their VAT accounting with enough responsibility. Now, companies must strive to submit only completely error-free reports.

Based on the updated legislation, the surcharges can be applied to returns submitted up to 36 months prior. However, specific dates are not specified yet, and companies can now use the mercy period for their older reports. Current surcharges are only applied to companies that failed to register for VAT or have missed a reporting deadline.

Companies should keep in mind that both an over-declaration and an under-declaration are considered reporting errors and must be submitted for correction, thus resulting in penalties.

If no VAT report is submitted, the Danish Tax Office will do the calculation based on the estimates and charge the company a DKK 800 fee for that service. Once the estimated VAT is calculated, the company is responsible for amending the data so that it is correct. This means that if a VAT reporting deadline is missed, the business is subject to a surcharge, a fee for VAT calculation, and the VAT due itself.

Such a steep VAT interest surcharge and potentially other fees pose significant risks to businesses. As of now, the only way to avoid the damages is to do the best one can to submit accurate reports. Often, this means working with trusted VAT compliance partners who can guarantee bulletproof VAT reporting processes.