What is input VAT (purchase VAT)?
VAT (Value Added Tax) is a tax supplement in Denmark that must be paid on purchasing goods or services. Here, the tax is split between input VAT and output VAT.
Output VAT is the tax imposed when a company sells goods or services. Input VAT (also called deductible VAT), on the other hand, is the tax imposed when a company purchases goods or services.
The VAT is paid by the buyer to the seller, after which the seller later deducts the VAT amount from their VAT settlement to the tax authorities.
You can handle electronic invoices automatically with Acubiz
You or your accountant must have control over the relevant documents and invoices when you need to do your VAT accounting. Here, you can advantageously use the Acubiz app, which makes document management easy.
How much is VAT?
VAT is 25%. If your business sells taxable goods or services, you must add 25% on top of the sales price the customer must pay.
However, if you need to calculate back to see how much a product costs before VAT or how much of the product’s price is VAT, you need to subtract 20%.
Here’s an example of selling a pair of pants:
Sales price (excluding VAT) | 80 kroner |
VATable amount (25%) | 20 kroner |
Total sales price: | 100 kroner |
If you need to calculate the price before VAT, you need to subtract 20% from the total sales price:
Total sales price | 100 kroner |
– 20 % (100 x 0,2) | 20 kroner |
Sales price excluding VAT: | 80 kroner |
Input VAT must be included in your VAT accounting
All VAT-registered companies in Denmark must submit a VAT return each year.
The return is settled with Skattestyrelsen (tax authorities) and is used to calculate whether a company has had more input than output VAT. When the accounting is made up, you can see whether you owe money in VAT or are entitled to a VAT refund.
If your accounting shows that output VAT exceeds input VAT, it is a good indicator that you are generating more sales than you are purchasing. This is a sign that you are running a healthy business.
It must be clear from the accounting what input VAT is and what output VAT is. It must also be clear what goods and services your company has purchased so that they can be deducted from the VAT accounting.
Do you want to know more?
With Acubiz, you can get control of your accounting and make invoice management easier. Save on manual tasks and get increased control and overview of your company’s expenses, so you can easily report and settle VAT with all relevant documents.
Contact us if you want to know how we can help your business or book a free online demo to learn more.