What is a VAT accounting?
If you have a VAT-registered business, you must keep accounts of the company’s purchase and sale of goods or services. This is called a VAT account, usually integrated into your regular accounts.
The VAT account must be calculated periodically and reported to the tax authorities. The purpose is to show how much VAT you are owed or how much you owe to the tax authorities.
You can register and manage expenses digitally with Acubiz
With Acubiz, you get a digital tool to register and manage expenses and costs for the company. This reduces the workload for the bookkeepers, as they avoid too much typing.
Contents of a VAT account
The VAT settlement in your accounts must be made with purchase VAT and sales VAT:
- Purchase VAT is the VAT you are charged when you buy a product or a service.
- Sales tax is VAT on the goods or services your company sells – the VAT you charge your customers when they buy from you.
The difference between your purchase and sales VAT constitutes the VAT you must report and pay to the tax authorities. The accounts must clearly state which goods and services your company has sold and which goods and services have been purchased.
If the accounts show that your sales VAT exceeds your purchase VAT, it indicates that you sell for more than you buy for – which is a good sign.
Your company's turnover determines the VAT period
Your VAT account must form the basis for your company’s calculation of VAT over a given period. The period for when you must report the accounts to the tax authorities depends on the size of your company’s turnover and extends over one month, three months, or six months.
- Turnover between DKK 0-5 million annually: Report every six months.
- Turnover between DKK 5-50 million annually: Reporting every quarter.
- Turnover of more than DKK 50 million annually: Report every month.
Who has to make a VAT return - and who doesn't?
You must prepare a VAT account if your company is VAT registered with Erhvers- og Selskabsstyrrelsen. In addition, you are required to register if your company meets the following two requirements:
- The company sells goods or services for which the company receives payment.
- The company’s turnover exceeds DKK 50,000 within any 12-month period.
Health treatments, education, and banks are exempt from VAT registration and are exempt from VAT and thus also from reporting VAT accounts.
If your company’s turnover is less than DKK 50,000 over an arbitrary 12-month period, you are also not obliged to register for VAT – and, therefore, not obliged to make a VAT return. Instead, it is up to you to voluntarily calculate and report VAT.