What is a VAT loan?
In 2020 and 2021, during the COVID-19 pandemic, the state offered a range of interest-free loans to provide businesses with the necessary liquidity to get through the period of forced shutdowns in the country.
The interest-free loans could be obtained from the Tax Agency (previously SKAT) between November 17, 2020, and June 16, 2021, which was the last application date. Small and medium-sized businesses could borrow an amount equivalent to the VAT the company was due to pay.
This means that, in practice, businesses were given an extension to pay the owed VAT.
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A number of requirements
Although there were no immediate requirements for collateral, borrowers still had to meet several conditions.
For example, a business could not be under bankruptcy proceedings or owned by persons previously convicted of tax fraud.
How to repay a VAT loan
You can repay your VAT loan as a single repayment if you have the available funds. You can set up a payment plan with the Tax Agency if you do not have the total amount. Here, there is a monthly interest rate of 0.7%.
The payment plan imposes some requirements – for example, the loan must be repaid within 12 months of entering your payment plan.
If you do not repay your VAT loan within the deadline and you have not entered into a payment plan, the debt will be sent for collection by the Debt Collection Agency, where default interest will be imposed.
Requirements for an installment plan for small and medium-sized businesses
To be allowed to make an installment plan for the interest-free VAT loan, the Tax Agency has established some requirements. For a business to be considered, it must:
Have no debts with the Tax Agency for collection
Only have one existing installment plan at a time
Timely VAT reporting, as well as timely reporting of A-tax, AM-contributions, and other taxes
The requirements ensure that a business can repay the debt within the deadlines. You can read more about the payment plan on Skat.dk.
When is a VAT loan due for repayment?
If you applied for the loan from November 17, 2020, to April 14, 2021, you must repay it by April 1, 2022.
However, if you applied from June 12, 2021, to June 16, 2021, you must repay it by November 1, 2022.
The entire debt falls due on these dates unless you have made other arrangements with the Tax Agency.
Do you want to know more?
At Acubiz, we offer automatic VAT refunds through an app so that you can avoid the hassle. If you are interested in learning more, you can see our solutions and learn more about the benefits of digital invoice management for VAT and other taxes.