Newsroom, VAT | 25. November 2022

The Danish tax authorities are cashing in

Before the end of the 1st quarter of 2023, the Danish tax authorities will start sanctioning companies that submit incorrect VAT returns with interest surcharges of up to 30%. by

Denmark penalty surcharge
Denmark penalty surcharge

On 9 June 2022, the Danish Parliament passed an amendment to the Act on the Collection of Value-Added Tax that requires businesses to be more diligent when filing their VAT returns. This amendment confirms that companies are fined if they make mistakes in their VAT returns. The background to the amendment is, for example, to provide an incentive for the correct submission of VAT returns and to ensure that VAT procedures and rules are applied effectively.

New consequences for incorrect VAT returns

In the event of necessary corrections to VAT returns, interest surcharges of up to 30% may be levied for a period of up to 36 months. However, companies can make any necessary corrections – before the cut-off dates are fixed – and thus counteract penalties. The Danish tax administration recommends that businesses carefully check their VAT returns before filing to ensure that they are 100% error-free, or risk incurring the costs of any corrections. All the more reason for businesses to ask themselves from now on whether they are at all capable of submitting error-free VAT returns.

When is it a so-called correction?

A correction of the VAT return may often be necessary: from a change in the individual details to errors in submitting the correct documents.

When will the change in the law take effect?

The Danish Parliament has already adopted some provisions on 15 June 2022. However, only for businesses that still need to register for VAT or report it for the tax period. The date for the entry into force of the final interest surcharge has yet to be set. However, the new regulation is expected to be implemented by the end of the first quarter of 2023.

How can you avoid the penalty interest?

The best way is to file an error-free VAT return. Even if companies do not show any transactions during the tax year, they must file an error-free VAT return.

What happens if a VAT return is not filed?

Suppose you do not file a VAT return. In that case, you will face a tax assessment by the Danish Tax Administration, a processing fee of DKK 800, and penalty interest for the period concerned.

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