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Error in your VAT return
Every company which is performing transactions in another country might need to register for VAT purposes in the aforementioned country. The said transactions need to be reported in the company’s local VAT returns and errors might always occur. These possible mistakes can be corrected in some country by submitting a corrective VAT declaration. However, correcting a past VAT declaration might entail extra costs, as some countries are charging added interests.
How to make a correction in Denmark?
In Denmark, the law requires that the adjustments in a VAT return cannot be made in the following return but in the period itself where they belong.
What are the penalties?
Since July 1st, 2023, corrections in any declaration entail late payment interests if they relate to VAT due that was not declared nor paid. Those interests imposed concern the VAT corrections regardless of whether they were initiated by the Danish administration or the company itself (voluntary disclosure).
The late interests amount to 0.7% per month (8.4% per year) and are charged from the date of the original payment deadline e.g. a correction relating to a three years old transaction will bring a 28.55% surplus charge ! These interests is added automatically to your Tax Account (which gives you an overview of your business declarations and bills/charges as well as payments to and from the Danish VAT authorities).
The VAT expert's eye
It is highly advisable to review your processes in Denmark and to collect all appropriate documentation, to review potential incorrect invoices and to calculate the tax promptly, in order to avoid paying interests. Moreover it is highly important to pay attention to the timing for reporting your VAT transactions based on the chargeable event and the VAT liability and not based on the date of issue or receipt of invoices.