The Danish Tax Agency has answered a question as to when the final adjustment of the tax liability after the end of the financial year must be made, cf. the rules in section 17 of the VAT Executive Order.
Companies that have both VAT-liable and VAT-free activities have a partial right to deduct, cf. section 38 (1) of the VAT Act. 1, for purchases used for both purposes. The deduction percentage is calculated on the basis of the company’s taxable turnover in relation to the company’s total turnover.
When calculating the tax liability for the individual tax period, the company may make a preliminary deduction on the basis of a deduction percentage that has been calculated on the basis of the turnover in the previous financial year. After the financial year, a final adjustment of the tax liability must be made, cf. section 17 of the VAT Executive Order.
No rules have been laid down for when the final adjustment of the tax liability after the end of the financial year must be made, eg whether it is in the last tax period in the financial year, the first tax period in the following financial year or at another time. This control signal thus clarifies the rules for this.
Source: skat.dk
