Danish Court Rules VAT on Late Fees at 20% for Service Providers

• The Danish Customs and Tax Administration posted a decision on VAT treatment of late fees.
• A service provider charged a reminder fee for late payments.
• The Tax Agency initially applied a 25 percent VAT rate to the fee.
• The National Tax Court amended the decision on appeal.
• The court found the fee was not a penalty but a payment method choice.
• The fee was considered actual consideration for services provided.
• The fee constituted a significant portion of the taxpayer’s turnover.
• The court ruled the fee was subject to VAT at a 20 percent rate.

Source: news.bloombergtax.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.