Change in VAT Practice: Definition of “Irrelevant Purpose” and Reassessment of Extraction VAT

• The previous practice regarding “irrelevant purposes” in the VAT Act § 5, sections 4 and 5, is changed.
• A specific assessment must now determine if an activity falls under “irrelevant purposes” for VAT on withdrawals.
• If an activity is not considered “irrelevant,” no VAT on withdrawals is due for goods or services used for that activity.
• The practice for “irrelevant purposes” in VAT Act § 38, section 2, on deduction limitations, remains unchanged.
• The term “irrelevant purposes” has different meanings in § 5, sections 4 and 5, and § 38, section 2, of the VAT Act.

Source: info.skat.dk

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.

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