Denmark Clarifies Output VAT Deduction Policy and “Irrelevant Purpose” Concept Under VAT Act

• The Danish Customs and Tax Administration clarified a change in output VAT deduction policy.
• Previously, all activities outside the VAT Act’s scope, such as the exercise of authority, were included under the “irrelevant purpose” concept.
• Going forward, a specific assessment is required to determine if an activity falls under this concept.
• If an activity isn’t covered, output VAT is not due when company assets or services are used for that activity.
• The policy on “business purposes unrelated to the business” under deduction limitations remains unchanged and is different from the output VAT provisions.

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.

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