Partially Deductible VAT for Self-Governing Institution: Economic vs. Non-Economic Activities and Calculation Method

The court ruled that a self-governing institution carried out both non-economic activities (welfare work for seafarers funded by mandatory welfare charges) and VAT-liable business (user-financed video services).
These were considered separate activities, not a single economic enterprise.
The court confirmed that Danish law allows for a proportional deduction of VAT on general expenses when both economic and non-economic activities are present.
The tax authority correctly determined the institution’s partial VAT deduction based on the proportion of income from welfare charges and VAT-liable services.
This method objectively reflects the share of expenses attributable to each activity, in line with EU law.

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.