VAT Deduction Denied for Luxury Car Purchases Intended for Resale—Not Considered Economic Activity

• The Danish Tax Council (Skatterådet) ruled that purchasing 1-2 luxury cars for resale does not constitute an economic activity for VAT purposes.
• The applicant could not deduct input VAT on the purchase of the cars, as the activity resembled private investment rather than business operations.
• The same applies to cars offered for leasing to investors; this setup was not considered typical business behavior for car trading companies.
• The decision was based on the fact that the cars would be sold only when market conditions were optimal, similar to private asset management.

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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