This article will cover how we actually pay the VAT, and if you qualify, how you retrieve a VAT refund from the tax office.
Gather the sales VAT & purchasing VAT
After we’ve received all your invoices and have booked everything in your preferred system (e-conomic, Dinero, or Billy’s Billing) then we can make a VAT report, where we gather all the sales VAT, as well as the purchasing VAT. Some items are exempt from VAT in Denmark, like stamps, insurance if you drive a cab, newspaper subscriptions, etc. Exemptions also include any sales VAT that qualifies. For instance, if you have some sales through the European Union to companies registered for VAT in another European country, or if you have sales to America or someplace outside the EU where we don’t add VAT, these are also exempt. We must book everything first before we know the VAT.
Make the VAT report
After we’ve finished the booking, we make a VAT report, after which we must have access to your SKAT account, which is the Danish tax office website. We log in with our own username, plug in your VAT number, and open a menu that’s related to your business. You must provide us this access first. If you are a client, you will have received an email from us with a simple guide on how to provide us access.
After we’ve logged into the tax office website, then we declare the VAT inside the relevant menu. We record how much sales VAT and purchasing VAT you’ve had, which gives us the net VAT either to pay or be reimbursed by the tax office.
Pay the VAT
If you have to pay in, we’ll send you a payment ID in the form of an A4 PDF, reading, “receipt from the tax office,” and listing the amount of VAT due for payment, as well as the due date and a payment ID for the internet bank. Along with this, we’ll send you a profit ledger and a balance, as well as the ledger cards with everything we’ve booked. Payment IDs in Denmark start with a few different prefixes, like +71 or +73, followed by a long sequence of numbers that you enter into your internet bank. If you already have a Danish bank account that you want to use to pay the bill, paying VAT is done in the same manner as paying a phone bill, for instance. If you’re not used to paying bills, read our guide and you’ll find it’s fairly simple.
VAT due dates
Most clients pay every three months, others every six months, and some every month.
For simplicity we state the deadlines below only for the quarterly VAT’s which are the most common. The dates that VAT must be paid depend on which quarter we’re in (be aware that these dates are subject to change; you can always verify the due dates at: https://www.skat.dk):
VAT for the 1st quarter (January, February, March) is normally due on June 1st.
VAT for the 2nd quarter (April, May, June) is normally due on September 1st.
VAT for the 3rd quarter (July, August, September) is normally due on December 1st.
VAT for the 4th quarter (October, November, December) is normally due on March 1st.
In cases where you have to pay VAT, but you don’t have the money to pay for it all at once, you will owe the tax office money. The way the tax office controls this is through “Skattekontoen”, which is a tax account that functions like a normal bank account. You can access it on: https://www.skat.dk on the business section of the tax office website. Every time you submit a VAT declaration, you can see how much we declared on the statement, as well as any payments you’ve made or any reimbursements received. At any given time, you can see how much VAT you owe the tax office if you’re not sure. This includes interest and fees added to your VAT debts, if you haven’t paid by the due date.
Retrieve a VAT refund
Businesses retrieve VAT when they have purchased more with VAT than they have sold with VAT, which results in a net amount to be reimbursed by the tax office. Again, Dania Accounting will book the invoices, log into the tax office website, declare the VAT, and receive a receipt. If you are to be reimbursed, a minus in front of the amount to be reimbursed will indicate this. After we’ve submitted the declaration, we again send you an email with the receipt, along with the profit ledger and balance.
How long does a VAT refund take & where will you receive it
After 1-2 weeks, the money is transferred to what we call in Danish a “NemKonto,” which directly translated is an EZ account. This is an account your bank allocates for you. When you create your bank account for your business, you have a normal business account, which will also serve as your “NemKonto” account. The bank should automatically allocate this as your NemKonto, but if they forget to do so (which they often do for limited liability companies), when the tax office wants to transfer your VAT to you, they will receive an error. So it’s smart to verify that your bank has designated your company account as your NemKonto. You can do that at https://www.NemKonto.dk. You can also simply call your bank and ask if they’ve remembered to allocate you a NemKonto.