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Denmark: National Tax Court Clarifies VAT Rules on Advisory Service Expenses

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The Danish Customs and Tax Administration posted a decision online, clarifying the VAT liability and the non-approval of an input VAT deduction on advisory service expenses related to the sale of capital shares in a subsidiary.

 

 

Key Points:

 

  • Taxpayer Details:
    • The taxpayer is a company registered for various consulting services.
    • The company’s activities include holding capital shares.

 

  • Tax Agency Findings:
    • The costs incurred by advisors were linked to the sale of the shares.
    • The Tax Agency disallowed the taxpayer’s input VAT deduction on advisory service expenses used for VAT-exempt letting after the sale.
    • The taxpayer’s VAT liability was increased.

 

  • National Tax Court Decision:
    • The expenses for the advisory services were directly attributable to the taxpayer’s VAT-exempt sale of shares in the subsidiary.
    • The taxpayer was not entitled to a deduction for input VAT from the costs of the consultancy services.
    • The expenses were not considered general expenses as the advisory services were directly connected to the VAT-exempt sale of shares in the subsidiary.
    • The purpose of the company’s sale of shares was irrelevant to the company’s right of deduction.

 

 

Source: skat.dk

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