What can you deduct when owning a van in your company in Denmark?
An entrepreneur who owns a delivery truck in his Danish company is entitled to deductions, which depend on whether the truck is used for both company and private purposes, whether the truck is leased or purchased, and whether it is used only to transport goods for the company.
If a businessman uses a van both privately and for business purposes, he is not entitled to deduct VAT on the purchase, since the use of the vehicle for private purposes prevents the deduction of this tax. If the van was purchased for business purposes only, or for both business and private use, the full amount of the vehicle purchase will be recorded as an asset, and a tax deduction will be applied to this amount. On the other hand, if the van was purchased for company purposes only, the entrepreneur can deduct 25% of the value of the vehicle as an expense when preparing the annual report:
- First year depreciate 25% of the purchase sum,
- The second year 25% of the remaining amount after depreciation in the first years,
- The third year also 25% of the remaining amount after the depreciation made in the second year, and so on until everything is depreciated.
If you buy a van for both business and private use, you should deduct 25% of the value of the van as depreciation, then charge a partial tax deduction depending on how often the van is used for business (e.g., if the van is used privately 50% of the time, you must charge 25% depreciation first, and 50% of that amount will be a tax deduction on the value of the vehicle).
In the case of a van used solely for business purposes, the entrepreneur will receive an invoice - with or without VAT - when buying it. An invoice without VAT is usually issued when buying a used van from a private individual, in which case the tax is not deductible. On the other hand, an invoice with VAT is issued when buying a new van, which gives you the opportunity to deduct this tax in full, if the purchased car is used in the company only. At the time of the sale of a van, used for both private and company purposes, VAT does not need to be added, as it was not added during the purchase either, and therefore the entrepreneur who was at a loss on the sale of the car will receive a tax deduction, or will be taxed on the profit from the sale. An entrepreneur is obliged to add VAT when selling a van, used only in the company, if VAT was deducted during its purchase (VAT does not need to be added during the sale if the van was used for private and company purposes). In the case of tax, an entrepreneur who purchased a used van and received an invoice that did not include VAT can deduct 25% of the vehicle's value as depreciation. On the other hand, in the case of a vehicle used only for business purposes, VAT must be deducted first and the amount that remains will be booked as an asset in the company.
A businessman has the right to deduct VAT on out-of-pocket costs related to the operation of a vehicle, such as gasoline, diesel fuel, bridge crossing or car servicing, both if he uses it solely for business purposes and for mixed purposes - private and business. If a businessman does not post a gas bill, then unfortunately he loses the opportunity to deduct VAT, but he can choose another method involving the application of a fixed amount for the cost of a kilometer driven. In this case, you need to download a special application on your phone to track the amount of kilometers driven. In the app you can choose whether it is a private or business trip. At the end of each month, you will receive an accurate report, which will serve as a document to be booked. The deductible amount for 2018 was DKK 3.54 per kilometer for the first 20,000 kilometers driven each year. After 20,000 kilometers were exceeded, the amount dropped to DKK 1.94 per kilometer, while DKK 3.54 per kilometer covers everything except driving over a bridge, parking or using a ferry. You can add such additional costs as ferry, bridge crossing or parking to your income tax deduction, but you must keep all receipts to prove the cost.
In the case of leasing a van, a businessman is entitled to deduct 100% of VAT if he uses the vehicle solely for business purposes (if he uses it for both business and private purposes, he can only deduct one-third of the VAT).