Smart Calculations in Sales Tax for You Now

It is stated in the notice SKM2016.480.SKAT that SKAT will for the time being (presumably until dialogue with the Commission on the need for changes in the VIES system is completed) maintain the following practice of administrative simplifications for specifying the VAT number and name and address:

  • For the time being, SKAT accepts upon sale that the company provides the individual VAT number, name and address and not the joint registration’s VAT number, name and address. Both individual and common VAT numbers can be used for reporting.
  • For EU purchases, SKAT can still accept that the individual VAT number is used instead of the joint registration.

Draft control signal on VAT-exempt education

SKAT has found reason to specify practice for when education can be considered school-related and thus covered by the VAT exemption in section 13 (1) of the VAT Act. 1, No. 3.  To calculate sales tax this is important.

It is SKAT’s opinion that teaching in language, music, physical exercises, needlework, drawing, bookkeeping and typing, etc., which has been delivered outside the actual school process, may be covered by the VAT exemption in the VAT Act. However, it is a condition for VAT exemption that the teaching has the character of school teaching, which means that the teaching must have the same academic content and level corresponding to what is offered at VAT-exempt schools or universities.

The consultation phase has been completed, and we look forward to SKAT’s final control signal and the fact that the rules will be further clarified.

We of course incorporate the final control signal in the manual and keep you updated in general.

Draft control signals on VAT on real estate

SKAT has issued two draft control signals on VAT on real estate. There are crucial changes in SKAT’s interpretation.

Sale after letting and sale of building plots

SKAT has found reason to clarify that in certain situations there may be a sale subject to VAT if a building plot or new building with associated land is sold after VAT-free letting.

It is SKAT’s opinion that only properties that have been used for VAT-exempt letting are covered by the VAT exemption in section 13 (1) of the VAT Act. 2. This means that a new building must have been erected and used exclusively as part of a rental activity in order to be covered by the VAT exemption. In addition, the European Court of Justice has stated several times that exemptions from the VAT obligation must be interpreted restrictively.

Our immediate view is that this draft control signal is a tightening of practice in the field. You must therefore be very careful if you have activities within this area.

Draft control signal on VAT on the sale of building plots

In the second draft of a control signal, SKAT has clarified what is meant by VAT on the delivery of a building plot.

It is SKAT’s opinion that the definition of a building plot is an undeveloped area that enables the construction of buildings in accordance with the Planning Act (the Planning Act) or regulations issued as a result thereof. It does not matter to the VAT liability whether there has been a development of the land.