Additional information required when declaring VAT
Be aware of a new reporting obligation when reporting VAT for June, the second quarter or the first half of 2024.
The obligation applies to all VAT-registered businesses and means that the company must provide information:
- Whether the company has income/activities that are exempt from VAT under section 13 of the VAT Act.
- If the answer is yes, the current percentage on account must be provided for the VAT-exempt part.
The Tax Agency wants to make the control efforts more efficient and targeted, and it must be expected that the agency will increase the control of companies that have both VAT-exempt and VAT-liable activities.
Revenue that is exempt from VAT
Section 13 of the VAT Act includes a number of activities that are exempt from VAT and do not entitle you to a VAT deduction. Pay particular attention to the reporting obligation if:
- The company has one or more rental properties that are rented out for residential purposes without VAT
- There is VAT-free financial income from the provision of loans and/or insurance, as is often the case with car dealers, white goods dealers, etc.
In addition, § 13 includes, among other things:
- Hospital care, doctors, dentists, specialists, chiropractic, physiotherapy and alternative practitioners
- Social care and assistance
- School education and teaching at higher education institutions, vocational training, etc.
- Cultural activities - such as libraries, museums and zoos
- Writing, composing and other artistic activities
- Sales of real estate (sales of newly constructed properties, building plots, etc. not subject to VAT)
- Financial activities, insurance activities
- Passenger transport (taxi, bus, train and ferry)
- Charitable/non-profit organizations.
The overview is not exhaustive.
VAT-exempt income from sales abroad and other sales covered by section 34 of the VAT Act (e.g. deliveries to aircraft and ships) should not be reported as VAT-exempt income.
The current on-account percentage
If you have answered "yes" to the question that the company has VAT-free activities, the company will be "mixed" for VAT purposes and must reduce its VAT deduction according to the rules on partial deductibility of VAT, also known as split VAT.
The split VAT is the ratio between the VATable revenue and the total revenue, where the VAT-free revenue related to section 13 is included in the total revenue.
Want to know more?
Please contact your accountant if you are unsure whether your company's income is fully or partially exempt from VAT, whether the on-account percentage is calculated correctly, or if you have any other questions about the rules.
