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    Changes in the Danish VAT law and taxation on labour costs(Taxwatch (Tax news in english)) 

    22-04-2009 14:37

    Af Louise Eide Jeppesen

    When no other date is mentioned below, the changes will have effect as of 1. January 2011. The bill contains the following elements:


    VAT on supply of buildings, before first occupation and sale on building land
    The bill introduces VAT on commercial supply of new buildings or part of a building and of the land on which the building stands. Furthermore the bill introduces VAT on commercial supply of building land.


    The definition of a new building is not yet clear, however the bill gives the following definitions:


    A building is new when:

    • the building is sold before first occupation.
    • the period elapsing between the date of completion of the building and the date of first supply does not exceed five years.

    An extended or reconstructed building is to be considered as a new building when:

    • The cost of the work performed on the building exceeds 50 % of the selling price.
    • The cost of the work performed on the building exceeds 25 % of the selling price, when the building is sold including the land on which the building stands.

    The bill proposes a five year transitional scheme on supply of building land for building land purchased before the commencement of the law. There will be no transitional scheme for supply of buildings.


    VAT on administration of buildings
    The bill introduces VAT on administration of buildings. For this reason the taxation on labour cost for handling the administration will no longer apply.

    VAT will also be introduced on administration of own buildings and the supply of caretaker services.


    VAT on transactions carried out by travel agents
    The bill adopts the special VAT scheme in article 306-310 in the Council Directive 2006/112/EC for transactions carried out by travel agents who deal with customers in their own name and use supply of goods or services provided by other taxable persons.


    VAT is to be calculated on travel agent’s margin, exclusive of VAT.


    Extended taxation of labour costs in the financial sector
    The bill extends the existing taxation of labour costs in the financial sector and partly the basis of calculation.

    For companies computing their surplus according to the rules for taxable income, the labour tax is to be calculated as 9,13 % of the company’s labour costs + 1,25 % of the company’s surplus. It will not be possible to set off the taxes against deficits.


    For companies that do not calculate their surplus according to the above mentioned rules, the taxation of labour costs will increase from 9,13 % to 10,5 %.


    The changes will have effect as of 1. January 2013.


    Questions to this article can be directed to Louise Eide Jeppesen at ljs@bdo.dk



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