VAT

After you have set up your business and start to sell and buy goods, you must settle VAT. As a general rule, VAT must be entered in the books. However, it may be recorded in SKAT's special accounting booklet (available free of charge from the tax regions) or in the enterprise's accounts. SKAT uses the accounts to see whether you have calculated and paid your VAT correctly. Therefore, the following should be included as a minimum:

• An account for VAT on sales (output VAT);
• An account for VAT on purchases (input VAT);
• An account for settlement with SKAT (settlement account).

The enterprise must collect VAT (output VAT) each time that a VAT-registered product or service is sold, and pay VAT (input VAT), when a VAT-registered product or service is purchased from a supplier or wholesaler. The input VAT is usually deductable, however, there are exceptions. Some goods and services are exempt from VAT. This applies to stamps, registration duty on cars etc.