What can you deduct in VAT when driving a van for your company?

What can you deduct in VAT when driving a van for your company?

A van used for transporting goods or tools in your company is eligible for VAT deductions if the company is registered for VAT.

In this blog, we discuss what you can deduct in VAT when driving a van for your company.

Your company should be registered for VAT if the annual revenue exceed 50.000 DKK and the services or products are VAT applicable.

If the van is used for private or other non-VAT applicable purposes special rules apply for deducting VAT.

Van with a maximum payload of 3 tons	Deduct VAT on purchase	Deduct VAT on leasing	Deduct VAT on operating expenses	Add VAT when selling van
Used 100% for company purposes	Yes	Yes	Yes	Yes (if VAT was deducted from purchase)
Used for both company and private purposes (and revenue +50.000 DKK annually)	No	1/3	Yes	No

Van with a maximum payload of more than 3 tons	Deduct VAT on purchase	Deduct VAT on leasing	Deduct VAT on operating expenses	Add VAT when selling van
Used 100% for company purposes	Yes	Yes	Yes	Yes (if VAT was deducted from purchase)
Used for both company and private purposes (and revenue +50.000 DKK annually)	Proportionately	Proportionately	Proportionately	Proportionately

Purchase

Purchasing a van with a maximum payload of 3 tons

When you purchase a van with a maximum payload of 3 tons, you must first decide whether you will be using the van 100% for the company or if it will be used for both the company and for private purposes.

If you use the van for both the company and for private purposes we call it “mixed-use”.

The type of usage you decide should be shown on the registration document (“registreringsbevis”) for the van.

Since the tax on the van is determined by the type of usage it is important to register the use correctly.

A mixed-use van is used for both private and company purposes.

You will receive an invoice when you purchase the van which may or may not include VAT.

If it’s a new car, the invoice will contain VAT from the dealership.

For a preowned used van, sometimes there is no VAT.

This is the case f.ex. if the van was previously owned by a private person.

Van is used 100% in the company

If you use the van 100% for your company, and you have an invoice that includes VAT, you can deduct the full VAT from the purchase.

The requirements are that you use the van 100% for company purposes and that you can see VAT on the invoice.

Van is mixed-used for the company and for private purposes

If you use the van for both your company and for private purposes, you cannot deduct VAT on the purchase.

Purchasing a van with a maximum payload of more than 3 tons

When you purchase a van with a maximum payload of more than 3 tons, you must first decide whether you will be using the van 100% for the company or if it will be used for both the company and for private purposes.

If you use the van for both the company and for private purposes we call it “mixed-use”.

The type of usage you decide should be shown on the registration document (“registreringsbevis”) for the van.

Since the tax on the van is determined by the type of usage it is important to register the use correctly.

A mixed-use van is used for both private and company purposes.

You will receive an invoice when you purchase the van which may or may not include VAT.

If it’s a new car, the invoice will contain VAT from the dealership.

For a preowned used van, sometimes there is no VAT.

This is the case f.ex. if the van was previously owned by a private person.

Van is used 100% in the company

If the van is used 100% for the company you get a full VAT deduction on the purchase.

Van is mixed-used for the company and for private purposes

If the van is mix-used for the company and for private purposes you get a proportional VAT deduction based on how much you use the van in the company.

Leasing a van

Leasing a van with a maximum payload of 3 tons

Van is used 100% in the company

If you use the van 100% for business, then you are allowed to deduct 100% of the VAT on the leasing cost.

Van is mixed-used for the company and for private purposes

If you use a leased van for both private and business purposes, you’re only allowed to deduct a third of the VAT on the leasing cost.

Leasing a van with a maximum payload of more than 3 tons

Van is used 100% in the company

If the van is used 100% for the company you get a full VAT deduction on the leasing cost.

Van is mixed-used for the company and for private purposes

If the van is mix-used for the company and for private purposes you get a proportional VAT deduction on the leasing cost based on how much you use the van in the company.

Operating expenses

Operating expense for a van with a maximum payload of 3 tons

Van is used 100% in the company

You can deduct VAT on operating expenses.

Be aware that not all costs have VAT; f.ex. parking, insurance, and road tax, for instance, are normally exempt from VAT.

Van is mixed-used for the company and for private purposes

You can deduct VAT on operating expenses.

Be aware that not all costs have VAT; f.ex. parking, insurance, and road tax, for instance, are normally exempt from VAT.

Operating expense for a van with a maximum payload of more than 3 tons

Van is used 100% in the company

If the van is used 100% for the company you get a full VAT deduction on the operating costs.

Van is mixed-used for the company and for private purposes

If the van is mix-used for the company and for private purposes you get a proportional VAT deduction on the operational costs based on how much you use the van in the company.

Be aware that not all costs have VAT; f.ex. parking, insurance, and road tax, for instance, are normally exempt from VAT.

When should you use the actual receipts and invoices as operating expenses versus using the flat “per kilometre” rate system?

When you drive a van owned or leased by the company you should collect all the receipts and invoices relating to the operating costs (gas, service, insurance, parking, bridge crossings e.g.).

The flat “per kilometre” rate system (in Danish called “Kilometergodtgørelse”) is used when you use your private car for company-related driving.

Selling a van

Selling a van with a maximum payload of 3 tons

If you’ve deducted VAT when you purchased the van (which you only do for a van with 100% company use), you must also add sales VAT when you sell the van.

If you have a mixed-use van, and you have not deducted VAT from the purchase, then you should not add VAT when you sell it either.

Selling a van with a maximum payload of more than 3 tons

You should add proportional VAT on the sales invoice based on how much you used the van in the company.

What is considered private usage of a van?

In general, driving between your private residence and the company is considered private use of the van.

This type of use of the van will affect your possibility to deduct VAT on the purchase or leasing.

There are however a few exceptions:

1: If you drive to eat or pick up lunch during working hours;

2: Driving to your private residence up to 25 times per year when you have a company-related task or meeting the next day;

3: If you are picking up or delivering employees if your employer ordered you to do so;

4: Driving between the company address and changing workplaces related to your work in the company.

Special rules for vans with a maximum payload of 4 tons with special interior

In addition to the exemptions above further exemptions relate to vans with a maximum payload of up to 4 tons that is designed with a special interior.

Special interior in this context is an interior that will greatly minimise the risk of the van being used for private purposes.

It could be fixed mounted shelves that cover most of the space in the van.

Or it could be a computer mount or other installation on the front passenger seat.

Shelves or installations that can easily be removed are not considered special interiors.

If your van has a special interior you are allowed to:

1: Drive between your private residence and work;

2: Drive 1.000 kilometres during 12 months for private purposes (picking up or delivering your children, shopping and similar);

3: Drive between changing workplaces related to your work in the company and the company address.

The “On-call” scheme

If you have an “On-call” duty relating to your work you are allowed to drive to your private residence.

It is a requirement that the duty is based on an actual need in the company.

And that the van carries relevant tools or similar to justify the need to be “On-call”.

There is an agreement with the company to not use the van for private purposes.

There is a plan for the “On-Call” schedule and reports are made when being “Called”.

You are on the payroll for the hours where you are “On-Call”

The van can be identified in the parking lot (markings on the van).

The amount of vans used on the “On-Call” scheme is proportional to the “Calls”.

What happens if you do not comply with the rules?

The company could lose the VAT deduction and will need to repay the VAT.

The company will need to pay a higher tax on the car for using the car for private purposes.

The employee can be taxed on the value of the private use of the van using the special rules for calculating the value of the private use (“Fri bil”) for the periods where the car was made available for the employer (not only actual use but also just being available for private use). A special interior in the van would result in the employee being taxed on a comparable rental value had the car been rented.

The company and the employee can get a fine.

Day permits

If your van is registered for 100% company usage and it has a maximum payload of 4 tons it is possible to get a special permit called a “day permit” for up to 20 days per year for private usage.

By having a day permit you or your employees can use the van for private purposes during a day without any VAT or tax consequences in case you would get pulled over by the police or tax office (f.ex. customers officers at the border or ferry).

You can buy the day permit using an App or online:

Buy day permit in App Store
Buy day permit in Google Play
Buy day permit online

	Van with a maximum payload of 3 tons	Van with a maximum payload of 3 to 4 tons
You deducted VAT from the purchase/leasing	225 DKK	185 DKK
You did not deduct VAT from the purchase/leasing	185 DKK	185 DKK

Would you like to learn what you can deduct in tax when driving your private passenger car to and from your workplace?

(Last update of this blog: 1.4.2024)