New clarification from The Danish Tax Agency: Damages on leased vehicles will be subject to VAT

The Danish Tax Agency has amended and clarified the regulations regarding VAT liability in relation to damages and deficiencies when lessees return leased vehicles. In this article, you can read about what this will mean for you as a lessee.

Based on a case, the Tax Council has assessed that charges for damages when the leased vehicle is returned are subject to VAT.

The reasoning behind this decision is that the lessee is obligated to cover the expenses according to the leasing agreement, and the payment for lack of maintenance, damages, and deficiencies constitutes an integral part of the overall leasing fee.

The Danish Tax Agency has further assessed that a lessee could gain VAT-related advantages by not performing regular maintenance and repairing damages upon return, which is contrary to the principle of VAT neutrality.

What does this mean for NF Fleet's customers?

When a leased vehicle is returned, it will be inspected for any damages and deficiencies by FDM. If FDM determines that there are damages to the vehicle, VAT will be added to the final settlement for the damages.

We therefore encourage you to repair any damages and adhere to the service inspections before returning the vehicle.

When does the clarification take effect?

The change takes effect as of today.

You can read the The Danish Tax Agency’s decision “VAT - Charges for damages and deficiencies on leased assets at the end of the leasing period - supply for consideration”.

If you have any questions regarding the above, you are welcome to contact your contact person at NF Fleet.

←