Denmark Tax Agency Clarifies VAT Treatment of Interest Income From Loans to Subsidiaries

The Danish Customs and Tax Administration Jan. 15 posted online National Tax Court Decision No. SKM2026.27.LSR, clarifying VAT on interest income from loans granted by a company to its subsidiaries. The taxpayer, a Danish company, granted loans to two subsidiaries and received interest income, which it treated as passive capital income. The Tax Agency included the interest in taxable turnover, reduced the VAT deduction for shared costs, limited the right to electricity tax refunds, and assessed payroll tax. On appeal, the National Tax Court found that: 1) the interest income was a passive capital investment and ancillary transaction for VAT ...