Denmark Tax Agency Clarifies VAT Treatment of Late Fees

The Danish Customs and Tax Administration Aug. 20 posted online National Tax Court Decision No. SKM2025.446.LSR, clarifying the VAT treatment of late fees. The taxpayer, a service provider, charged customers a “reminder” fee for failure to timely pay. The Tax Agency found that VAT applied at a 25 percent rate to the fee. Upon appeal, the National Tax Court amended the decision, finding that: 1) the fee wasn’t a penalty for breach of contract between the taxpayer and a customer, but reflected a customer’s selected payment method; 2) a customer’s payment of the fee was involuntary and not unpredictable, uncertain, ...