If your company has a positive taxable income, corporation tax must be paid. Profit before tax and taxable income are not always the same, as certain expenses are not fully deductible. In addition, there may be differences between accounting and tax that cause taxable income to differ from profit before tax.
In Denmark, corporate tax is 22% and is calculated based on taxable income. Corporate tax is paid in the following fall in the period November 1 to November 21. A financing surcharge of 7.7% is added to the amount. There are no tax deductions for this surcharge, so it may be beneficial to pay tax on account if you have the liquidity to do so.
You can change your tax on account rates on skat.dk by following these steps:
- Log in to skat.dk with your company login
- Select "Profile"
- Select "Tax for companies etc."
- Select "Corporate tax"
- Select "Tax on account"
- Here you can choose which of the two installments you want to change
When does it pay to pay tax on account and corporation tax?
If you want to save the financing surcharge of 7.7%, you can benefit from paying tax on account if you have free funds in your company bank account.
However, it is not always an advantage to pay tax on account. It can be if:
- Liquidity in the company limited
- Your business is growing and you need capital for investment
- You don't want to tie up your money for over a year with Skat
Example of calculation
If your company has to pay DKK 200,000 in corporation tax and you choose not to pay tax on account, you will have to pay a financing surcharge of 7.7%. This corresponds to an extra DKK 15,400. By paying tax on account, you avoid this additional cost.
When is corporate tax due?
Corporate tax is always settled in the period November 1 to November 21, regardless of your company’s fiscal year..
Do you need help?
Do you have questions about tax on account or corporation tax – or do you want to make sure everything is reported correctly?
At AccountView, we help you with calculations, reporting and planning to avoid unnecessary costs. Contact us here for a no-obligation chat.