Last updated 08/21/2025 – Reading time: 7 min
Partial VAT - How to calculate partial VAT deduction
Partial VAT is relevant for businesses that have both VAT-taxable and VAT-exempt activities. This means that the company can only deduct a percentage of VAT on business expenses. Correct calculation of partial VAT is essential to ensure correct VAT accounting and avoid errors in reporting.
Types of VAT deductions for partial VAT
When a business is registered for VAT, the deductibility depends on the type of expense:
- 100% VAT deduction from the VAT part of the business activity
- 0% VAT deduction from the VAT-free part of the business activity Invoice date
- Partial VAT deduction from the VAT and VAT-free part of the business activity
How to calculate partial VAT
The deduction rate is calculated as follows:
(Taxable turnover / Total turnover) × 100
An example could be a bus company with an annual turnover of DKK 5 million. 3 million is tourist traffic (subject to VAT) and 2 million is scheduled traffic (VAT-free).
The company must use the same deduction rate throughout the year. At the end of the financial year, calculate the exact deduction rate. Therefore, it is recommended that the new deduction rate is used for the following financial year.
You can read more about the rules for partial VAT here.
We can help you
If your business has both VAT-exempt and VAT-liable activities, the rules for partial VAT can quickly become complex. At Accountview, we have VAT experts who can help you calculate and report correctly to avoid errors.