Many companies are currently experiencing increased cashflow pressure, but consumer registration or accelerated tax refund registration can help to improve cashflow.
Consumer registration avoids negative cashflow pressure
When the company receives an invoice for the payment of electricity, gas, oil, district heating, etc., this invoice includes taxes. Instead of paying the taxes and VAT on taxes to the energy supplier and later receiving a refund of taxes and VAT from the Danish Customs and Tax Administration, companies can be consumer registered. Consumer registration results in a net settlement of taxes, meaning that taxes are only payable on the part of consumption that is not eligible for repayment. This avoids the negative cashflow pressure between payment and repayment of VAT and taxes.
The company has to be registered with the Danish Customs and Tax Administration and also notify the supplier of the registration. Energy is subsequently supplied to the company without energy taxes.
To become consumer registered for electricity, the company’s annual metered electricity consumption must be in excess of 100,000 kWh at the same location and the repayment must be at least 87 percent of the taxes.
To become consumer registered for gas, the annual consumption must exceed 75,000 m3 of gas and the repayment must be at least 80 percent of the total energy tax on the heating supply and 30 percent of the heating supply must additionally be used for activities covered by Appendix 1 to the CO2 Tax Act (heavy processes).
It is similarly possible to become consumer registered for oil, coal, etc.
Example:
With consumer registration, a company with, e.g., an electricity bill dated 3 March 2020 and due on 13 March 2020, would have to remit the part of the electricity tax not eligible for repayment by 15 April 2020.
Without tax registration, the same electricity bill would be able to be remitted via the VAT return for March and repaid by 25 April 2020 when the VAT is settled on a monthly basis.
Accelerate repayment of taxes
An alternative to consumer registration is accelerated repayment of taxes. In order to accelerate repayment of taxes, the company’s total taxes eligible for repayment must be at least DKK 30,000 per year. This is regardless of whether the company makes monthly quarterly or annual payments pursuant to the VAT Act.
The refund sum is calculated for one calendar month at a time. The amount must, however, be at least DKK 5,000, and request for repayment of taxes can be submitted immediately after the end of the month.
Payment will subsequently take place not later than three weeks after the request has been received by the Danish Customs and Tax Administration – in reality it will often be sooner, however. If the amount is below DKK 5,000, the company shall have to wait with submitting the request for repayment until one or more months’ of additional taxes total a minimum of DKK 5,000.
Example:
If, for example, the company has an electricity bill dated 3 March 2020 which is due by 13 March 2020, the request can be submitted on 1 April 2020. Repayment will be made immediately after this.