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Supreme Court of Denmark

Reduction of input VAT deduction 
31-01-2014 

Case no. 47/2012
 

Judgment delivered on 31 January 2014.


PBH 26.742 ApS
vs.
The Danish Ministry of Taxation


VAT deduction to be reduced as the equivalent value of the taxable service was not the nominal value of a mortgage but rather the market value

In 1992 and 1993, a number of limited partnerships deducted the input VAT invoiced by a nursery garden for planting and maintenance of forest on the plot owned by each limited partnership. The nursery garden was not paid in cash for its services, but instead received a mortgage which was interest-only for eight years.

The case concerned whether the tax authorities had been right to reduce, based on an estimate, the VAT deduction claimed by the limited partnerships for the nursery garden's services.

The Supreme Court found that the equivalent value of the nursery garden's taxable services was not the nominal value of the mortgages but rather their market value. Consequently, the Court found no basis for setting aside the tax authorities' estimate of the value of the taxable services.

The Supreme Court thus affirmed the judgment of the High Court.

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