Your membership is fully deductible

What is a deduction?

When you run a self-employed business, you can get a deduction for the expenses associated with creating the company's income. It is important that you make sure to keep records of the expenses, which is a condition for the expense to be deductible.

A business deduction means that if you have a VAT registered business, you can deduct the sales tax, when you buy products or services used to manage the operations of your business or service customers. When reporting VAT, the purchase VAT is deducted from the sales VAT in the period in question - fully deductible, meaning that the full VAT can be deducted (25%).

Why is this membership deductible?

The membership is deductible, as it is categorized as operating cost in the company, cf. SL§ 6, subsection 1, letter a. In other words, it is considered a cost that helps to create the company's revenue/future revenue.

If you have an income of more than DKK 50.000 annually, you can deduct your membership.

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Example of the deduction

You purchase a membership at Startup Central for DKK 186.25/month. incl. VAT.

Your invoice will look like this:

• Contingent = 149 kr.
• VAT = DKK 37.25.
  • Amount to be paid = DKK 186.25.

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Your membership fee thus costs "only" DKK 149, as you will receive your purchase VAT refund, then it is a cost of DKK 149 that affects the result for the year in a negative direction.

• Profit for the year before the purchase
  • Profit = DKK 1.000

• Profit for the year after the purchase
  • Profit = DKK 851

When the financial year is over you must pay corporate tax of 22%, if you are an ApS, of the year’s profit.

• 22% of DKK 1.000 = DKK 220 must be paid in tax
• 22% of DKK 851 = DKK 146.03 must be paid in tax

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Example of posting a subscription:

In many accounting programs, such as Dinero, Billy and E-conomic, VAT is posted automatically if you post to the correct subscription account.

The posting can be done as follows:

• Account - Contingents including VAT - 149 DKK
• Account - Purchase VAT DKK - 37.25.
• Account - Bank 186.25 DKK

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If your accounting is set up correctly, this is the way you should be posting, and your postings will automatically be distributed as the example above.

• Account - Contingents with VAT -186.25 DKK.
• Account - Bank 186.25 DKK

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In case of questions and clarifications, you are welcome to contact the author of this page Camilla Nyvang, from Randers Bogholderen.