The deduction for 2 year loans is a fairly unknown deduction. This applies, including if you have a consumer loan, quick loans, cash credit or other loans to be repaid within 2 years. In these situations, you are actually entitled to deductions, and you have to remember to report it yourself.
It is one of the deductions for the fees of banks and loan providers that are not automatically reported, similar to the deduction of guarantee commissions. We'll guide you through it in this article.
In this article, we will cover:
What deductions for 2 year loans are
Other conditions you will need to be aware of
Whether you are eligible to receive any deductions
What are deductions for 2 year loans?
When you take out a loan, such as a consumer loan, you typically pay some fees to the bank, known as 'start-up costs' (Danish: 'stiftelsesomkostninger'). For example, there may be a fee for the bank to create the loan with them.
You can deduct these costs if your loan runs for less than 2 years. In particular, many consumer loans, quick loans, etc. do so. For reasons unknown, it is not a legal requirement for the provider, such as the bank, to report this amount to SKAT, just as they otherwise do with several other types of loans.
The calculation of the deduction itself is based on the costs you have paid. However, it is depending on the amount you have borrowed ('the principal'). For example, in the first year you can receive a maximum deduction of 2.5% of the principal. In addition, attention should be paid to all the other conditions listed below.
What else do you need to be aware of?
There are several other elements to be aware of with this deduction:
You cannot deduct costs such as registration tax, stamp duty and other paperwork even though you pay that when taking out the loan
The deduction is calculated over the period you have the loan. Where the deduction typically is highest in the first year and thereafter less
You must have proof that the loan rund for less than 2 years
Check to see if you are eligible for any deductions
Deductions for 2 year loans are for many a hidden bonus that they are not aware that they can get.
That's why we in Tax Helper have created an easy and intuitive platform where you can easily see if you can get the deduction and get all the way across the finish line of reporting your deduction to SKAT. It is free to try out, and you only pay if you get a tax refund.