Contents

This section describes how default interest is to be paid when payment deadlines are exceeded.

 

The section covers

• Rule
• Submission and payment deadlines
•  Default interest for several years of taxation
•  No deduction for default interest 
•  If SKAT exceeds the payment deadline
• Example

 

Rule (Section 28(1) of PAL)

If the PAL tax plus or less interest, if any, is not paid in due time, interest will be charged from the final due date for payment and until payment is made. The interest is calculated at the interest rate fixed in Section 7(1), cf. Section 7(2), of the Danish Tax Collection Act.

 

SKAT interprets the rule such that interest is calculated per day. The day of payment is not to be included.

 

The PAL tax must be paid at the time of submitting the final statement to SKAT.

 

Submission and payment deadlines

For the deadline for submitting a statement and paying PAL tax under

• Section 21 of PAL, see section D.1.1, Pension providers liable to taxation under Section 1(2) of PAL and pension plans liable to taxation taken out with pension providers
• Section 22 of PAL, see section D.1.2, Pension plans liable to taxation taken out with banks etc.
• Section 23 of PAL, see section D.1.3, Declaration and settlement by banks and pension providers on the termination of pension plans
• Section 24 of PAL, see section D.1.4, Cessation of tax liability.

 

Default interest for several years of taxation

If default interest is to be calculated for a period covering several years, the practice is to calculate the default interest at the interest rate fixed for the individual years of taxation. No compound interest is calculated in the period.

 

No deduction for default interest (Section 28(2) of PAL)

Interest under Section 28(1) of PAL cannot be deducted from the basis of taxation.

 

The difference between simple interest under Sections 21-24 of PAL and default interest under Section 28 of PAL is that the default interest is non-deductible when determining the basis of taxation.

See also

See also section B.6.2, Deductions for interest expenses.

 

If SKAT exceeds the payment deadline (Section 28(3) of PAL)

If the person liable to taxation has overpaid PAL tax, SKAT must repay the amount with interest within 6 weeks of the decision. See Section 27(4) and (5) of PAL.

 

If SKAT exceeds the 6-week deadline, interest must be calculated and paid under Section 7(1), cf. Section 7(2), of the Danish Tax Collection Act.

Example

►A pension provider under Section 1(2) of PAL has determined the final PAL tax to be DKK 1,000,000 for 2010. The payment deadline is 31 March 2011. The pension provider pays the tax on 16 April 2012.◄

 

►Under Section 21(1) of PAL, the pension provider must pay interest from 20 February 2011 and up until the final due date for payment, i.e. 31 March 2011. In the example, the interest under Section 21(1) is fixed at 5 per cent in 2011.◄

 

►The pension provider must pay default interest under Section 28 of PAL from 1 April 2011 and up until payment is made on 16 April 2012. In the example, the interest is fixed at 1 per cent (0.2 per cent + 0.8 percentage points) per month in 2011 and 1.1 per cent (0.3 per cent + 0.8 percentage points) per month in 2012. The 0.2 per cent and the 0.3 per cent are assumed interest rates as the interest under Section 7(1) of the Danish Tax Collection Act is not known for the two years in question.  The 0.8 percentage points is the fixed interest supplement under Section 7(1) of the Danish Tax Collection Act. ◄

 

►Interest under Section 21(1) of PAL for the period 20 February 2011 to 31 March 2011 is calculated as follows:◄

  ► ◄

	Tax payable and interest
Tax amount payable	DKK 1,000,000.00
Interest under Section 21 of PAL for the period 20 February to 31 March 2011:
DKK 1,000,000 * 5% / 360 days = DKK 138.88 per day for 40 days =	DKK 5,555.20
Amount payable as at 31 March 2011	DKK 1,005,555.20
Default interest under Section 28 of PAL for the period 31 March to 31 December 2011:
DKK 1,005,555 * 1.0% * 1/30 = DKK 335.18 per day for 270 days =	DKK 90,498.60
Default interest under Section 28 of PAL for the period 1 January to 16 April 2012:
DKK 1,005,555 * 1.1% * 1/30 = DKK 368.70 per day for 106 days =	DKK 39,082.20
Total default interest under Section 28 of PAL	DKK 129,580.80
Total amount to be paid on 16 April 2012	DKK 1,135,135