What are deductions for 2 year loans?

Aske Buemann

CEO & Co-founder

Deduction for 2 year loans

The deduction for 2-year loans is a rather unknown deduction. It applies, for example, if you have a consumer loan, a quick loan, an overdraft or other loans that must be paid back within 2 years. In these situations, you are actually entitled to the deduction and you have to remember to report it yourself.

It is one of the deductions for expenses to banks and loan providers that is not automatically reported, like the deduction for guarantee commission. We guide you through it in this article.

In this article we will go through:

  • What the deduction for 2 year loans is
  • Other conditions to be aware of
  • Whether you can get deductions yourself

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What are deductions for 2 year loans?

When you take out a loan, for example a consumer loan, you typically pay some costs to the bank when you set it up, known as 'set-up costs'. This could be a fee for setting up the loan with them.

This kind of cost can be deducted if your loan is for less than 2 years. Many consumer loans, quick loans, etc. do. For unknown reasons, it is not a legal requirement that the provider, e.g. the bank, reports this amount, as they do with several other kinds of loans.

The calculation of the deduction itself is based on the costs you have paid. However, it depends on the amount you have borrowed ('principal'), e.g. in the first year you can get a maximum deduction of 2.5% of the principal. In addition, you should pay attention to all the other conditions listed below.

What else should you be aware of?

There are several other elements to be aware of with this deduction:

  • You cannot deduct the cost of registration fees, stamp duty and other paperwork, even if they are also paid when you take out the loan
  • The deduction is calculated over the period you have the loan. Where the deduction is typically largest in the first year and then smaller
  • You must have documentation that the loan is less than 2 years

See if you can get a tax refund in just 15 minutes.

In TaxHelper, we help you find the deductions you're entitled to. You answer a few simple questions that take just 15 minutes to complete.

Then we report the deductions, and you get an extra DKK 2,704 back in tax. At the same time, you only pay if you get a tax saving.

Start here

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