Optimize borrowing costs

Aske Buemann

CEO & Co-founder

Optimize borrowing costs

When facing loan costs, it is crucial to understand the individual rules for different loan types.

Each loan type has different rules, so be aware of which loans you have.

The rules vary between loans and it is important to note that not all loans qualify for a deduction. Deductions can be obtained if the loan has a term of less than 2 years.

Deduction of borrowing costs is possible if the loan is for a period of less than 2 years. This applies to bank loans, mortgages and even payday loans.

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What can I deduct as a tax deduction?

If the origination fee is up to 2.5% of the loan amount, you can deduct the full amount in the year the loan is taken out. If the origination fee exceeds 2.5% of the loan, you can deduct an amount equal to 2.5% in the year of origination, regardless of when the loan is taken out. The part of the fee that is not deducted in the year of origination can be deducted for the rest of the loan period.

Self-reporting of deductions is required

When you take out a loan with a term of more than 2 years, the interest deduction is automatically reported to the tax authorities by your bank or mortgage lender. However, this does not apply to deductions for loans under 2 years. Here you must personally report the deduction to the tax authorities, which can be a bit complicated.
You can read more about this here.

Deductions require correct designation

When reporting deductions, it is essential that you refer to the set-up fee as "set-up fee" in the fee description. This may seem simple, but it's not always the case. The fee can have different names and it can be difficult to claim a deduction if it's not accurately called a formation fee.

Are there any other deductions for loans under 2 years?

Forloans with a term of less than 2 years, there are also other potential deductions. In addition to the origination fee, you can deduct certain commissions and other fees from your taxes. This is typically relevant for real estate purchases, where intermediate financing is sometimes needed. For such short-term loans, it is your responsibility to report the deduction to the tax authorities as the bank does not do this on your behalf.

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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.

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