Wednesday

18th Jul 2018

Danes stunned by €800mn tax fraud

  • The lost money equals the total yearly budget of the Danish ministry of culture. (Photo: Jonas Smith)

Criminals have duped Denmark’s tax authority into incorrectly refunding €830 million in the past three years, by filling out an online form for tax refunds under double taxation agreements.

The fraud was alerted to police on Wednesday (26 August) and appears to be the country’s biggest tax scam ever, with little chance for the state to recover the money.

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"I'm shocked like everybody else at how much money this is. Now the state prosecutor for serious economic and international crime has been entrusted with the case, and then we will see what comes out of the investigation", said Karsten Lauritzen, who has been minister of tax for less than three months.

Refunds

"Fraud in large amounts of course raises the question: How could this happen? And could it have been avoided?", he said.

With most of Danish taxes administrated online, it was easy for the fraudsters to fill in the one-page, so-called 06.020 form on the tax authority's homepage and then claim refunds for taxes paid on stock revenues from Danish companies held by foreign companies.

All you need is a "NemID" digital signature.

Normally shareholders pay 27 percent tax on their revenues, but if residing outside Denmark the tax can be reclaimed under double taxation agreements.

"A large network of companies abroad have apparently applied to have their dividend taxes refunded for fictional share holdings, based on falsified documents,” Jesper Ronnow Simonsen, the head of the Skat tax agency, explained in a press statement.

The alleged crime happened from abroad and relates to a refund of withholding taxes of approximately 6.2 billion krone. Estimated 2,000 false requests were sent to the tax authority between 2012 and 2015.

On Wednesday, it emerged that the tax ministry's internal audit in 2010 and 2013 criticised the tax administration's handling of the dividend tax because payments of refunds to foreign shareholders more than quintupled from €200 million (1.5 billion krone) in 2012 to €1.16 billion (8.7 billion krone) in 2015.

The lost money equals the total yearly budget of the Danish ministry of culture.

The fraud would have been easily revealed if the tax authority cross-checked the ownership of shares with Danish companies.

Some of the biggest companies, such as Danske Bank, Novo Nordisk, and Vestas confirm that they were abused in the tax scam.

No information about the identity or residence of the fraudsters has been released.

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