84 reported for new dividend tax refund fraud

In recent years, the Danish Tax Agency has spent a lot of effort checking that dividend tax refunds are made correctly.

Control over dividend tax refunds has been tightened considerably after it emerged that Briton Sanjay Shah, among others, had tried to defraud the state of billions of kroner on that account for a number of years.

New figures from the Danish Tax Agency show that in the period from 2020 onwards, a lot of effort has been spent on checking the many applications for refunds of dividend tax.

While the vast majority of applications have gone through without any comments, there are also several thousand applications that have either been rejected completely or have been changed because errors have been identified.

Finally, in 84 cases, irregularities have been found to be so serious that the cases have been reported to the police on suspicion of fraud.

“Reviewing dividend refunds is a priority effort at the Danish Tax Agency.”

“From a political perspective, we have been given significantly more resources for the task and the control has been significantly strengthened. This means that we currently have just over 130 employees to handle case processing and control of dividend refunds,” says Sine Louise Møller, Director of Corporate Taxation.

The figures from the Danish Tax Agency do not show how many of the 84 cases reported to the police ultimately result in a penalty.

They do not necessarily lead to prosecution, and some of the cases are still pending in the legal system.

Foreigners who own Danish shares are generally taxed according to Danish tax rules when they receive dividends from the shares.

If stock dividends are taxed lower in the country where they are taxable, and if the country has a double taxation agreement with Denmark, they can get the difference refunded by the Danish state.

Dividend tax refund fraud occurs when investors are unjustly refunded tax on stock dividends, often through false documentation or trades that create the impression of multiple owners of the same stock.

Inadequate control by the then Tax Office meant that Denmark lost billions on that account years ago.

The aforementioned Sanjay Shah was found guilty in December last year and sentenced to 12 years in prison for defrauding himself of nine billion kroner in this way. The case has been appealed and will go to the High Court in November.

Several other foreigners have been convicted of dividend tax fraud or have reached settlements with the state. Others are still waiting to have their cases tried in court.

ritzau