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US sues Deutsche Bank over tax scam

The US government sued Deutsche Bank on Monday for creating shell companies that allowed it to avoid paying tens of millions of dollars in taxes.

Published: 9 December 2014 08:41 CET
US sues Deutsche Bank over tax scam
Deutsche Bank headquarters in Frankfurt. Photo: DPA

The suit filed by the US attorney in New York asks for $190 million in back taxes and penalties for an operation it alleged was made expressly to avoid taxes on a $100 million (€81 million) gain in the sale of stock.

But the bank said the issue had been settled five years ago with the US tax authority and that it does not understand why the government is pursuing it again.

The government said the bank set up three shell companies in 1999-2000 with the purpose of executing "a series of pre-planned transactions" meant to eliminate the tax liabilities on the sale of the stock.

"These shell corporations collectively served as an underfunded special-purpose vehicle with no function other than to be stuck with a tax bill that it could never pay," the Manhattan US attorney said in a statement.

"This was nothing more than a shell game." The Internal Revenue Service determined that the total tax liability, plus penalties and interest, is more than $190 million (€154 million).

In a separate statement Deutsche Bank said it would fight the case.

"We fully addressed the government's concerns about this 14-year-old transaction in a 2009 agreement with the IRS. In connection with that agreement they abandoned their theory that DB was liable for these taxes," it said.

"While it is not clear to us why we are being pursued again for the same taxes, we plan to again defend vigorously against these claims."

SEE ALSO: Legal fees lose Deutsche Bank €1 billion

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Published: 30 October 2023 15:21 CET
Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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