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Denmark vows to recover billions stolen in tax fraud

Danish Tax Minister Karsten Lauritzen on Thursday announced plans to recover the billions of kroner the nation has lost to tax fraud in recent years.

Published: 1 November 2018 14:02 CET
Denmark vows to recover billions stolen in tax fraud
Tax Minister Karsten Lauritzen. Photo: Ólafur Steinar Gestsson
Lauritzen, displaying clear anger at a press conference, said Denmark would do everything in its power to recover the 12.7 billion kroner ($1.9 billion, €1.7 billion) that were swindled out of state coffers between 2002 and 2015.
 
The scandal came to light in August 2015, when Skat reported tax fraud to the tune of 6.2 billion kroner ($940 million) – later revised upward to the 12.7 billion kroner figure – to Denmark’s State Prosecutor for Economic Crime (Statsadvokaten for Særlig Økonomisk Kriminalitet). The frauds were related to returns on stock, including dividends, in Danish companies paid to foreign companies.
 
 
Lauritzen said on Thursday that progress was being made on recovering the money but he could not hide his frustration. 
 
“I’m normally a northern Jutlander with a calm disposition but I’m angry and deeply, deeply offended,” he said. “One can only conclude that the greed of certain banks knows no ends.”
 
The tax minister said that a number of policy initiatives have been launched to strengthen the control of dividend taxes in Denmark and Europe. These include new agreements on the knowledge sharing between countries.
 
Additionally, as part of the complete overhaul of tax agency Skat, there are now more than 100 extra employees dedicated to the issue. 
 
 
“Danish banks have openly acknowledged that they have helped channel money directly out of European treasuries,” he said. 
 
Lauritzen added that he was “shocked” over the lack of morals within the financial advisory sector. 
 
“It's an underlying task to instil some morals into this industry. Action must be taken, which is why oversight of tax advisors will now be strengthened,” he said. 
 
In connection with efforts to recover the swindled 12.7 billion kroner, Lauritzen said that Denmark has sued more than 400 people and companies, frozen 3.3 billion kroner and made settlements with two American pension funds that were involved in the tax fraud.  
 
More actions are on the way, he added. 
 
“I want to drive home the fact that we will fight for every single nickel that was taken from the treasury,” he said. 
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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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