On 15 December 2016, the Danish parliament adopted an amendment to the Danish Tax Administration Act as part of the implementation of Legal Rights Package II (Retssikkerhedspakke II), the purpose of which is to improve legal rights in the tax area and restore confidence in the Danish tax authorities, SKAT. The amendment reintroduces compensation to companies and foundations for expenses incurred in connection with cases concerning taxes or duties as well as a tightening of the Dan-ish Ombudsman's reviewing of SKAT. The possibility of being compensated for expenses was abolished for tax liable companies and foundations in 2009. The abolishment was criticised, particularly by advisors, for weakening the legal protection of companies and foundations in relation to SKAT.
Amendment reintroduces compensation for expenses
The amendment reintroduces the right of companies and foundations to be compensated for expenses for legal assistance in cases concerning taxes or duties from 1 January 2017. Consequently, equal to natural persons, companies and foundations will be compensated for 50 per cent of their expenses for legal assistance in appeal cases and legal proceedings against SKAT if the case is lost or not predominantly won, and 100 per cent of the expenses if the case is won or predominantly won.
The financial burden of initiating tax proceedings has meant that particularly SMEs have opted not to pursue perfectly justified cases against SKAT as they have not had the financial strength to do so. The amendment will significantly strengthen the legal rights of companies and foundations in relation to SKAT as it will considerably lessen the costs connected with conducting tax cases.
Ombudsman's reviewing of SKAT tightens
Today, the time limit for bringing an administrative decision before the courts is three months, and this limit is not suspended in connection with a complaint about the decision to the Parliamentary Ombudsman. As a result, citizens actually have to choose between having their case heard by either the Ombudsman or the courts.
The amendment provides for a suspension of the time limit for bringing SKAT's decision before the courts if a complaint is submitted to the Ombudsman, so that the time limit for bringing the decision before the courts expires no sooner than one month after the Ombudsman has com-pleted his review of the case. The amendment becomes effective for final administrative decisions as from 1 January 2017. The amendment means that the time limit for bringing a decision by SKAT before the courts no longer cuts into the Ombudsman's time to process the complaints case.
I addition, it has been decided to establish a "tax desk" with the Ombudsman to ensure intensified reviewing and strengthening of the tax area. Until now, the Ombudsman appears to have been reluctant to enter the tax area. With the establishment of the tax desk, the Parliamentary Ombudsman's focus on the tax area will increase, and hopefully the new provisions regarding time limits will intensify the Ombudsman's reviewing of this area.