Denmark in brief

Suspected fraud with Danish dividend withholding tax

In November 2015, the Danish Tax Authorities announced that they had filed a report with the Danish Public Prosecutor for Serious Economic Crime regarding suspected tax fraud of an additional amount of DKK 2.9bn (approx. EUR 0.4bn). The total suspected fraudulent amount thereby exceeds DKK 9.1bn (approx. EUR 1.2bn). As a consequence of the increased focus on dividend with- holding tax reclaims, a new supervisory unit has been established which will oversee all payments made by the DTA as well as a new anti-fraud unit with its sole focus on prevention of international tax crime and fraud.

Critique of the Danish Tax Aut- horities’ control of repayment of Danish dividend withholding tax

In February 2016, the results of the Danish National Audit Office’s investigation into the circumstances allowing for suspected fraud involving an amount expected to exceed DKK 9.1bn (approximately EUR 1.2bn) were published. Following the report, the Danish Public Accounts Committee strongly criticized the Danish Tax Authorities’ completely inadequate control of the repayment of Danish dividend withholding tax. The Danish Ministry of Taxation has now announced the implementation of new and improved control mechanisms as well as stricter documentation requirements.

Denmark enters World Top 3 and is Best in Europe for Business

Denmark moves into the top 3 in the World Bank’s ”Doing Business”-ranking published in October 2015. It is now the fifth year in a row that Denmark is ranked as the easiest place in Europe to do business. The World Bank report pointed to Denmark’s effective digitisation processes, which allow for quick and easy registration of companies, acquiring a NemID signature, and registering employees with insurance. All of those procedures can be completed in less than one day, and registering a company with the Danish Business Authority costs a mere DKK 670.

Danish voters reject EU justice rules

In December 2015, Danes voted against the adoption of some European Union justice rules in a referendum. Results showed 53% had voted “no” while 47% had voted “yes.” In the referendum, voters were asked whether parliament should have the power to opt-in on a total of 22 EU justice and home affairs laws, from which Denmark has hitherto been exempt. Ultimately, voting “no” means Denmark remains exempt from large parts of the EU’s criminal justice and home affairs system.

Industry news

Travel portal’s duty to compensate

Going forward, companies brokering the products of others should have particular focus on whether they have made it sufficiently clear that they act only as an intermediary, and accordingly are not liable for the performance of contracts brokered. This is the consequence of a leading case delivered by the High Court of Eastern Denmark. The judgment is of general public importance as it may affect 833 similar cases concerning compensation with the Danish Consumer Complaints Board having awaited the judgment of the High Court of Eastern Denmark.

Denmark introduces a legislative proposal to implement BEPS Action Point 13

In November 2015, the Danish Ministry of Taxation introduced a draft bill (bill no. L46) including an amendment to section 3B of the Danish Tax Control Act (skattekontrol-loven). The purpose of the proposed amendment is to implement Action Point 13 of the BEPS Initiative (Guidance on Transfer Pricing Documentation and Country-by- Country Reporting) into Danish law. With the new proposal, the requirement of transfer pricing documentation will be extended from the current ”two-tiered structure” to a ”three-tiered structure”.

The Danish Data Protection Agency sets up a new supervisory authority

In February 2016, the Data Protection Agency announced that it is to set up a new supervisory entity. The supervisory entity is to conduct all the Data Protection Agency’s planned supervisory controls and be responsible for the current supervision of any violations of the safety requirements laid down in the Danish Act on Processing of Personal Data (person- dataloven).