Denmark’s tax authority said on Wednesday that it had alerted police after foreign companies appeared to have drained more than 800m euros from the system in what would be the country’s biggest tax fraud.

“Over the summer we became suspicious after receiving information from a foreign authority,” said Jesper Ronnow Simonsen, head of the Skat tax agency. “Our own internal investigations have strengthened our suspicions and we have therefore turned the case over to the police.” Danish police confirmed the investigation and said the case was top priority.

A Skat spokesman was not willing to disclose which country had flagged the matter to Denmark. The case involves returns on stock, including dividends, in Danish companies paid to foreign companies. Dividends normally carry a 27% tax in Denmark. Under double taxation agreements, however, foreign companies based abroad are entitled to a refund of part or all of the Danish tax if they have paid tax on the dividend in their country of domicile.

Simonsen said Skat’s investigations showed that “a large network of companies abroad have apparently applied to have their dividend taxes refunded for fictional share holdings, based on falsified documents”. “The expected criminal fraud in refunds has so far been calculated based on 2120 individual claims totalling some 6.2bn kroner [$940m] in the 2012 to 2015 period.”

The Danish police’s special economic and international crime unit said the case was top priority. “The treasury and society have possibly been robbed of very considerable funds … We have a major investigation ahead of us. I envisage a long hard haul to find out what has happened,” the national prosecutor, Morten Niels Jacobsen, said. Neither the tax authority nor the crime unit would disclose any information about the cases, or name any of the companies involved.

The Guardian

27 August 2015