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CARS

Tesla accused of trying to circumvent Danish tax

The Danish government accused Tesla of using a bulk purchase of its own vehicles to shortchange the public purse of one billion kroner.

Tesla accused of trying to circumvent Danish tax
A Tesla spokesman said the company merely registered the number of vehicles it expects to sell next year. Photo: Odd Andersen/Scanpix

The registration of 2,500 luxury electric cars over the past few weeks has led Tax Minister Karsten Lauritzen to suspect extensive tax fraud by electric car manufacturer Tesla.  

Speaking to DR, the minister said that “2,500 electric cars, most likely Teslas, have been registered, and it seems that it is a circumvention of the tax exemption on electric cars”. 

Lauritzen announced last month that Denmark will be phasing out its tax credit on electric cars, which exempts the environmentally-friendly vehicles from the nation's 180 percent car registration levy. 

As a result, the costs of some popular electric models will skyrocket. The hardest hit will be the luxury model Tesla S P85D, which will more than double in price from 875,000 kroner today to 1,807,100 kroner in 2020.

See also: Tesla to fight Denmark's tax on electric cars

On Wednesday, the minister said that the huge increase in electric car registration indicates that Tesla is hoarding and reselling cars, a profit-motivated move that is illegal and will cost the Danish people.  

“If you buy under the old rules, then you will be able to sell them for a large profit. But it is a bill that will be passed on to Danish society, and I, as the tax minister will not allow this to happen,” he said.

Tax Minister Karsten Laurtizen. Photo: Jens Nørgaard Larsen/Scanpix 2015
Tax Minister Karsten Laurtizen. Photo: Jens Nørgaard Larsen/Scanpix

The minister estimates that the loss in tax revenue from the re-sale of the cars could amount to one billion kroner when the tax credit phase-outs begin on January 1st.

Esben Pedersen, a spokesman for Tesla Motors Denmark, initially rejected any allegations that Tesla had bulk registered cars, telling TV2 News “I have followed the case with amazement, and I would immediately pull the plug on the story. Tesla is not hoarding any cars.”

But Pedersen later made a u-turn, acknowledging that Tesla has been involved in the purchase of 2,500 number plates.

“What I have been made aware of is that there has been someone in our headquarters, sitting and ordering number plates for all markets”, Pedersen told DR.

Pedersen has argued that the registration of the 2,500 plates is a fully justifiable move, as demand for Tesla vehicles has increased since the tax increase on electric cars was announced. He said he couldn't understand Lauritzen's suspicions about Tesla.

“It is realistic that we will within the next year sell 2,500 cars. The person has therefore ordered plates for these vehicles,” Pedersen told DR.

“I think it is unfortunate that as a politician he is willing to hang a business out to dry in the national media on the basis of incomplete information,” he added.

Speaking to BBC News, Lauritzen said he is sorry if Tesla feels it has been targeted by the tax move and now feels that they have given a satisfactory reason for the registration of the 2,500 plates.

“I want the people to take advantage of the rules we have. But I also do not want people to be able to bypass them and hoard cars for re-sale. But if there are no suspicions of it, then that’s really good news,” he told the BBC.

In announcing the tax credit phase-out, Lauritzen said that the new plan “balances the needs for the continued expansion of electric cars in Denmark, the public purse and fairness within the automobile market”. 

“Many regular Danes have a hard time understanding why they should pay the full registration tax for their regular cars while those who can afford an electric car have gotten off completely free,” Lauritzen said in a press release. 

Tesla countered that the move amounts to “a phasing out of electric cars in Denmark”. The American company also feels it is being unfairly singled out by the plan. Tesla plans to fight the decision within the EU court system

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MONEY

Denmark scraps popular tax deduction for home improvements

A tax deduction for home improvements, the “håndværkerfradrag”, is to be scrapped in 2022 after parties agreed to end it in next year’s budget.

A popular tax subsidy for home improvements, the
A popular tax subsidy for home improvements, the "håndværkerfradrag", will end in Denmark on April 1st 2022. Photo: Signe Goldmann/Ritzau Scanpix

The government, along with its left wing allies Red Green Alliance, Social Liberals and Socialist People’s Party; and minor parties Alternative and the Christian Democrats, presented the 2022 budget on Monday, including an agreement to drop the home building subsidy.

Sofie Carsten Nielsen, leader of the Social Liberals, said “we are dropping the building subsidy that has ignited the already overheated housing and construction market”.

READ ALSO: Four ways to (legally) lower your tax bill in Denmark

The tax deduction will be removed from April 1st next year. Other tax deductions that can be applied for home services, including cleaning and childcare, are retained.

Tax subsidies for people who hire services in their homes, termed boligjobordningen, were broadened last year as part of government measures to support the economy during the coronavirus crisis.

The provision allowed for a higher tax deduction for the encompassed home services.

Demand for builders has since increased so dramatically that supply can no longer meet demand. As such, the parties behind the budget deal reason that the deduction is no longer needed.

Additionally, the Danish central bank, Nationalbanken, has warned that high demand could contribute to an overheating of the housing market.

Although the deduction was adjusted five years ago to favour green home improvements, the government’s allied parties still maintained they wanted to scrap it.

Nielsen said on Monday that the deduction has put Denmark’s building trade under strain.

“This is an economically responsible budget which also contains huge green decisions,” the Social Liberal leader said.

Finance Minister Nicolai Wammen said that the deduction would remain applicable to other trades, including cleaning, in order to prevent cash-in-hand arrangements.

“The biggest challenge we have in regard to the Danish service industry is in building and extensions. That’s why we are revoking the building element of the (subsidies),” Wammen said.

“But we are very concerned with keeping down cash-in-hand work in the service sector,” he added.

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