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TAXES

Danish tax commission begins interviews in major investigation

A commission assigned to investigate a 15-year period of controversies at Denmark's tax authority is set to begin the lengthy process of interviewing witnesses.

Danish tax commission begins interviews in major investigation
File photo: ERIK REFNER/Ritzau Scanpix

Up to 106 different people will be interviewed by the commission, officially named Undersøgelseskommissionen om Skat (Commission for Investigation of the Danish Tax Authority) which is set to be ongoing until December 19th this year.

The primary task of the commission is to uncover what went wrong with a scandal-hit and now scrapped system for tax collection known as EFI.

But the work of the investigative commission was in 2018 expanded to examine where responsibility lies for tax refunds which cost the state 12.7 billion kroner.

Former and current employees at the Ministry of Taxation and the Tax Authority, and the roles played by relevant ministers in the cases, will be scrutinised by the commission.

The first four people are scheduled to be interviewed by the commission on Tuesday.

Last of the scheduled interviewees is current tax minister Karsten Lauritzen, who is scheduled to provide statements in November and December. Former ministers for the area Troels Lund Poulsen, Peter Christensen, Thor Möger Pedersen, Holger K. Nielsen, Jonas Dahl, Morten Østergaard and Benny Engelbrecht will also speak to the commission.

The tax commission was established in July 2017 after a series of scandals, and has since criticised both the Ministry of Taxation and the Tax Authority for causing delays to its work.

In its criticism, the commission cited difficulty in securing requested documentation from the ministry and tax authority.

In December last year, the Ministry of Taxation submitted 576 ringbinders of documentation to the commission, which is now reported to have been submitted a total of 2,559 such files.

READ ALSO: After years of scandals, here's how Denmark's reformed tax authority will look

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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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