Denmark hits German bank with multi-million euro fine over tax fraud

Denmark slapped a German bank with a fine of 110 million Danish kroner (14.7 million euros) on Monday in a case which is part of the biggest fraud scandal the Scandinavian country has seen.

Denmark hits German bank with multi-million euro fine over tax fraud
Denmark's Tax Authority (Skattestyrelsen) in Copenhagen. Photo: Niels Christian Vilmann/Ritzau Scanpix

The case relates to the European “cum-ex” tax scam. 

North Channel Bank was found guilty of facilitating “1.1 billion kroner (that) was unjustifiably paid out from the Danish treasury,” according to a statement by the Danish Prosecution Service.

The German bank admitted its role in the fraud case and accepted the fine at the district court in the Copenhagen suburb of Glostrup, the statement continued.

The case is part of a wider affair in which Denmark is estimated to have lost 1.7 billion euros to fraudulent tax return claims.

First revealed in Denmark in 2015, it is considered the largest case of tax fraud in the history of the country, which is now revising its tax code.

The scam centred around companies, funds or individuals using a system of exchanging stocks in companies to claim multiple tax rebates for a single dividend payout.

The so-called “CumEx-Files”, an investigation published last October by big-name European outlets including German public broadcaster ARD and French newspaper Le Monde, showed that the practice was also used around Europe, costing Germany 7.2 billion euros and Belgium 201 million euros since 2001.

Danish prosecutors said the crime was committed when a number of actors made several fictitious stock trades to create “a paper trail,” and that the bank played a “crucial role” in its creation.

Capital gains made on the Danish stock market are normally taxed at 27 percent, but treaties between Denmark and certain countries allow beneficiaries based in these countries to be refunded all or part of this tax.

“It's very satisfying that we now have the first conviction in a court in the dividend cases,” prosecutor Kirsten Dyrman, said in a statement.

“All together this is the biggest fraud case in the history of Denmark, and has resulted (in) a significant loss for society and the treasury,” she added.

In March, Danish tax authorities reported that they had taken legal action against 470 individuals and companies related to the affair.


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Danish customers face VAT charges on all non-EU purchases

All goods bought outside the EU will be subject to Value Added Tax in Denmark from July 1st.

Danish customers face VAT charges on all non-EU purchases
Packages in process at a Danish depot. Photo:Mads Claus Rasmussen/Ritzau Scanpix

A decision by the EU to scrap an exemption for low-value items mean that all purchases outside the bloc will now have VAT (moms in Danish) applied.

Under current rules, purchases of under 80 kroner (10 euros) do not qualify for VAT on import to Denmark, but that will no longer apply from July.

This means that anything purchased from, for example, China, the United States or United Kingdom on websites like Amazon and EBay will have VAT added to the price, no matter how small.

The Danish Customs Agency (Toldstyrelsen) said it was working to increase awareness of the incoming change amongst Danish consumers.

A recent YouGov survey, conducted on the agency’s behalf, found that 79 percent of 750 people were unaware of the impending extra VAT charges.

That proportion would correspond to over three million consumers across the entire population.

“It’s a real shame to be left with an extra bill if you think you’ve got a bargain. We want to help consumers avoid this,” said Annette Hove Nielsen, a section leader with the Danish Customs Agency responsible for customs checks on incoming packages at Copenhagen Airport.

Nielsen also directed consumers to the agency’s information page undgå

Foreign residents in Denmark, particularly those from non-EU countries (including the UK since the beginning of 2021) may be more likely to have experienced VAT charges on parcels sent from abroad.

But those charges have previously only been applied in items worth over 80 kroner.

Goods purchased outside of the EU are subject to VAT at 25 percent of the purchase price. Postage and shipping charges are also generally applicable.

READ ALSO: How does income tax in Denmark compare to the rest of the Nordics?