Inspections in 2022 at workplaces including restaurants, construction sites and agricultural and cleaning businesses turned up a large number of cases of social dumping.
Some 3,343 inspections were conducted during the year, scrutinising working environments and tax payments along with staff work and residence permits, the Danish Tax Agency (Skattestyrelsen) said.
Social dumping is defined by the EU as the practice whereby “workers are given pay and/or working and living conditions which are sub-standard compared to those specified by law or collective agreements in the relevant labour market, or otherwise prevalent there.”
This means that, in cases where the Danish authorities detected social dumping, foreign staff were working under poorer conditions than the law or relevant collective bargaining agreement provides for Danish nationals. This saves employers money because the labour costs them less.
The Tax Agency is responsible for checking Danish tax rules are properly complied with. As such, the checks by the Tax Agency checked tax aspects of potential social dumping breaches, with other authorities responsible for other areas.
The Tax Agency can detect social dumping by, for example, checking the amount of income tax or VAT (moms in Danish) paid at a company.
Companies were asked to regulate their tax payments at more than one in two inspections in 2022, according to the tax ministry.
“The new report from the Tax Agency clearly shows that there is an issue here and that the joint efforts from authorities are paying off,” Tax Minister Jeppe Bruus said in the statement.
Some 1.9 billion kroner has been raised by the state in tax demands made as a result of social dumping inspections since 2015.
Last year’s inspections enabled tax authorities to demand 317 million kroner, the highest figure since structured control of social dumping began in 2012. The prior year, 2021, saw demands for 311 million kroner issued as a result of the inspections.
“It’s crucial for the economy and cohesion in society that there is respect for the playing rules of the Danish labour market,” Bruus said.