Danish police suspect at least two people are involved in an extensive case of fraud involving the repayment of dividend taxes. Estimates say the amount of the swindle could be as much as 6.2 billion kroner.
DR Nyheder reported that one of the suspects is a financier with investment activities in London. Assets belonging to that suspect have been seized. Countries with better tax arrangements than Denmark, like the US and Malaysia, have been used as part of the scam.
Claus Kirkeby Olsen, a tax partner at Rønne & Lundgren, said that Malaysia has a particularly attractive tax agreement with Denmark.
“Malaysia is pure gold for someone who wants to avoid dividend taxes, since the tax treaty between Denmark and Malaysia has a zero withholding rate tax.”
The suspects are already being represented by Danish defence lawyers, including Anders Nemeth, who declined to comment on the case.
The scam involved claims for repayments for tax deducted from stock dividends, which investors living outside Denmark can claim an exemption.
Financial police SØIK are currently in charge of the investigation, which began when Danish tax authority Skat received two unrelated tips claiming that since 2012, those behind the fraud have sent in 2,000 counterfeit applications for refunds of withholding taxes.
The criminals filled in a simple form on the tax authority’s website and then claimed refunds for taxes paid on stock revenues from Danish companies held by foreign companies.
Tax authorities in Denmark have admitted paying out billions in bogus tax refunds to people living outside the country.
“Our preliminary studies show that a large network abroad has apparently tried to get dividend tax paid back on the basis of fictitious shareholdings and falsified documentation,” the head of the tax authority, Jesper Ronnow Simonsen, said in a statement.
One tip-off came from a Danish lawyer who said he had knowledge of the fraud and wanted it stopped.
The other tip-off came from bankers in London who were surprised the Danish tax authorities had paid large sums to bank accounts in London.