Model’s tax case ruling opens up can of worms

Politicians want answers after Skat attracted heavy criticism for not revealing the details of the Kinnock tax case decision earlier

The tax authority Skat will change its protocol after deciding this week to accept previous court decisions that top model Camilla Vest wasn’t liable to pay taxes in Denmark.

Skat decided on Wednesday that it would not appeal the Vest case to the higher courts, thereby setting a new and more relaxed protocol regarding similar cases in the future.

The case stems from 2011 when Vest and her husband were sentenced to 21 months in prison and fined 6.6 million kroner for tax evasion in connection with Vest’s modelling work in Denmark, a sentence that was overturned by the Eastern High Court in November 2012.

The court's ruling, which was echoed in February by the national tax tribunal, Landsskatteretten, contended that Vest was not completely liable for taxes in Denmark between 2001 and 2003, even though she had purchased a home and completed some business activities in the country.

Vest’s tax case has often been compared to the case involving Stephen Kinnock, the husband of PM Helle Thorning-Schmidt (Socialdemokraterne), and Kinnock’s lawyer, Anders S Németh, argued that Vest was acquitted based on the Kinnock case, so Skat’s protocol change should be attributed to the Kinnock case and not Vest's.

“Skat shouldn’t, because it is more convenient for them, assign a protocol change to the Vest case, because it is in the Kinnock case that the precedence lays,” Németh told Politiken newspaper. “It is in that central Kinnock decision that a person can work in a temporary capacity in Denmark without paying taxes.”

But there are differences between the two cases, such as the work patterns and time spent in the country, according to Skat.

“It is Camilla Vest’s tax case that sets a precedent and not Stephen Kinnock’s tax case, despite the Eastern High Court referring to the Kinnock case in its acquittal of Vest,” the Tax Ministry wrote in a press release.

But politicians are not satisfied with Skat’s actions in either case and have criticised the tax authority for sitting on the Kinnock decision even though it was of great importance to other similar cases.

Venstre (V) and Dansk Folkeparti have both called for an impartial audit of the entire affair. Claus Hjort Frederiksen (V), the former finance minister, contended that Vest was only acquitted because Thorning-Schmidt revealed the Kinnock decision herself.

“It is a legal policy scandal that Skat has to clean up,” Frederiksen said to Ritzau news service.

In Vest’s case, the question was whether the number and duration of the daily photo sessions which took place in Denmark made her liable to pay taxes.

Skat’s decision not to appeal the decision to the higher courts means that there are about 100 similar cases that will have to be re-opened and re-processed because they are similar to the Vest case.

Factfile | Camilla Vest tax case:

1995 – Camilla Vest and her husband Peder Nielsen move to the US

2000 – Nielsen moves back to Denmark; Vest stays in the US.

2004 – Vest moves back to Denmark (according to her information)

2006 – The whole family, which now includes a daughter, moves back to the US

27 January 2010 – Fredensborg tax authorities decide that Vest has been liable to pay taxes since 1 January 2001, citing that she has worked as a model during stays in Denmark.

16 September 2010 – Skat Copenhagen decides that Stephen Kinnock is not liable for taxes in Denmark, despite the fact that he worked in a limited capacity and attended meetings in Denmark. The decision is not publicised.

6 December 2010 – Landsskatteretten, the top administrative tax authority, upholds Skat’s decision in the Vest case, arguing that Vest had worked four days in 2000, three days in 2001 and once in 2002 during her time spent in Denmark.

25 November 2011 – The courts in Helsingør sentence Vest and her husband to prison for 21 months each and a 6.6 million kroner fine for tax evasion. The court argued that Vest did not pay taxes in the US and had a residence and worked in Denmark.

25 August 2012 – Thorning-Schmidt and Kinnock publicise the decision in Kinnock’s tax case, which showed that he participated in work-related meetings twice in 2009 and twice in 2010, something that Skat decided was not enough to be deemed liable for taxes.

5 November 2012 – The Eastern High Court acquits Vest and her husband for tax evasion, referring directly to the Kinnock decision and citing that Vest’s work in Denmark was not enough to be held accountable for taxes. It is the first time ever that a tax evasion case is reversed.

19 February 2013 – Landsskatteretten reverses its own decision from December 2010 that Vest was tax liable, referring to the Kinnock case and the Eastern High Court decision. It is the first time ever that Landsskatteretten reverses its own decision.

22 May 2013 – Skat decides not to appeal the decisions of Eastern High Court and Landsskatteretten to the higher courts.