Government accused of taxing citizens who challenge SKAT

Law proposal would impose tax for legal fees under ‘no-win-no-fee’ agreements

Legal experts have claimed that proposed changes to the current tax rules are an attempt to stop citizens from bringing legal action against the tax authority SKAT, reports Ekstra Bladet.

This comes in the aftermath of what the newspaper calls one of the biggest tax scandals of the century concerning tax deductions for improvements in land value.

Until the government banned taxpayers from bringing new cases last year, some 45,000 cases had been brought against SKAT to contest the calculation of the deduction. The issue will affect taxpayers’ property tax for 30 years.

No-Win-Yes-Tax
The change to the rules currently being proposed would tax citizens for legal costs and lawyers’ fees paid by a third party if they have a so-called ‘no-win-no-fee’ arrangement with their legal provider.

Christian Gommesen, the head of legal services at the consultancy Rafn & Søn, suggests the latest proposal is an attempt to stop the cases already in the system from reaching the courts.

“It’s simply a dirty trick,” he said.

“The government wants to tax people who dare to stick their neck out and take up a legal case against SKAT. It’s a completely unheard-of way of treating a counterpart, just because SKAT and Kammeradvokaten [Danish government's legal advisory firm] are losing case after case. It’s about the rule of law for normal detached house owners and owners in housing associations.”

Challenging SKAT too risky
Gommesen explains that this might prevent taxpayers from taking SKAT to court because the risk of losing the case would be too great.

“The economic risk would be too big,” he said.

“There is no-one who would bring a case against Kammeradvokaten, where you might win 20,000 kroner but risk being taxed several hundred thousand kroner if you lose.”

Benny Engelbrecht, the tax minister, rejects the suggestion that the proposal is an attempt to undermine the rights of taxpayers. “Of course it’s not intended to compromise citizens’ rights,” he said.

“The proposal doesn’t lead to any barrier to the right of appeal, and citizens have exactly the same rights as before.”

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