VAT and tax fiddling rife amongst cafes, pizzerias and kiosks, report reveals

A lot of small businesses, particularly in the fast food sector, have been taking money under the table

A recent investigation carried out by the Skatteforvaltningen tax body encompassing 37,000 businesses in seven different fields has revealed that about one-third of all cafes, bars and takeaways are deliberately avoiding paying VAT (moms) and tax.

The fiddles can be carried out by taking money under the table, deleting sales from the accounts, deliberately underestimating takings or avoiding paying the 25 percent VAT in other ways, reports DR Nyheder.

“We know there are small and middle-sized businesses that don’t pay the right amount of tax – some of them because the rules are very complicated, but others that cheat and swindle on purpose,” said the tax minister, Karsten Lauritzen.

Digital tills on the horizon
The investigation has been carried out as part of some background work for a proposal to introduce digital cash registers that record and keep all the details of a transaction so that it is much more difficult to divert money into the shopkeeper’s own pocket.

A large majority in Parliament indicated approval for the measure last year, but it is not scheduled to become law before 2025.

The study reveals that the worst culprits are cafes, pubs, discos, fast-food outlets, pizzerias, and coffee and juice bars. Here, around one-third of the 8,600 businesses visited had deliberately avoided paying the tax man.

In comparison, 11 percent of all companies that sell to private individuals were found to be cheating.

Action sooner rather than later
The figures are worrying to the Dansk Erhverv trade organisation.

“It’s obvious there are some areas where, more often than not, swindling is the rule rather than the exception, so something will have to be done about it from the tax authority’s side,” said the organisation’s head of tax policy, Jacob Ravn.

Sweden and Norway have already passed laws to make digital cash registers compulsory in shops and cafes, and in both countries it is estimated that around 5 percent of the under-the-table money has been made legal.

In light of the new report, Socialdemokratiet would like to see things speeded up.

“We believe the introduction of digital cash registers should be much quicker. We’ve already seen figures showing there is a problem and we find it irritating that the government seems to be dragging its feet,” said the party’s tax spokesperson, Jesper Petersen.