Denmark billed as ‘perfect’ tax haven

Tax minister pledges to look into

When it comes to tax havens, most people usually think of islands in the Caribbean, Switzerland or Jersey, and certainly not tax-ravenous Denmark.

But actually Denmark allows a particular company type – limited liability partnerships – that attracts foreigners who are looking to avoid paying taxes in their own nations because the company type not only conceals the owner, but is also absolved from taxation.

“In my opinion, there is a massive loophole in the legislation,” Thorbjørn Helmo Madsen, an accountant and tax advisor, told P1 Radio, which ran a documentary about the issue. “They should have more control of the limited liability partnership so they can see where the money comes from and where it goes.”

READ MORE: Eastern European workers put more in than they take out

Tax hell to tax haven
Denmark’s potential as a tax haven is particularly well-promoted in parts of eastern Europe including Russia, Ukraine and the Baltic nations, which all promote tax possibilities in the Scandinavian country.

Strangely enough, it is Denmark’s reputation as a nation with high taxes and tough tax authorities that makes it a perfect cover for hiding money. According to DR Nyheder, one foreign website advises that “a Danish limited liability partnership is a perfect way to optimize one’s taxes.”

The amounts of money being funnelled through Denmark using these tax-evading tactics are astounding. For example, there are over 170 limited liability partnerships with connections abroad that are registered to just two addresses in Copenhagen.

READ MORE: As Taxgate finally wraps up, total tab hits 19 million

Billions pass through every year
None of the companies pay any tax, despite billions of kroner passing through them every year. One of the said business is an Uzbek oil company that has its legal base in Denmark and has a turnover of ten billion kroner a year. And it’s not only Denmark that is losing out.

According to the Organisation for Economic Co-operation and Development (OECD), which has urged Denmark to scrap the use of limited liability partnership firms, the nations where the money originates are the big losers.

“A lack of transparency makes it possible for tax evaders to establish companies in Denmark to be used for evading taxes in other countries, which as a result can suffer serious consequences,” Monica Bhatia, OECD’s global forum head of tax transparency, told P1 Radio.

READ MORE: Tax bonus for paternal leave dropped from budget

Tax minister puts foot down
Although the Danish government has failed to address the problem despite being aware of it since 2008, the latest round of scrutiny has prompted the tax minister, Jonas Dahl (SF), to pledge a full investigation by tax authority Skat.

“It is a problem if Danish limited liability partnerships are being used as part of tax-evasion constellations,” Dahl said in a Tax Ministry press release. “I have asked Skat to look into the issue because there should be no doubt that the government is taking this very seriously.”

Listen to the entire P1 Radio documentary here (in Danish)

TOP STORIES

  • Bestselling author of ‘The Year of Living Danishly’ Helen Russell on why she moved back to the UK after 12 years

    Bestselling author of ‘The Year of Living Danishly’ Helen Russell on why she moved back to the UK after 12 years

    After more than a decade living in Denmark, Russell shares why she made the move, how she’s coping, what she already misses, and the exciting new projects she’s working on. “It’s been a very tough decision. I love Denmark, and it will always hold a special place in my heart,” she says.

  • Denmark launches first AI supercomputer

    Denmark launches first AI supercomputer

    The new Gefion AI supercomputer is one of the world’s fastest and will accelerate research and provide new opportunities in Danish academia and industry.

  • Navigating big love, big moves and big feelings

    Navigating big love, big moves and big feelings

    Experts believe it takes seven years to move into a new culture, according to leading Danish psychologist Jette Simon and therapist Vibeke Hartkorn. For expat couples, the challenges of starting a new life together in Denmark can put pressure on relationships, but emotions-focused therapy can help.

  • More and more Danes are working after retirement age

    More and more Danes are working after retirement age

    Politicians debate a lot these days about when you can retire. The reality shows that an increasing number of Danes like to work, even if they can withdraw from the labor market. Financial incentives help.

  • Environmental activist fears death in prison if extradited to Japan

    Environmental activist fears death in prison if extradited to Japan

    Canadian-born environmental activist Paul Watson has been in prison in Greenland for almost 100 days awaiting an extradition decision for a 14-year-old offence against a Japanese whaling vessel that he calls a “minor misdemeanor”. The 73-year-old had previously passed through Ireland, Switzerland, Monaco, France and the USA without trouble, before Greenlandic police arrested him in July.

  • Denmark too slow to ease recruitment rules for non-EU service workers, say industry associations

    Denmark too slow to ease recruitment rules for non-EU service workers, say industry associations

    When the Danish government in January presented the first of its schemes to make it easier to recruit foreign labour from outside the EU, it was hailed by the healthcare and service sectors as a timely and important policy shift. But while healthcare changes have been forthcoming, the service sector is still struggling, say the directors of the industry association Dansk Industri and one of the country’s largest private employers ISS.

Connect club

Connect Club is your gateway to a vibrant programme of events and an international community in Denmark.

Sign up here

Career

  • Come and join us at Citizens Days!

    Come and join us at Citizens Days!

    On Friday 27 and Saturday 28 of September, The Copenhagen Post will be at International Citizen Days in Øksnehallen on Vesterbro, Copenhagen. Admission is free and thousands of internationals are expected to attend

  • Diversifying the Nordics: How a Nigerian economist became a beacon for inclusivity in Scandinavia

    Diversifying the Nordics: How a Nigerian economist became a beacon for inclusivity in Scandinavia

    Chisom Udeze, the founder of Diversify – a global organization that works at the intersection of inclusion, democracy, freedom, climate sustainability, justice, and belonging – shares how struggling to find a community in Norway motivated her to build a Nordic-wide professional network. We also hear from Dr. Poornima Luthra, Associate Professor at CBS, about how to address bias in the workplace.

  • Lolland Municipality launches support package for accompanying spouses

    Lolland Municipality launches support package for accompanying spouses

    Lolland Municipality, home to Denmark’s largest infrastructure project – the Fehmarnbelt tunnel connection to Germany – has launched a new jobseeker support package for the accompanying partners of international employees in the area. The job-to-partner package offers free tailored sessions on finding a job and starting a personal business.

Want to advertise your job with CPH Post?

Contact us

Jobs