Common Sense at the National Tax Tribunal in a Case on Extraordinary Reopening
On 10 December 2024, the National Tax Tribunal ruled that a company which, over a multi-year period, had overall paid too much VAT had not acted with gross negligence for the periods in which it had mistakenly underpaid VAT. The errors committed were due solely to simple negligence, and therefore there was no basis for extraordinary reopening.
The Danish Motor Vehicle Agency Loses a Series of Cases on Denial of Export Refunds
Bachmann/Partners Law Firm has represented various car dealerships in cases against the Danish Motor Vehicle Agency concerning access to registration tax refunds.
The Motor Vehicle Agency had, in these cases, denied access to registration tax refunds for various reasons, including:
Possibility of Refund of Interest on Late Reporting and Payment of Dividend Tax
In the summer of 2023, a client, with the assistance of Bachmann/Partners Law Firm, successfully secured a refund of interest charged for late reporting and payment of dividend tax. Companies that reported and paid dividend tax late before 15 June 2022 may—depending on the circumstances—be entitled to a refund of interest.
When Should Tax Be Paid on a Loan?
In a case handled by Bachmann/Partners Law Firm for a client, the National Tax Tribunal on 10 February 2023 ruled that a loan—granted from the client’s spouse’s company to the client—should not be considered disguised dividend to the client. As a result, the taxation imposed by the Danish Tax Agency on the client was entirely annulled.
New Ruling from the Eastern High Court Overturns the Danish Tax Agency’s Practice on Registration Fee Refunds
On 8 July 2022, the Eastern High Court issued a ruling in a landmark case concerning the refund of vehicle registration fees. In 2016, a car dealer applied for an export refund for a number of vehicles. The refund was initially denied by the tax authorities, who argued that documentation proving the vehicles had been exported from Denmark was not available at the time of the application.
The Eastern High Court ruled that the right to an export refund is not forfeited if documentation of export is only provided after the dealer has approved the monthly VAT return for the month in which the refund application is submitted.
Bachmann/Partners Advokatpartnerselskab represented the dealer in the case, which had been referred to the Eastern High Court as a precedent-setting matter.
Taxation of real estate used for residential purposes without payment
The owner of a residential property who allows a relative to use the property free of charge must be taxed on an amount corresponding to the objective rental value – that is, an estimated market value for rental. The person who is given access to an asset free of charge must also be taxed on this. Bachmann/Partners Law Firm has conducted and won a case before the National Tax Tribunal, where the question was whether a residential property owned by a sister was being used by the sister’s brother. Such cases are typically evidentiary matters, where there is a strict burden of proof on the taxpayers. This strict burden of proof also applied in the case, where the brother had his registered address at the property.
Long-term retention of detailed documentation may prove crucial in a potential tax case
On 17 June 2021, Bachmann/Partners Law Firm won an appeal case concerning the discretionary distinction between when a person is carrying on independent business activity and when a person should be regarded as an employee. The decision also includes a delimitation of the concept of gross negligence as a basis for extraordinary reopening of a tax assessment. However, the decision of the National Tax Tribunal is of interest in several respects, and the main points will therefore be highlighted below.
When is VAT applied to real estate?
Before 1 January 2011, all transfers of real estate were exempt from VAT. As of 1 January 2011, the VAT exemption has not been unconditional. In 2017, SKAT increased a company’s VAT liability for the fourth quarter of 2015, as SKAT was of the view that the company should have paid VAT in connection with the transfer of certain plots of land. Bachmann/Partners Law Firm appealed the decision, and on 1 September 2021, the National Tax Tribunal issued its decision in the case, in which SKAT’s decision was amended. The core of the case was whether certain plots with foundations constructed before 1 January 2011 should be regarded as building plots or whether they constituted real estate with old buildings. SKAT took the view that they were building plots. The National Tax Tribunal reached the opposite conclusion
The National Tax Tribunal determines that self-declarants can apply for export refunds on behalf of others
On 24 March 2021, the National Tax Tribunal ruled that there is no legal basis in the Danish Registration Tax Act for requiring that a self-declarant must be the owner of a vehicle in order to obtain payment of a registration tax refund upon export of the vehicle. Until 31 December 2019, self-declarants could both register vehicles and request refunds of registration tax on behalf of third parties
No joint and several liability when using an external tax calculator
On 2 June 2021, Bachmann/Partners Law Firm won a landmark case concerning liability for registration tax when a car dealer has used an external tax calculator to declare and settle registration tax. The Ministry of Taxation acknowledged the claim in the case, which must be considered to have implications for all other similar cases concerning liability where the Danish Motor Agency has asserted claims against car dealers