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
It has become a widespread trend for car dealers to use an external tax calculator to value vehicles and to declare and settle registration tax. The use of external tax calculators is driven by two factors. Firstly, the stricter collateral requirements imposed by the Danish Motor Agency. Secondly, the extensive resources that car dealers must devote to valuing vehicles, without being able to be certain that the Danish Motor Agency will not change the valuation, even if the car dealer has exercised the assessment in accordance with the guidelines issued by the Danish Motor Agency
When the external tax calculator Afgiftsportal ApS went bankrupt, it appeared that the registration tax had not been correctly declared, as the valuations had been too low. The Danish Motor Agency subsequently attempted to recover the missing registration tax from the car dealers as jointly and severally liable parties
In the specific case conducted by Bachmann/Partners Law Firm, it was the view of the Danish Motor Agency that the external tax calculator had valued the vehicles too low, and therefore the full registration tax had not been paid. The dealer was thus considered jointly and severally liable with the tax calculator for the unpaid additional registration tax
In the case, it was argued that the Danish Motor Agency did not have the legal basis to assert joint and several liability under section 20(7) of the Danish Registration Tax Act
According to the wording of this provision, liability can only be asserted against a car dealer who imports a used vehicle from abroad and has it registered without paying registration tax, and subsequently sells it to a customer
These conditions were not met, as the vehicles had previously been registered on a proportional registration tax basis. The car dealer had also paid the registration tax to the external tax calculator
Our Assessment
Section 20(7) of the Danish Registration Tax Act cannot be applied in relation to vehicles that have already been registered in Denmark
It is also a condition that the dealer has acted in a liable manner for liability to be asserted under this provision, as section 20(9) of the Danish Registration Tax Act would otherwise be without content. Under section 20(9) of the Danish Registration Tax Act, an owner or dealer is not liable for the registration tax if a self-declarant has declared the tax
Bachmann/Partners Law Firm considered the Danish Motor Agency’s interpretation of the Danish Registration Tax Act to be incorrect. This incorrect interpretation raised a fundamental and far-reaching issue. As many car dealers were faced with claims of joint and several liability, it was decided in cooperation with DBFU to bring a test case directly before the courts, rather than allowing the case to proceed as an administrative appeal before the Danish Tax Appeals Agency. The reason for bringing the case directly before the courts was that it was entirely unacceptable for the industry to face several years of uncertainty, as well as the risk that otherwise financially sound car dealers could go bankrupt as a result of the Danish Motor Agency’s claims. This decision proved successful, as only approximately five months passed from the Danish Motor Agency’s decision until the Ministry of Taxation acknowledged the claim.
The fact that the Ministry of Taxation acknowledged the claim in the case should clearly result in the Danish Motor Agency reopening cases in which the Danish Motor Agency has held car dealers jointly and severally liable for registration tax declared by an external tax calculator, cf. section 20(7) of the Danish Registration Tax Act
If you wish to receive assistance in submitting a request for reopening, Bachmann/Partners Law Firm is happy to discuss your case with you
For further information, please contact Diana Mønniche at tel. 20 71 78 62 / dme@bachmann-partners.dk, Peter Hansen at tel. 40 32 35 35 / pha@bachmann-partners.dk or Peter Loft at tel. 40 30 23 15 / psl@bachmann-partners.dk
Regardless of your situation, we can help you create the most advantageous solution. We have Denmark’s best
team of lawyers and experts, so you can be confident you are receiving the best advice.
We have offices in Copenhagen, Aarhus, and Aalborg, so you always have access to tax advice near you.
Contact us today
Or fill out the form to learn more about how we can help you or to book a meeting with us.
Then fill out the contact form below. Then a lawyer will contact you within the area you need help with.
