By attorney Diana Mønniche and cand.merc.(jur.), tax and duties specialist Kristine Holmgaard Eriksen, Bachmann/Partners Law Firm.
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
In the specific case, X had entered into an agreement with Y that X would apply for export refunds for Y’s vehicles. X received a commission per vehicle for its services during the period 1 January 2013 – 30 June 2015. X received the export refund for a number of vehicles that had been exported from the country, after which the export refund was transferred from X to Y
SKAT required repayment of the export refund paid, referring to the fact that the payment had been made to X, who was not the owner of the vehicles in question at the time of declaration, as these were owned by Y. SKAT referred to section 7c(2) of the Danish Registration Tax Act, which states that the refund of the tax must be paid to the owner
The National Tax Tribunal concluded that X was authorized to apply for and receive export refunds on behalf of Y. The export refund ultimately ended up with the actual owner of the vehicles – namely Y – and therefore the conditions in section 7c(2) of the Danish Registration Tax Act were fulfilled
In its reasoning, the National Tax Tribunal stated that such an authorization arrangement is in accordance with general principles of contract law, including that it was not contrary to the Danish Registration Tax Act as in force at the time, since the export refund was effectively paid to the owner through an intermediary
The National Tax Tribunal further determined that SKAT’s practice regarding documentation requirements in connection with applications for export refunds did not alter the fact that there was legal basis in the Danish Registration Tax Act to apply for refunds on behalf of third parties
Our Assessment
In our opinion, the decision of the National Tax Tribunal of 24 March 2021 has invalidated the administrative practice of the Danish Motor Agency that a self-declarant is only entitled to receive export refunds in cases where the self-declarant held ownership of the vehicle at the time of application/export
Based on the decision of the National Tax Tribunal, it is our assessment that the Danish Motor Agency should issue a reopening circular, enabling all self-declarants to obtain access to extraordinary reopening of decisions in which they have been required to repay registration tax or have been denied payment of a registration tax refund on the grounds that they were not the owner of the vehicle
In our assessment, the decision of the National Tax Tribunal cannot be regarded as a specific, isolated decision. In our opinion, the decision of the National Tax Tribunal has a principled significance. The National Tax Tribunal specifically established that there was legal basis for self-declarants to declare registration tax and apply for refunds for both their own vehicles and vehicles belonging to others
The National Tax Tribunal has further determined that an authorization to apply for a registration tax refund for a vehicle belonging to another party is in accordance with general principles of contract law, including that such an agreement does not conflict with the Danish Registration Tax Act as in force at the time, when the export refund is effectively paid to the vehicle’s owner through an intermediary
From the decision of the National Tax Tribunal, it can thus be inferred that it is not decisive for the entitlement to payment of a refund whether the registration tax is paid by the applicant to the owner after the applicant has received the refund, or whether the applicant prepays the registration tax by selling the vehicle to the buyer without registration tax. The decisive factor for the payment of the tax is that the owner who most recently incurred the cost of the inherent registration tax is effectively reimbursed for the tax
Based on the above decision of the National Tax Tribunal, we encourage you to contact the Danish Motor Agency to request reopening of cases concerning withholding of registration tax or claims for repayment of registration tax if the decisions have not been appealed. We are happy to assist with reopening cases
For further discussion of your case, 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, Peter Loft at tel. 40 30 23 15 / psl@bachmann-partners.dk or Kristine Holmgaard Eriksen at tel. 30 12 82 25 / khe@bachmann-partners.dk
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