Reimbursement of litigation costs for companies

It is hardly a surprise to anyone operating a business in Denmark that the Danish tax rules are highly complex and that a dispute with the Danish tax authorities may arise.

It is also well known that the proceedings can go on for an extended period of time. Consequently, the litigation costs can be considerable.

This may prevent businesses from pursuing a second opinion when it comes to rulings issued by the Danish tax authorities that are contrary to the interpretation of the tax rules by the business and professional tax advisors.

Naturally, this can be seen as an obstacle in the effort to achieve rule of law when it comes to Danish tax matters.

An initiative recently launched by the Minister of Taxation seeks to strengthen the rule of law when it comes to taxation in Denmark by implementing rules for reimbursement of litigation costs in tax matters for companies.

The rules for reimbursement of litigation costs for companies where abolished in 2009 but remained in place for individual taxpayers.

The rules stipulate that the state will cover 50 pct. of the litigation costs associated with a case concerning taxation for individual taxpayers.

If the individual taxpayer is vindicated, the state will cover 100 pct. of the litigation costs.

It is expected that the new rules will seek to give companies similar access to reimbursement of litigation costs as the current rules applicable to litigation costs incurred by individual taxpayers and similar to the rules for companies before the abolishment in 2009.

The new rules are expected to take effect from 1 January 2017.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge.