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, Thorbj rn 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.
Tax hell to tax havenDenmark 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.
Billions pass through every yearNone 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.
Tax minister puts foot downAlthough 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.
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