International tax agreements
Denmark is part of the Single Market and in the Customs Union the tariffs are harmonised. Otherwise there is no harmonisation of the taxation policies. In certain areas coordinating measures have been agreed upon.
Double taxation agreements with Denmark
Denmark has entered into double taxation agreements with a number of countries. The double taxation agreements are available (in some cases only in Danish) at the website of the Danish Ministry of Taxation. Denmark has entered into other international agreements (only available in Danish) covering mutual administrative assistance, exchange of information or the taxation of income from savings.
More information is available here:
OECD Tax Topic
EU Taxation and Customs Union
International dialogue
The documents listed below are either drafted in English or have been translated and adapted with an international audience in mind. They will be of special interest to policy makers, managers, specialists or researchers working with public regulation. The documents can also be found at the International Tax Dialogue Website www.itdweb.org.
The Danish Tax and Customs Administration has made it part of its policy to publish key documents in English to facilitate international dialogue, which we consider crucial to the continued development of our organisation.
Random audits
Business Sector Analysis: Compliance with Tax and VAT Rules by Businesses in Denmark: Tax Year 2006 (International version - November 2010)
Findings from error type analysis based on thorough re-examination of 5,500 businesses where errors were identified during random audits. Errors have been recorded in terms of error type and the amount of money involved, which allows for an accurate calculation of the tax gap across error types that can further be broken down on 16 business sectors. The analysis shows that errors typically occur in combination and that errors relating to undeclared income, private expenses and depreciation are significant both in terms of volume and contribution to the tax gap.
Compliance with the Tax Rules by Businesses in Denmark: Tax Year 2008(International version - March 2013)
Findings from a compliance survey based on random audits of almost 3,000 businesses for the tax year 2008. The study provides a statistically reliable bottom-up estimate of the tax gap. Moreover, the study helps identifying risks in the risk management process and thus gives valuable input to specific audit/enforcement projects. Among the key findings, a rising tax gap and a rise in deliberate tax evasion have been identified. More specifically, the percentage of deliberate tax evasion among businesses has risen from 7 percent in 2006 to 10 percent in 2008. However, compliance levels are still high, and a significant share of errors made can still be attributed to unintentional errors.
Compliance with the Tax Rules by Businesses in Denmark: Tax Year 2006 (International version - October 2009)
Findings concerning businesses from a large compliance survey based on random audits of 22,000 private individuals and businesses for the tax-year 2006. The study provides a statistically reliable bottom-up picture of the tax-gap that can inform risk analysis and resource allocation or be applied as a benchmark to assess the impact of treatments directed at specific risks. Among the key findings is that compliance levels are high and that a significant share of non-compliance can be attributed to unintentional error rather than intentional fraud or evasion.
Compliance with the Tax Rules by Private Individuals in Denmark: Tax Year 2006 (International version - October 2009)
Findings concerning private individuals from a large compliance survey based on random audits of 22,000 private individuals and businesses for the tax-year 2006. The study provides a statistically reliable bottom-up picture of the tax-gap that can inform risk analysis and resource allocation or be applied as a benchmark to assess the impact of treatments directed at specific risks. Among the key findings is that compliance levels are high and that a significant share of non-compliance can be attributed to unintentional error rather than intentional fraud or evasion.
Outcome evaluation
Effects of a Campaign Directed at Danish Residents who own Property Overseas(International version - October 2009)
Outcome evaluation of treatment directed at Danish residents who own property abroad taxable under Danish law. The evaluation documents that it has proved possible to influence a large group of the population with a mass mailing approach in an area where it would not have been possible to increase compliance through traditional enforcement instruments.
Effects of Information Leaflet and Guidance Letter in a 2008 Shareholder Taxation Project (International version - February 2010)
Outcome evaluation of treatment directed at shareholders who fail to accurately declare their profits. The evaluation documents that information and guidance does contribute to increased compliance levels, but that compliance problems persisted even after the treatment. A systemic solution was later implemented applying third party data to effectively eliminate the risk.
Effects of Local Driving Instructor Project (International version - March 2010)
Outcome evaluation of local treatment directed at driving instructors who fail to accurately declare their income tax and VAT liabilities. Measurements indicate that warning of a possible tax audit, press coverage of audits, and contact with the local association of driving instructors prompted driving instructors whose tax returns had not been audited to declare higher turnover. The results thus support the assumption that visibility has an effect. There is also evidence that compliance increased among audited driving instructors in the years following the audits.
Planning and accountability
Taxpayers' Charter
Charter setting out the framework for our interaction with taxpayers. The charter makes it clear what we expect from taxpayers and what they in turn can expect from us. Citizens and businesses are expected to comply with their tax obligations and seek advice when they find it difficult to do so. In turn we make sure that the law is applied consistently and that everybody can expect a fair and equal treatment. Great emphasis is placed on professionalism, procedural justice and transparency.
Nordic and Baltic Sea relations
Denmark is involved in international work with our colleagues from other tax administrations in the Nordic and Baltic Sea countries.
The Norden Association
The Norden Association refers to the cooperation established between countries of the Nordic region (The Faroe Islands, Finland, Åland Islands, Sweden, Norway, Denmark, Iceland, Greenland). The Nordic cooperation in the taxation area focuses on:
- Easing the work of individuals and businesses operating in the different Nordic countries.
- Strengthening the Norden Association as a common market.
A result of the Nordic cooperation is the Nordic agreement on double taxation that was entered in order to prevent that the same tax base was taxed twice.
Another result is the Nordic internet tax portal Nordisk eTax, which adresses individuals living in a Nordic country and having income or assets in another Nordic country. The Internet portal has been developed by the Nordic Council of Ministers and the tax administrations in Sweden, Denmark, Finland, Norway and Iceland.
Baltic Sea
The Council of the Baltic Sea States is an overall political forum for intergovernmental cooperation in the Baltic Sea region. The Members of the Council are the eleven states of the Baltic Sea Region (Denmark, Estonia, Finland, Germany, Iceland, Latvia, Lithuania, Norway, Poland, Russia, Sweden) as well as the European Commission. The cooperation is in a number of areas including:
- In the border control area the cooperation focuses on security-related issues concerning border control in the Baltic Sea region.
- In the taxation area the cooperation focuses on combating tax-related crime in a multilateral environment.
More information is available here:
The Norden Association
Council of the Baltic Sea States
Nordisk eTax
European relations
Denmark is a member of the European Union (EU) and the Intra-European Organisation of Tax Administrations (IOTA).
The Single Market and the Customs Union in the EU
The Customs Union is a foundation of the European Union and an essential element in the functioning of the Single Market. The Single Market can only function properly when there is a common application of common rules at its external borders, including common tariff of all 27 member states.
In addition to fighting harmful tax competition, the main priority of the EU is to eliminate tax obstacles to all forms of cross-border, economic activities, i.e. obstacles that currently prevent individuals and companies from operating freely across borders and from exploiting the full benefit of the Single Market. Provided that EU Member States respect Community rules, they are free to choose the tax systems that they consider most appropriate and according to their preferences.
Fiscalis
Fiscalis aims at stimulating cooperation between tax authorities in order to raise revenue, while at the same time decreasing the administrative burden on taxable persons. The aim of the Fiscalis 2013 programme is to improve the operation of the taxation systems in the internal market. The tools of Fiscalis 2013 and Customs 2013 programmes are:
- Project groups - A project group has specific predefined objectives and precisely described, expected outputs.
- Seminars - A seminar (including forum/conference) is a one-off event providing an opportunity to bring the administrations of all participating countries together to examine specific topics.
- Workshop - A workshop is a one-off event providing an opportunity to bring the administrations of all participating countries together to discuss or examine a precise topic (It should be considered as a special kind of seminar).
- Working Visits - the administrations of participating countries use working visits to study and share knowledge and good practice.
- Multilateral controls - multilateral control refers to a co-ordinated control of the tax liability made possible by legislation on the exchange of information, mutual assistance and simultaneous controls.
IOTA
IOTA consists of 41 members in the European region and two associated members. The purpose of the organisation is to provide a forum for discussion of practical tax administration issues, to strengthen cooperation between tax administrations in the European region, to support their development according to their individual needs and to encourage the adoption of good practice. The technical activities programmes of IOTA can be grouped in the following categories:
- Area group and task team activities - the current focus is large taxpayers, VAT fraud, taxpayer education and the construction industry.
- Case Study Workshops - the current focus is VAT fraud, financial instruments, transfer pricing and application of tax treaties.
- Workshops - the current focus is managing change, tax collection, tax investigation, benchmarking, risk management, e-audit, the role of the media and common aspects of merging tax and customs departments.
IOTA cooperates with various international organisations, in particular the European Commission, OECDand CIAT (The Inter-American Center of Tax Administrations).
More information is available here:
EU Taxation and Customs Union
The Fiscalis Programmes
IOTA
Worldwide relations
Denmark is a member of the international organisations OECD and WCO where international tax and customs issues are being discussed.
OECD
Today the Organisation for Economic Cooperation and Development (OECD) has 30 member countries. The Organisation provides a setting where governments compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies. In the taxation area the issues adressed by the OECD include:
- How to adapt international tax arrangements in a global environment
- How to tax enterprises operating in different countries
- How to create tax systems that are simple, fair and effectively administered
WCO
The World Customs Organisation (WCO) represents 174 customs administrations. WCO plays an important role in promoting international customs cooperation and addressing new challenges for customs and trade. It is particularly noted for its work in areas covering:
- The development of global standards
- The simplification and harmonisation of customs procedures
- Trade supply chain security
- The facilitation of international trade
- The enhancement of customs enforcement and compliance activities
- Anti-counterfeiting and piracy initiatives
- Public-private partnerships
- Integrity promotion
- Sustainable and global customs capacity, building programmes.
The WCO also maintains the international Harmonized System goods nomenclature, and administers the technical aspects of the WTO Agreements on Customs Valuation and Rules of Origin.
Further information
OECD Tax Topic
WCO
WTO