19. Tax Fraud

The Danish tax authority has filed several lawsuits since 2018 claiming $2 billion of fraudulent withholding tax claims were made and paid to over a hundred defendants in the period 2012–2015. These fraud claims highlight weaknesses in the tax system. This chapter shows how these scams worked and what the tax authorities have done about it since (i) in chasing them perpetrators and (ii) changing the rules of tax reclaims in response. The chapter also discusses the wider implications of this type of fraud on the reputation of financial institutions and tax administrations. This chapter is also useful for investors to understand the degree to which tax planning can easily cross a line into tax evasion and even fraud.