STOP

54 • Fifty Shades of Tax Dodging
Special Purpose Entities (SPEs)
Denmark has a certain type of shell company structure called
‘kommandit’ companies and it is possible to set up trusts. As
part of the December tax haven package, a law was passed
in April 2015 to ensure that the creator of a trust is taxed in a
manner that makes it more difficult to use these structures
to dodge taxes. 400 The government has also initiated
investigations to outline the use of the kommandit structures
in tax dodging. The full investigation is set to finish by the
end of 2015. However, preliminary conclusions have already
resulted in the government planning to set up a new register
for the owners of kommandit companies, to avoid these
companies being used by foreigners to dodge taxes. 401
Patent box
Denmark does not have a patent box and has no plans to
introduce one. 402
Tax treaties
Denmark has 87 tax treaties with different countries around
the world, of which 37 are with developing countries. 403 The
negotiations of treaties are conducted by the Ministry of
Taxation with no involvement of other ministries or external
actors – including the Foreign Ministry. 404 The tax treaties
with developing countries were, until the mid-1990s, largely
based on the United Nations (UN) model, while subsequent
treaties are primarily based on the Organisation for Economic
Co-operation and Development (OECD) model. Asked if the
Ministry would consider once again using the UN model as a
starting point for negotiations with developing countries today,
the answer is no. Officials state that they prefer to “present the
same draft irrespective of the country we negotiate with.” 405
However, a small step forward in Denmark’s treaties came
in 2015, with the adoption of the ‘super GAAR’ (see above).
This means that all Danish treaties now include an anti-abuse
clause, which was not the case before. 406
It is problematic that the Danish tax treaties are negotiated
without the involvement of the Ministry of Foreign Affairs as it
results in a lack of policy coherence. This became very clear
in the autumn of 2014, when the government negotiated a tax
treaty with Ghana. The treaty has been highly criticised by
non-governmental organisations (NGOs) and left-wing parties
for being unfavourable towards Ghana. It has a tax rate of only
5 per cent on transferred assets to Danish subsidiaries, which
is lower than the 8 per cent stated in Ghanaian legislation. 407
The treaty stands in sharp contrast to the Danish development
policy in Ghana, which has an explicit focus on strengthening
the Ghanaian tax system and domestic resource
mobilisation. 408 Thus there is lack of coherence between
Danish tax policies and Danish development policies. This
misalignment sill happens despite the Danish Government’s
Policy Coherence for Development (PCD) plan, which is clearly
not being implemented by the Ministry of Taxation. 409
A Parliamentary hearing was held in April 2015 on the effect
of Danish tax treaties with developing countries. Responding
to the critics of the Danish treaty with Ghana, the then
Minister of Taxation sought to offer reassurance that the deal
did not cheat Ghana of revenue, but at the same time he also
stated that “Denmark does not give development assistance
through tax treaties”, a statement that reaffirms the
government’s position that tax treaties should not be crafted
in a way that is more favourable to developing countries. 410
The tax focus in the Danish PCD plan is on strengthening
and implementing fair tax systems, and creating synergies
between the fight against tax fraud and the promotion
of good governance within taxation. 411 Furthermore, the
Ministry of Development and Trade in April presented a
plan on ‘tax and development’, which added extra funds of
€1.34 million to the Danish development work on tax. 412 The
ministry focuses on advocacy and capacity building, with
a special focus on civil society, regional and international
organisations. 413 The total value of the current and new
Danish tax and development agenda amounts to €75 million
until 2019. 414 These are all welcomed initiatives, but it is
worrying that they are happening without coordination
with the Ministry of Taxation, which allows for the kind of
inconsistencies that the treaty with Ghana demonstrates.
A powerful tool to become aware and to better avoid these
inconsistencies would be for Denmark to carry out a spillover
analysis of its tax practices on developing countries and
to ensure that, when Ministries’ objectives collide, then the
objective that overrules is the one in favour of development.
Unfortunately, the Tax Ministry has no plans to conduct a
spill-over analysis, 415 nor to implement the PCD, which it
considers to belong under the Ministry of Foreign Affairs. 416
Financial and corporate transparency
Seemingly inspired by a British model, the previous
government encouraged relevant stakeholders to establish a
‘Fair Tax mark’, a label that companies that live up to certain
standards can put on their products to show consumers
their commitment to fair and transparent taxation. 417 The
government hopes that “…a fair tax-brand will bring the
transparency all the way to the counter, all the way to
consumers.” 418 It remains to be seen whether these plans
will progress under the newly formed government.