CEO acquitted of VAT evasion of DKK 2.4 million

The VAT reporting had been outsourced to an external accountant

As managing director, our client bore overall responsibility for the company's operations and had, among other things, signed and approved the company's annual reports.

The day-to-day finance function, however, had been outsourced to an external accountant who, among other things, handled the company's VAT returns.

During the case it was argued that the CEO had no knowledge that incorrect VAT statements had been made, and that he had not been involved in the actual returns.

In our view, the fact that the CEO had signed the company's annual reports could not in itself lead to him being held criminally liable for the erroneous VAT statements.

Acquitted of VAT evasion of DKK 2.4 million

During the case, the actual division of responsibilities for the company's finances and VAT reporting was examined, along with who had handled the concrete returns.

The outcome was that the CEO was acquitted of the alleged VAT evasion of DKK 2.4 million.

The case shows that criminal liability for tax and VAT matters cannot be determined solely by a person's title or formal position in a company.

What is decisive includes what the individual actually did, what knowledge they had, and whether the conditions for personal criminal liability are met.

Director liability rests on a concrete assessment

A director bears considerable responsibility for the company's affairs. That does not mean, however, that every error in the company's bookkeeping, VAT statements or tax affairs automatically entails personal criminal liability for the director.

In cases of tax and VAT evasion it will therefore often be central to establish, among other things, who actually made the concrete transactions, who was responsible for the returns, and what the director knew or ought to have known at the relevant time.

Particularly where bookkeeping and finance functions are entrusted to external advisers, the actual division of labour and responsibility can be highly material to the assessment of the case.

Involved in a tax-criminal case?

We assist in cases involving, among other things, VAT evasion, tax fraud and other economic-crime cases where directors, business owners or companies are faced with criminal liability.

If you have been charged or indicted in a tax or VAT case, you are welcome to contact us for an initial, non-binding assessment of your case.