Tax cases · 21 August 2026
Full success in tax case, assessment of DKK 3.5 million dismissed
The matter was conducted by attorney Hussain Ali Alhaidary. Hussain Ali Alhaidary
We obtained full success in a tax case where the Tax Agency sought to tax a business owner on DKK 3.5 million as disguised dividend. The assessment was reduced to DKK 0.
We assisted a client in a tax case where the Tax Agency had increased his taxable income by DKK 3.5 million in total as a disguised dividend.
The case concerned a transport company wholly owned by the client and operated by him in the income years 2021 and 2022.
Following an audit of the company, the Tax Agency took the view that a number of payments to subcontractors could not be regarded as genuine operating expenses. The Tax Agency considered the payments to be so-called invoice factories and that the amounts should therefore be treated as disguised dividends received by our client.
We did not agree.
The payments were made in the company's interest
During the appeal we argued that the payments from the company's account had been made as part of the company's operations and that there was no basis to treat the amounts as private withdrawals or distributions to the client.
The review of the case focused, among other things, on what the payments specifically concerned, how they formed part of the company's business, and whether there was a basis to establish that the client had personally received a financial benefit.
Our view was that there was no documentation that the amounts in question, totalling DKK 3.5 million, had been received by the client.
The Tax Appeals Board granted the client full success
The Tax Appeals Board agreed that there was no basis to tax the client on the transfers as a disguised dividend.
The assessment of DKK 3.5 million in total was therefore reduced to DKK 0.
The decision underscores a central point in disguised dividend cases: it is not sufficient for the Tax Agency to question a payment from a company. There must also be a basis to attribute a financial benefit to the owner personally if the amount is to be taxed as a disguised dividend.
Cases on subcontractors and disguised dividends
Subcontractor cases can develop into significant tax cases for both the company and its owner.
If the Tax Agency disallows an expense for a subcontractor, it may, among other things, affect the company's deductions and VAT. In some cases the company's owner is also met with a claim for personal taxation of the amounts as a disguised dividend.
It is therefore important to keep the various tax issues separate and to assess whether there is in fact a basis to treat a payment as received by the owner.
In the specific case, the overall assessment of the documentation and the factual circumstances led to the client not being taxed on the DKK 3.5 million.
Have you received a decision on disguised dividends?
We assist in tax cases involving, among other things, disguised dividends, subcontractors, denied deductions, invoice factories and major increases to personal income.
If you have received a proposal or a decision from the Tax Agency stating that payments from your company are to be taxed personally to you, you are welcome to contact us for a non-binding assessment of the case.
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