Tax criminal case dropped, client avoided a DKK 210,000 fine

The tax case and the criminal case had different outcomes

The underlying tax case concerned whether the profit from the sale of the apartment was tax-free under the so-called owner-occupier rule.

The Tax Agency and the administrative appeals body had concluded that the conditions for tax-free sale were not met. The profit therefore had to be taxed.

However, this did not automatically mean that the client had also committed a criminal offence.

That became the central question in the subsequent tax criminal case.

It was not enough that the tax had been calculated incorrectly

In the criminal case, we argued that the client had a genuine belief that the apartment could be sold tax-free.

We were also able to make it probable that the client had in fact occupied the apartment for a period.

On that basis, we argued that the failure to report the profit was not an attempt to evade tax and could not be characterised as gross negligence.

The Tax Agency's Criminal Case Unit agreed.

The criminal case was therefore closed without a fine, even though the client had been taxed on the profit in the underlying tax case.

Tax liability is not the same as criminal liability

The case illustrates an important distinction in tax criminal law.

The fact that the Tax Agency has decided that an income or gain is taxable does not in itself mean that the taxpayer should also be punished.

In order to impose criminal liability, an independent assessment must be made of, among other things, what the taxpayer knew, how the error arose, and whether there was intent or gross negligence.

It is therefore important that a subsequent tax criminal case is not merely treated as an extension of the administrative tax case.

The client avoided a DKK 210,000 fine

The result was that the Tax Agency's Criminal Case Unit closed the case.

The client thereby avoided a fine of DKK 210,000.

The case is also a good example of the importance of having the criminal liability assessed independently, even if the underlying tax case has previously been lost.

Involved in a tax criminal case?

We assist in cases concerning, among other things, property gains, the owner-occupier rule, tax evasion, fine cases and liability cases before the Tax Agency's Criminal Case Unit.

If you have received a notice of a liability case, a proposed fine, or notice that your case has been referred to the Criminal Case Unit, you are welcome to contact us for a confidential and non-binding assessment.