The Danish ‘Cum Ex’ Settlement – Above or Under the Rule of Danish Law? Taxation by Law or by Settlement?

Abstract

This article’s findings or conclusions are the following: (i) The Danish “cum ex” settlement regarding tax fraud winnings must be in full congruence with statutory authority, since any write down or annulment of tax debt are encompassed by art. 43, first indent of the Danish Constitution (requirement of statutory authority to impose, alter or repeal tax, VAT and excise). (ii) Danish public law settlements, including public law settlements within tax, VAT and excise law, must under case law be fully congruent with the relevant legal basis of the area in question (e.g. statutory authority). Furthermore, such a state of law is in congruence with EU law (supranational law), since EU law cannot be bypassed or circumvented via public law settlements. (iii) Under Danish law or EU law circulars have no legally binding effect in an individual onerous direction for the subjects of taxation. But surely, unlawful circulars, which are not evidently contrary to the legal basis, are legally binding in a beneficial way for the subjects of taxation under a principle of equality or a principle of justified legal expectations. And there is no sufficiently legal basis in the Act of the Budget, etc., for a write down or annulment of tax debt, including via settlement. (iv) However, there is legal basis in art. 13, 14 and/or 16 of the Act on Debt Collection for a write down or annulment of tax debt via settlement, including extraordinarily also tax fines. (v) Nevertheless, Danish law 5-1-2 will under lawful criterions derived or construed from e.g. case law hinder the Danish “cum ex” settlement regarding tax fraud winnings under the common perception of morality. But this result is with substantial uncertainty given the legal basis (judicial reviewing of a common perception of morality). (vi) From a tax advice perspective each specific case requires individual tax advice from e.g. Danish tax attorneys to the tax evaders and/or to the Danish tax authorities.