Denmark Tax Agency Clarifies Tax Treatment of Misappropriated Funds, Masked Dividends

The Danish Customs and Tax Administration Nov. 28 posted Tax Council Binding Answer No. SKM2025.676.SR, clarifying whether misappropriated company funds through fictitious credit notes constitute masked dividends under the Danish Taxation Act. Taxpayers A and B were co-shareholders in a company where each held 50 percent. Taxpayer B diverted payments for false credit notes to private accounts over several years. After discovery, the company fired B, filed a police report, and demanded repayment, planning to repurchase B’s shares with set-off against the claim. Upon review, the Tax Council found that: 1) the transfers of misappropriated funds from the company to ...