Denmark is adopting broad changes to how foreign investors are refunded dividend taxes as the government hunts down more than $2 billion it says was tricked into turning over.
In a new agreement with the country’s financial industry, banks will play a central role in monitoring payments, and will be held liable for clients’ outstanding taxes. All foreign investors will have to register with the Danish Tax Agency, according to a statement by the tax ministry.
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The new system is designed to avoid a repetition of a years-long coordinated attack on global dividend tax refund laws by financiers. Denmark has filed cases against almost 500 firms and individuals across five countries for allegedly claiming refunds to which they weren’t entitled. It’s so far settled with 61 U.S. pension funds to claw back about $233 million.
“This agreement is a milestone in the work to ensure that we never again will experience the kind of dividend fraud which cost Denmark 12.7 billion kroner,” Tax Minister Morten Bodskov said in a statement.
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