SKAT is going after multinationals in transfer pricing cases

Tax authority adjusts the tax bill of 76 companies for 20 billion kroner

The tax authority SKAT has challenged 76 companies for their tax bill in 2014 to the tune of 20 billion kroner, Jyllands-Posten reports.

This continues a war on so called transfer pricing cases (where there has been manipulation of prices between related or controlled companies in a business group), which SKAT has been waging for three years. Companies have been hit with extra tax bills for a value of 59 billion kroner during this period.

READ MORE: SKAT cheated out of a quarter of a billion kroner

Benny Engelbrecht, the tax minister, explained the tax authority’s focus on this type of activity but also offered an explanation for the apparent ubiquity. “It is crystal clear that transfer pricing can unfortunately be a very effective tool for cheating, tax speculation and aggressive tax planning,” he said.

“But, on the other hand, these increases are an expression of the fact that it is very, very difficult to make a correct assessment of transfer pricing. Here, we need to help companies where they need it.”

Disconnected picture
Jacob Bræstrup, the head of the taxation department at the business advocacy organisation Dansk Industri, draws attention to the fact that the figures don’t necessarily show the true extent of transfer pricing tax abuses. “These figures give a very disconnected picture and contribute to myth-making about companies,” he said.

“They just give a picture of the number of cases where SKAT disagrees with the companies, not how much money SKAT is due.”

It is likely that many of the cases will end in protracted legal disputes.