Project Money Transfer 6 initiated
The Danish Tax Council has recently authorised the Danish Tax Agency to obtain information from a number of selected financial institutions regarding unidentified individuals’ and companies’ money transfers to and from Denmark in the period from 1 January 2023 to 31 December 2025. As a result, the Danish Tax Agency can now effectively initiate Project Money Transfer 6.
The purpose of project Money Transfer 6 is:
- to identify untaxed income and assets concealed abroad,
- to demonstrate that there is a risk of detection when taxpayers attempt to hide income and assets outside Denmark, and
- to provide the Danish Tax Agency with a basis for selecting cases for tax audits relating to cross-border money transfers.
The rhetoric surrounding the purpose of Project Money Transfer 6 is therefore quite clear: The project is aimed at identifying and taxing funds held in tax havens.
However, experience from previous iterations of the Money Transfer project shows that ordinary taxpayers also become subject to tax audits as a result of the project. This may occur, for example, where taxpayers believed that their employer had reported certain information on their behalf, such as employee share schemes, or where they received foreign transfers — such as ordinary gifts — that were not taxable in Denmark and therefore were not reported.
This means that a large number of Danish taxpayers can expect to receive letters from the Danish Tax Agency in the coming period, requesting explanations and documentation for foreign money transfers. These letters clearly reflect an assumption of the Tax Agency that tax evasion have taken place, placing the burden on the taxpayer to prove otherwise in the course of a tax audit.
Tax audit cases can have serious consequences. It is not uncommon for the Danish Tax Agency, alongside the financial aspects of the audit, to raise questions of criminal liability, which may result in fines of up to 100% of the alleged tax claim or, in severe cases, custodial sentences.
How a tax audit is handled is therefore of great importance — both in terms of the outcome of the case and the duration of the proceedings.
Explaining and documenting foreign money transfers often requires a substantial amount of work, even where such transfers are not taxable in Denmark or otherwise unlawful. A correct and well-structured presentation of the facts is frequently the decisive factor in a tax audit and can be crucial to both the financial and liability-related consequences of the case.
At PrivatRevision, we have extensive experience with tax audit cases, including advising on how taxpayers can most effectively present and document the background to foreign money transfers. If you receive a letter from the Danish Tax Agency in connection with Project Money Transfer, you are therefore very welcome to contact us to discuss how we can advise you in your specific situation.
