The financial consequences of the wrong treatment of employee benefits for tax purposes may be substantial for both employer and employee. Employee benefits that are made available to an employee or board member in return for personal labour and services are taxable if the total value of the benefits exceeds a basic amount of DKK 1,100 (2016). If the benefits are made available primarily for work purposes but may be used for private purposes, the basic amount is DKK 5,800 (2016).
For certain benefits, the employer is under an obligation to ensure that the benefits are only used for work purposes to avoid taxation. Where checks have not been made or cannot be documented, the employee risks being taxed and the employer risks liability for not withholding tax.
Depending on the benefits concerned, the employer may be under an obligation to withhold tax on the value of the benefit. If failing to withhold tax correctly, the employer will generally be liable for the tax.
In practice, SKAT has paid special attention to high-value benefits such as free accommodation, free cars, free holiday homes, use of pleasure boats, travel, hunts and hunting trips. A number of employee benefits, for example holiday homes and pleasure boats, are considered to be made available to executive officers and employees with significant influence on their own salary for the year. This may lead to taxation of very substantial amounts even if the benefits have been used for a very short time only.
If, as an employee or an employer, you are in any doubt about the taxation of employee benefits, TVC Law Firm is ready to answer your questions. We can also help you obtain a legally binding assessment notice from SKAT.
If SKAT has issued a demand to you as an employee or an employer as a result of an agreement on employee benefits, we are ready to assess the case with a view to establishing whether an appeal against SKAT's decision would be likely to succeed.