Financial advisors in Denmark have come under pressure after a documentary series has unveiled how the Danish industry has been illegally advising clients to hide their money in offshore accounts.

Financial advisors in Denmark have come under pressure after a television documentary series has unveiled how the Danish industry has been illegally advising clients to hide their money in offshore accounts.

The three journalists uncovering large-scale tax evasion in Denmark won the highest journalist award in the country, the Cavling Prize, last week for their documentary series, called Inside Tax Havens, on financial advisors trying to circumvent the Danish tax authorities. In Denmark, individuals are allowed to create offshore accounts, provided they register the account’s details with the tax authorities. Financial advisors are not lawfully permitted to market or suggest such solutions.

The series, produced and aired by the Danish Broadcasting Corporation, revealed how financial advisors across the Danish industry have been advising firms and wealthy individuals to place their money in offshore tax havens. The series also uncovered how several Danish high profile individuals and firms based in the UK, have sought out methods to avoid Danish taxation - a fee that on an individual basis can reach a maximum tax level of 67 per cent.

The Danish-UK Chamber of Commerce told WealthBriefing that the series has revealed “some disparities between UK and Danish tax laws and how there might be several grey areas in tax jurisdiction across EU member countries”.

Authorities: financial advisors acted illegally

The series has also prompted a crackdown on advisors and banks offering private banking and wealth management services by the Danish tax authorities.

In particular, the country’s third largest bank, Jyske Bank, was exposed for advising a client to move to England, create a company in Gibraltar, and place his money with Jyske Bank Zürich. It also advised him to wait a couple of months after he left Denmark before collecting his $725,000, in order to avoid paying Danish tax. 

Danish tax experts said that the bank’s advice was immoral, encouraged tax evasion and in some cases even constituted tax fraud, while the Danish tax minister Holger K. Nielsen deemed the advice illegal.

“I think it’s shocking that Jyske Bank is giving this kind of advice. Tax evasion and tax avoidance are very serious things. It’s a criminal offense. And I don’t understand, and I’m also quite surprised, that a big Danish bank is giving this kind of advice,” Nielsen told the Danish Broadcasting Corporation.  

Since then, the Danish government has launched several inquiries into the practices of Danish financial advisors, wealth managers and private banks, including many of which serve clients and firms based in the UK.

However, the Danish-UK Chamber of Commerce maintains that the majority of Danish firms and wealthy individuals which are based in the UK, are not attempting to evade Danish taxes or pursue advice from firm’s looking to help them do so.

Furthermore, the chamber said it is hosting a public event in February, which will shed light on some of the UK/Danish cross border tax and legal issues, including some of the changes to the UK tax rules over the past year, in an effort to promote compliance between the two jurisdictions.