The Danish Western High Court ruled in an income tax and VAT evasion case involving unregistered business income between 2018 and 2021. The prosecutors accused T of running business activities without properly reporting the income or registering for VAT. This resulted in a total income tax evasion of DKK 206,823 (approximately EUR 27,650) and VAT evasion of DKK 126,917 (approximately EUR 17,000).

Summary of the Case

Prosecutors alleged that T ran a business without reporting the income. Under Danish rules, taxable persons must notify the Tax Agency within four weeks of each annual assessment if their taxable income was understated. T allegedly failed to do so, resulting in under-assessed income tax for 2018–2021. Additionally, T was charged with operating a VAT-liable business from January 2018 through December 2021 without registering for VAT.

T denied these charges, claiming that she did not operate a business and that the money deposited into her accounts represented reimbursements from friends for food purchases she had made on their behalf. She also claimed these deposits represented repayments of personal loans related to casino visits and private gambling.

Based on records from the Danish Business Authority and photographs from T's social media accounts where she advertised various food items for sale, the District Court ruled that T had been conducting business activities. Additionally, the District Court determined that numerous deposits from different individuals into T's bank account and the amounts involved demonstrated that T had operated an unregistered business during the relevant period. 

The District Court ruled that T had earned substantial unreported profits, failed to declare this income to the Danish Tax Agency, and knowingly failed to account for VAT. Consequently, the District Court imposed a fine of DKK 450,000 (approximately EUR 60,000). However, both T and the prosecution appealed the judgment.

The Western High Court upheld T's conviction, finding no evidence in either the tax or criminal proceedings to justify higher deductions for business expenses than those already estimated by the Danish Tax Agency's Criminal Case Unit. Consequently, the High Court affirmed the conviction and increased the fine from DKK 450,000 to DKK 600,000 (approximately EUR 80,000).

Conclusion

In the end, T is responsible for unpaid tax and VAT resulting from undeclared business activities totaling DKK 333,740 (approximately EUR 44,650) and a criminal penalty of DKK 600,000. The ruling underscores that informal, undeclared business activity carries real risk: tax authorities can and will reconstruct income using bank records, social media, and other digital evidence.