Financial Crime World

Denmark Cracks Down on Illegal Labour Practices: Thousands of Firms Under Investigation

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A major crackdown is underway in Denmark to combat illegal labour practices, with thousands of firms being investigated for using fake employment contracts and generating fraudulent work permits.

Joint Initiative by Government Agencies

The joint initiative between the Danish Tax Authority, the Working Environment Authority, and other government agencies aims to tackle “letterbox companies” - foreign firms that register in Denmark but operate from elsewhere, often exploiting cheap labour and evading taxes.

The Problem: Letterbox Companies

According to a recent report, over 10,000 foreign companies have been registered in Denmark, with many suspected of being letterbox operations. The authorities are working to determine the true location of these companies’ economic activities and whether they are complying with Danish laws.

Statement by Jens Mogensen

“We are determined to ensure that all companies operating in Denmark respect our labour laws and pay their fair share of taxes,” said Jens Mogensen, Chief Consultant at the Danish Tax Authority.

Investigation Results

The investigation has already led to a number of firms being taken off the register, with some facing fines and others being warned about their illegal activities.

Experts’ Views

Experts say that better coordination between agencies and international cooperation are key to tackling social dumping, which is estimated to cost Denmark millions of euros each year.

Denmark’s Efforts to Combat Social Dumping

Denmark has been at the forefront of combating social dumping, signing bilateral agreements with several countries including Romania, Latvia, Lithuania, and Slovakia to prevent this form of exploitation. The authorities have also published a white paper on social dumping in Denmark, highlighting the issue and proposing solutions to address it.

Useful Resources

For more information on this topic, please contact:

  • Jens Mogensen, Chief Consultant, Danish Tax Authority
  • Annemarie Knudsen, Chief Consultant, Danish Working Environment Authority

Useful sources and resources: