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Denmark’s £1.5 billion fraud claim dismissed for lack of jurisdiction under ‘Revenue Rule’

May 14, 2021

On 27 April 2021 Mr Justice Andrew Baker dismissed the case brought by Denmark’s tax revenue agency (SKAT) to recover more than £1.5 billion worth of tax refunds granted to various individuals and companies between 2012 and 20151. SKAT’s argument was that the relevant tax refund claims included fraudulent misrepresentations and/or negligent misstatements (or were otherwise invalid) and had therefore been approved and paid out in error.

The case involved around 100 defendants, represented by more than 20 different legal teams, and had previously been described by the judge as “litigation on a massive scale”. The decision was based on an application of the ‘Revenue Rule’, discussed in more detail below.



Under Danish tax law, Danish listed companies must deduct a withholding tax of 27% from any dividend payments. Non-Danish shareholders may however be entitled to a refund of this tax, provided that there is a double taxation treaty in place between Denmark and their country of residence.

The tax refund claims relevant to this case arose from a form of dividend arbitrage trading known as “cum-ex”. As part of this arrangement, shares were purchased before the dividend date and delivered after the dividend date. The relevant tax refund claims were made on the basis that the purchasers were beneficial owners of the shares at the time of the dividend payment.



The case had been listed for a final trial in January 2023 and was expected to last more than one year. However, all claims were dismissed in their entirety at the first substantive hearing, convened to consider the ‘Revenue Rule’. Otherwise known as ‘Dicey Rule 3’ (from its position in Dicey, Morris & Collins on the Conflict of Laws) and based on the decision in the 1955 Government of India case2, the rule provides that the English Courts have no jurisdiction over actions for the enforcement of a penal, revenue or other public law of a foreign state3.

The question was whether the rule applied to this particular litigation i.e. was this a private law cause of action to reclaim money lost by fraud (and other alleged causes of action) or a bid to bring in tax revenues?

Mr Justice Baker declared: “My conclusion is that all of SKAT’s claims are, in substance, claims seeking to enforce here the Kingdom of Denmark’s sovereign right to tax dividends declared by Danish companies, and the (relevant) refund systems… The central interest of SKAT, and of the Kingdom of Denmark in whose interests the claim is brought… is to vindicate that sovereign right and have it enforced indirectly here.”

He considered it was not “right to distinguish… for the purpose of Dicey Rule 3 between dividend tax never paid and dividend tax conditionally collected… but paid away by SKAT by way of… refunds” and concluded that “the result is that by the application of Dicey Rule 3 in these proceedings, all of SKAT’s claims fall to be dismissed”.


Next steps

SKAT declared that it intended to appeal the ruling as soon as it was made and on 6 May 2021 it was granted formal permission to do so.

The full judgment can be found here


1 Skatteforvaltningen (the Danish Customs and Tax Administration) v Solo Capital Partners LLP & Ors [2021] EWHC 974 (Comm)

2 Government of India v Taylor [1955] AC 491

3 Dicey, Morris & Collins on the Conflict of Laws, 15th Ed., R5-019