Companies' right to cost reimbursement for expenses related to tax appeal cases was repealed in 2009. Hereafter, companies - unlike individuals for whom the cost reimbursement regime continued - were only able to deduct such costs on their tax returns.

The rules of reimbursement for companies' expenses in relation to tax appeal cases will now be reintroduced as part of the government's current focus on improvement of legal certainty for taxpayers. It is the government's stated wish to avoid that companies - solely due to cost considerations - refrain from appealing a ruling made by the tax authorities, if the company otherwise disagrees with the result.

The new rules entail that companies are entitled to a full or partial reimbursement of its expenses related to direct and indirect tax cases pending before the Danish administrative appeals authorities, i.e. the Tax Appeals Agency or the National Tax Tribunal, the Danish courts, the EU Court of Justice and in relation to cases handled under the EU Arbitration Convention.

Under the new rules, if the case is decided predominantly in favour of the company it will, in general, be entitled to a reimbursement of 100% of its expenses in relation to the case proceedings including, e.g., advisory/legal fees, court costs and expert appraisals. If the case is decided predominantly in favour of the tax authorities, the company will, in general, be entitled to a reimbursement of 50% of the expenses.

If a decision of the National Tax Tribunal is appealed to the courts by the tax authorities, the company will be entitled to a reimbursement of 100% of the expenses no matter the outcome of the court case.

As mentioned, the new rules will enter into effect on 1 January 2017 and will apply to expenses relating to services performed and costs incurred as of that date and onwards irrespective of when the case has been brought to the appeals body or the court.