Denmark Tax Agency Clarifies Individual Income Taxation of Bank Compensation for Overcollection of Debt

The Danish Customs and Tax Administration Feb. 19 posted online National Tax Court Decision No. SKM2026.91.LSR, clarifying individual income taxation of bank compensation for overcollection of debt. The taxpayer, an individual, was overcharged by a bank on debt due to the bank’s automated system error. The bank repaid the taxpayer specific amounts as compensation. The Tax Agency treated the amounts as taxable. On appeal, the National Tax Court found that: 1) the amount constituting exact overpayment of the debt was exempt; 2) the time compensation was exempt under the State Tax Act as one-off compensation for deprivation and inconvenience from ...