A Manhattan federal jury awarded Denmark's tax authority $500 million on Monday in the first U.S. civil trial involving the country's quest to recover $2.1 billion in tax refunds allegedly obtained through fraud, as affirmed by the authority's lawyers.
SKAT, Denmark's tax agency analogous to the U.S. IRS, prevailed in the bellwether trial against four individuals and 17 pension plans under scrutiny.
Denmark's Taxation Minister Jeppe Bruus expressed satisfaction with the outcome, stating, "I am pleased that there has now been another important decision... an expression that the Danish Tax Agency's strategy for civil litigation is the right one," in a written response to Reuters.
The case stemmed from intricate arbitrage transactions known as "cum-ex" trades, with British hedge fund trader Sanjay Shah, the accused lead, sentenced to 12 years in prison for fraud in December.
SKAT alleged that numerous pension plans and companies engaged in illegal trading from 2012 to 2015 to falsely inflate their holdings and claim tax refunds on dividends never received.
Neil Oxford, a partner at Hughes Hubbard & Reed representing SKAT, described the verdict as a milestone in the agency's global efforts to recover misappropriated funds.
Several defendants' lawyers did not immediately comment.
The case, named In re SKAT Tax Refund Scheme Litigation, was heard in the U.S. District Court, Southern District of New York, under case number 18-md-02865.