Global Tax Alert | 30 June 2017

Danish Government publishes report on considering company's tax position in public tender

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On 20 June 2017, the Danish Competition and Consumer Authority published a report examining whether public authorities are entitled to consider a company’s tax position in a public tender.1 The basis for the examination is the Danish tender law and the European Union (EU) directive on public procurement (2014/24/EU). The report should be seen in light of an agreement reached in May 2017 among all the political parties in the Danish Parliament to clampdown on international tax avoidance. This agreement mentions that there is a need for clarification of whether tax positions may be considered in public tenders.

The report examines the following issues:

  • Exclusion from a public tender due to the geographic location of a company
  • Exclusion from a public tender due to the statutory exclusion grounds
  • Consideration of tax positions in the evaluation of the fitness of a company to participate in a tender
  • Application of tax positions as selection criteria for awarding a contract
  • Application of tax positions as conditions for the performance of a contract

The overall conclusion of the report is that the tax position of a company cannot be considered in a public tender. There are two exceptions from the main rule:

  • A company has unpaid, due (tax) debt to the public exceeding DKK100,000 (approx. US$15,350)
  • A company is in breach of its obligations under tax legislation

The analysis of the Competition and Consumer Authority is summarized in the table.

Type of tender
Exclusion due to geographic location of company
Exclusion due to statutory exclusion grounds
Demand to the fitness of the company to complete the contract
Selection criteria for awarding a contract
Conditions for performance of contracts

Tender above the EU threshold amounts

Companies from countries outside of the EU/European Economic Area (EEA) that are not parties to GPA2 and do not have a free trade agreement with the EU can be excluded

Companies with unpaid, due debt to the public or which is in breach of tax legislation may be excluded

Tax position cannot normally be considered

Tax position cannot normally be applied a criteria

Tax position cannot normally be used as contractual conditions

Tender below the EU threshold amounts with a clear cross-border element

Companies from countries outside of the EU/EEA can be excluded

Companies with unpaid, due debt to the public or which is in breach of tax legislation may be excluded

Tax position cannot normally be considered

Tax position cannot normally be applied a criteria

Tax position cannot normally be used as contractual conditions

Tender below the EU threshold amounts without a clear cross-border element

Non-Danish companies can be excluded

Companies with unpaid, due debt to the public or which is in breach of tax legislation may be excluded

Tax position cannot normally be considered

Tax position cannot normally be applied a criteria

Tax position may potentially be used as contractual conditions

Endnotes

1. Skattemæssige forhold i offentlige udbud, Juni 2017 (Tax affairs in public tenders, June 2017), Competition and Consumer Authority.

2. Agreement on Government Procurement (GPA).

For additional information with respect to this Alert, please contact the following:

Ernst & Young P/S, Copenhagen
  • Jens Wittendorff
    +45 51 58 28 20
    jens.wittendorff@dk.ey.com

EYG no. 04089-171Gbl