Self-employed or employee, where is the demarcation in Danish tax law?

Abstract

The purpose of this master thesis is to investigate how the concept of "self-employed" should be interpreted in a Danish tax law context, with a focus on where the demarcation goes between self-employed businesses and persons in employment as wage earners (employee).
In Danish tax law, there is no definition of what it means to run an independent business, and it can also be seen from the amount of case law that this demarcation can be difficult to handle.
Based on the structure of the tax law and through an analysis of case law, it can be seen that a concrete assessment must be made, based on the actual circumstances, of whether a taxpayer can be considered to have obtained remuneration as a self-employed business or whether he must instead be considered an employee. This assessment must be based on the criteria set out in Circular 129 of 4 July 1994 from the Personal Income Tax Act.
From the Circular it appears that a self-employed business enterprise is characterized by the fact that a business of an economic nature is carried out at one's own expense and risk with the aim of achieving a profit, whereas an employee is considered to receive remuneration for personal work in a service relationship where the person performs the work according to the employer's instructions and at his expense.
Criteria appearing in the Circular have no hierarchical order, or equal importance in all situations, nor can a simple majority of criteria decide the case. Incurring expenses do not preclude the possibility of a service relationship, nor can it itself entail self-employment.
Based on the thesis' analysis of practice, it can be deduced that the term "self-employed" in Danish tax law cannot be actually defined, and that it has been established by jurisprudence that an independent assessment of the individual employment relationship must be carried out. From the analysis, however, it can be seen in the analysis of case law that Self-employed businesses can predominantly be interpreted as a contractor who, in his relationship with an employer, is free to carry out tasks for others, to plan the work without instructions and to assume assistance, and is only obligated to the individual order, who has taken on a certain financial risk and mainly bears the expenses themselves in connection with the performance of the task. Where the remuneration is paid according to invoice and where the contractor is not granted the employee benefits, such as notice of termination and coverage by employee legislation, and that the contractor is otherwise professionally established with VAT registration. In cases of doubt, it does not take much to tip the balance, and it can be seen from the analysis that if a relationship contains elements that speak for an employee relationship, where the elements can only be viewed as such, this will weigh decisively against the relationship being viewed as an independent business enterprise and must therefore be regarded as an employee relationship.