Danes Investigate Carbon-Trading Fraud

Dec 4 2009 | 9:31am ET

The Danish government has been forced to push an emergency law through parliament to halt VAT fraud involving carbon credits.

Similar laws were passed in the UK, France and the Netherlands this summer to stop the fraud which occurs when a carbon trader buys credits from an EU country free of VAT, then resells them, charging the buyer VAT but not actually passing it on to the tax authorities.

Denmark is ripe for this type of fraud, as registering carbon quotas for the European Emissions Trading Scheme (ETS) is easy and the VAT rate is 25%.

The Danish government says it does not know how much money it has lost to the fraud but believes it runs to the millions – if not billions – of kroner.

A spokesman for the Danish Energy and Climate Ministry, which supervises the carbon quota registry, told the Guardian newspaper that the rules for registration were being immediately tightened so anyone applying to trade carbon would face stringent checks.

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