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Failure to deduct taxes

July 2009 - Employment. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

More articles by this firm.

An employer who had deducted too little tax by mistake could deduct the balance from the December payroll

Employees must pay back taxes if too little tax has been deducted by their employer during the year. But in this case, the employer discovered the mistake and deducted the balance from the employee's December pay. And that was okay, the Court ruled.

The case concerned a teacher who took leave without pay June to August. In the July payroll, a number of adjustments were made but his local authority employer failed to deduct the correct amount of tax. A couple of months later, the employer discovered the mistake and deducted the outstanding amount from the December payroll. The teacher did not believe his employer was entitled to do so and sued.

The Court sided with the employer, ruling that it was entitled to deduct the tax from the December payroll. The teacher was liable to pay the amount and the employer was liable to the tax authorities for deducting payroll tax. Also, the teacher had suffered no loss as the amount would have been collected by the tax authorities anyway in connection with his tax assessment notice.


Norrbom Vinding notes: 

  • that the case has been appealed to the High Court


Elsebeth Aaes-Jørgensen