Platform economy businesses dealt a blow by the Danish tax authorities

The Danish tax authorities in a recent decision has considered a Wolt platform worker an employee under Danish taxation regulation.

The background for the matter is that a journalist worked undercover for the food delivery service, Wolt, as a self-employed courier and submitted a request to the Danish Tax Agency for a binding advance notice (in Danish: en bindende forhåndsbesked) as to whether he for tax purposes was to be considered self-employed or an employee of Wolt.

The matter was considered to be of principal importance and was thus referred to the Danish Taxation Council, which consists of 19 members.

After almost a year and three meetings in the Taxation Council, the Danish Tax Agency rendered its decision, which is not public available because it concerns an individual taxpayer. Apparently, Wolt has not even been heard during the processing of the request nor has Wolt received a copy of the decision.

Nevertheless, it has in the media been leaked that in the decision it is stated:

“… After an overall assessment of the criteria above, the Danish Tax Agency is of the opinion that the Applicant is not self-employed. Significant emphasis has been placed on the fact that Wolt has a significant power of instruction vis-à-vis the Applicant. Wolt has thus specifically laid down a number of general and specific instructions for the execution of the work .”

And that …

“… Significant emphasis has also been placed on whether the work is carried out at the payee’s own expense and risk … “, the agency writes.

As a result, the Wolt couriers can probably look forward to having their income tax withheld from Wolt in the future.

For platform economy businesses the decision may have far greater financial consequences.

Since in Denmark an employer is obliged to deduct taxes from the salary paid to employees, the biggest challenge will be that the tax authorities can ask platform businesses to pay for the missing withholding tax, which the couriers have not paid. In theory, a platform economy business not collecting taxes could also be met with fines from the Danish Tax Agency for breach of the Income Tax Act.

On top of that a number of payroll related taxes and duties, holiday entitlements, wages to the couriers during sick leave (the first 30 calendar days of sick leave), and insurance coverage (i.e. compulsory workers compensation insurance) will, if the decision stands, need to be paid by platform economy businesses.

The decision is a tax related one and does not imply that because the Wolt couriers have been considered “employees in disguise” that the couriers are also to be considered employees from a labour law point of view.

Whether a platform worker is an independent contractor, or an employee still remains undecided under Danish labour law, but of course the decision from the tax authorities might well have a great influence on the matter.

The matter shows how important it is to make a thorough analysis of whether a consultant / freelancer working for a company is a true independent contractor before the cooperation starts. The consequences of not doing so can be economically crippling to a company – especially if it is a start-up within the new “platform economy” – and completely change or even destroy the business model.


Magnusson’s employment team advised on all aspects of employment law in Denmark. If you have questions on employment related matters in Denmark please do not hesitate to get in touch.

Tom Froberg
Partner, Head of Employment
+45 40 43 18 40