Dubai police have arrested and seek to extradite a British man wanted in Denmark over a $1.7bn tax scheme, one of Denmark's largest-ever fraud cases.

The arrest of hedge fund trader Sanjay Shah, 52, follows after Danish officials signed an agreement in March this year allowing for extradition between the United Arab Emirates and Denmark.

In a statement on 3 June, Dubai police Brigadier General Jamal al-Jallaf said that the emirate received an international arrest warrant from Denmark for Shah, who is accused of a fraud that saw foreign businesses pretend to own shares in Danish companies and claim tax refunds for which they were not eligible.

"The fraud scheme, known as ‘cum-ex' trading, involved submitting thousands of applications to the Danish Treasury on behalf of investors and companies from several countries around the world in order to receive dividend tax refunds," al-Jallaf said.

Al Jallaf added that Shah "will be handed over to the competent Danish authorities after presenting him before the Public Prosecution in Dubai and taking legal actions to obtain his extradition warrant per the international laws in this regard".

The arrest comes after the country signed an agreement in March allowing for extradition there from the United Arab Emirates.

The 52-year-old has maintained his innocence in interviews with journalists while living in Dubai over recent years on the city-state's manmade Palm Jumeirah archipelago, but never appeared in Denmark to face the claims.

"We will push for an extradition as soon as possible," Danish foreign minister Jeppe Kofod said in a tweet on 3 June. 

"This arrest sends a very strong signal that the Danish authorities are pursuing financial fraud," said Jeppe Bruus Christensen, the Danish minister of taxation, "no matter where in the world you are."