Exitbeskatning af danske selskaber og dets forenelighed med EU

Fatma Kartal

Student thesis: Master thesis


Executive Summary: This thesis concerns the compatibility of the Danish exit taxation rules with the rights guaranteed by the TFEU’s (Treaty on the Functioning of the European Union) Right of Establishment as described in article 49. On July 18th, 2013, The European Court of Justice (ECJ) established that the Danish rules concerning exit taxation conflicted with TFEU’s freedom of establishment rules, since transferral of funds to a registered office with tax residency in a different EU/EEA country or to an operating point located in a different EU/EEA country lead to exit taxation immediately after transferral. However, no exit taxation was levied, if the same company transferred assets to a registered office or operating point on a national level. Following The ECJ’s verdict of July 18th, 2013 (Commission v. Denmark), The Ministry of Taxation drafted a bill, that took effect March 1st, 2014. The bill allows companies to pay off the exit tax with an interest on the debt. The interest is one percent above Denmark’s central bank’s rate, though no less than three percent per annum. The exit tax is levied from the time of relocation. The annual instalments must be paid concurrently with the assets carrying a return, though no less than one-seventh of the debt. The extension extends to all assets irrespective of intentions of liquidation. Although the new Danish rules grant companies the option of an extension, the aforementioned rules are still said to be problematic. The extension amount attracts an interest rate of one percentage point above Denmark’s central bank’s bank rate though no less than three percent per annum. It is considered unsuitable to demand the same interest rate in all situations, since the interest rate is risk-based. Since the risk would never be the same in all cases, an assessment of the individual debtor’s credit rating and security for every single case would be considered a better alternative. The extension amount must be paid off depending on the returns. There are no clear guidelines for how the return should be calculated, but it stands to reason that companies will need to devote more resources to monitoring assets and their returns. Although the ECJ’s verdict allows for a certain degree of administrative burden, it is suggested that the Danish code of practice is far too complicated on the administrative level and could therefore be considered to be disproportionate. Based on the reflections above, it is suggested, that the Danish exit tax rules in their current wording are not compatible with the freedom of establishment.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2015
Number of pages79