Er kursgevinstlovens § 23 i strid med reglerne om kapitalens frie bevægelig

Abstract

This dissertation will focus on the relationship between The Danish Capital Gains Act
(Kursgevistloven) Sections 21 and 23. The Danish Capital Gains Act treats capital gains and losses on debt differently depending on whether the debt is contracted in DKK or in a foreign currency. The Danish rules apply to both capital gains and losses resulting from volatility in currency exchange rates as well as to the gains and losses resulting from an increase or decrease in the value of the debt itself. The rules also apply to debt relief, which are considered capital gains on debt.
In accordance with KGL Section 21, capital gains realised on debt contracted in DKK are tax exempt and losses are non-deductible. When it comes to debt contracted in a foreign currency, the rules in KGL Section 23 apply, meaning that capital gains are taxable and losses are deductible.
This have led to speculation on whether Danish legislation treats cross boarder loans less favourable than loans contracted between two domestic parties. As a result, hereof, the European Commission has on three occasions requested Denmark to clarify whether these rules lead to restriction of the free movement of capital. The Danish government has justified the rules by arguing that there is symmetry between taxation and deductions in both schemes. Furthermore, it is argued that it is the currency of the debt that decide which rules that apply and not the residency of the lender. The European Commission has accepted the arguments set forth by Denmark and the cases have been closed by the Commission.
In recent years the question has arisen again as a result of taxation of capital gains from debt reliefs on debt contracted in foreign currency. The same capital gain would not have arisen if the debt was contracted in DKK. The plaintiffs, who were limited partners(kommanditister), claimed that if Section 23 takes precedence over Section 21, the Danish rules are less favourable to loans contracted with a lender, who reside in another member state.
The Danish Capital Gains Act does not clarify which of the two rules supersede the other. This has been a topic for dispute for many years. In recent years, these disputes have made it through the legal system all the way to the Danish Supreme Court. The rulings of the court did not only find that Section23 takes precedence over Section 21, but also that the tax authorities shall not respect the limited liabilities arising from private law. This means that debt on a loan issued with a Non-ecourse clause, does not limit the liability of the debtor when it comes to taxation. Furthermore, the statutory limitation of a limited partnership, does not limit their liability when it comes to taxation of capital gains from debt relief, if the debt is contracted in a foreign currency.
The Danish Supreme Court has been requested to ask to the EU Court for a preliminary ruling. The Supreme Court declined the request, since they found that there can be no reasonable doubt about the interpretation of TEUF Article 63.
This dissertation will analyse the rulings of the Supreme Court, in the light of the recent case law, to conclude, whether the Danish rules may be considered to pose a restriction to the free movement of capital.