Fondsbeskatning og skattereformen 2009-2010

Abstract

The purpose of this thesis is to determine and analyse the possible effect of the Danish tax reform and subsequent ’overhaul’ reform on foundations. The thesis is divided into two parts. One part provides a description of general founda-tion and tax laws. The other part starts with a description of the rules on taxation of se-curities before and after the tax reform and ends with an analysis of two specific founda-tions in terms of possible consequences of the tax reform. Part one starts with a description of the special rules that foundations must observe. The rules depend on which type of foundation it is. Foundations can be divided into two types - commercial foundations and ordinary foundations, which are regulated by two different laws. The two laws are in many areas similar but they differntiate in terms of the activities of commercial foundations. Part one continues with a description of the tax rules of foundations. The section focuses on the rules that differ from those of companies. Foundations can for example make dis-tributions to various objects and deduct the distributions in the foundation’s taxable in-come. In addition, non-profit foundations are allowed to make allocations for later dis-tribution and then deduct these in their taxable income. Allocations must, however, be distributed within five years. Non-profit foundations are, moreover, allowed a consoli-dation deduction in their taxable income. The consolidation deduction constitutes 25 per cent of distributions for the year. Part two starts with a description of the tax rules of securities prior to and after the tax reform. The most significant change of the tax reform was that securities are now to be taxed according to the market-value principle whereas previously, they were taxed ac-cording to the realisation principle. This change was one of the most discussed issues during the debate and was highly criticised. Many felt that the change would hit espe-cially hard on foundations as many foundations’ assets primarily comprise securities. Following the heavy criticism, more easy terms were adopted for foundations. Founda-tions are still allowed to use the realisation principle on portfolio shares if they observe certain distribution requirements. In general, the distribution requirement implies that foundations must distribute their entire taxable income in order to be allowed to use the realisation principle. Part two then continues with an analysis of two specific foundations to ascertain how these are affected by the tax reform. The two selected foundations only have passive in-vestments. One is a non-profit foundation and the other a family foundation with sever-al objects. These types of foundations are assessed to be most affected by the new tax rules on taxation of securities. The analysis showed that the foundations find it difficult to plan zero-tax in accordance with the new rules; particularly if they use the market-value principle in connection with shares. This is due to the fact that it is no longer possible to influence the taxation date of shares when using the market-value principle. In addition, the abrogation of the three-year rule on shares also puts a limit to the foundations’ tax exemption. Mandatory mar-ket-value taxation of bonds does not make it easier for the foundations in terms of tax either. Due to the exception in terms of portfolio shares, which means that foundations must distribute their entire taxable income every year, the conditions have improved some-what for non-profit foundations. By carefully planning and updating of the market, the-se foundations can maintain a zero-tax position in line with the situation before the tax reform. The foundations’ very diverse investment strategies as well as charters’ distribu-tion requirements etc. must, however, be taken into consideration. In terms of family foundations with various objects, the exception has limited effect as these foundations do not have the same possibilities of allocation as non-profit foundations. The overall conclusion is that the foundations’ conditions have been challenged by the new tax rules and that close cooperation is required with e.g. tax consultants and ac-countants to ensure that the foundations can remain tax exempt.