Skatteretslig omstrukturering: De skærpede regler om udbyttebeskatning af

Lasse Staurby Andersen & Simon Daniel Jensen

Student thesis: Master thesis

Abstract

The objective of our thesis is to identify the ways in which Danish companies can reorganise their group structure in relation to Danish tax legislation, to identify possible related issues and consequences, and to suggest solutions to these identified issues. The thesis consists of both a theoretical review of current Danish tax rules for company restructuring and an analytical review of current practice in the form of verdicts, connection to EU legislation, examples of use of existing restructuring models etc. To understand the background of the modifications made to the Merger Tax Act, the thesis gives a brief summary of the historical Development. The thesis describes the four types of company restructuring which exist according to Danish tax legislation. These are demerger, merger, injection of assets, and share exchange. The Danish Merger Tax Act has been adjusted, to a great extent, to the EU legislation in force, i.a. with the merger directive. As a consequence of the implementation of the merger directive 90/434, the Danish tax system concerning restructuring is a two-tier system – restructuring with or without permission. There are two ”parallel” sets of rules. The first branch is a result of this directive and requires permission, adequate commercial justification as well as compliance with subjective requirements. The second branch deals with restructuring without permission. As indicated by the name, it requires no permission, and there are no requirements for commercial justification – merely compliance with objective requirements. It is possible for companies to restructure in numerous ways. Besides the four restructuring methods mentioned above, the companies also have the option to carry through taxable or non-taxable restructurings. Thus, there are many tax rules for restructuring, and one choice will always involve a number of limitations, problems and consequences compared to another choice. The choice of restructuring method therefore has to be considered carefully, and all factors have to be taken into account to secure success. The objective sets of rules were implemented in Danish tax legislation to simplify the field of restructuring and to facilitate the processes of restructuring. The primary argument was that permission was no longer necessary. But instead of just eliminating this requirement, a whole extra set of rules was implemented in the legislation. The legislation has been ”mended” many times since it was adopted in the attempt to prevent tax evasion or tax avoidance. However, this has also made the system stiffer and far less transparent. The adoption of Act No. 274 of 26 March 2014 (L81) was no exception. The act was introduced to prevent shareholders with ownership shares under 10% from receiving tax-free cash compensatory amounts. This was done by introducing withholding tax on cash compensatory amounts instead of the previous profit tax. Reality is, however, that the act has wide impact and makes it even more ”expensive” for companies with few owners and ownership shares under 10% to restructure their companies. This is considered problematic, as small and medium-sized companies with few owners are expected to have a higher restructuring frequency to be able to adjust to the market, to carry though a generational succession process etc. In addition, there is no longer the same clear similarity between the definition of profit and dividend in Danish legislation and EU legislation. In the thesis we have examined if it is possible to make tax optimisation to avoid payment of increased tax on compensatory amounts. We found that with thorough examination and preparatory work it is possible to optimise. The increased complexity and the fact that a non-taxable restructuring may become taxable in case the company fails to follow the objective sets of rules, means that the rules cannot be brought into use if there are many factors of uncertainty regarding the restructuring. Such a factor could for instance be the valuation of various assets and liabilities. Therefore, it is often necessary to get a binding answer in order to avoid problems, and in consequence simplicity and fast processing time, which was the purpose of the rules, disappear. The thesis demonstrates the large number of rules for restructuring which exist in Danish tax legislation. It is not possible to conclude that one type of restructuring is more favourable than others, as this always depends on the background of the shareholders’ wish to carry through a restructuring. No matter what the purpose of a restructuring process is, it is our judgement that thorough planning and examination is required to optimise the restructuring and to minimize any profit or dividend payment related to the restructuring.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2015
Number of pages124