David L.B. Andersen

Student thesis: Master executive thesis


In a tax-neutral world the basis for decision-making for citizens' and businesses' capital in-vestments would not be influenced by tax incentives or tax planning. In consequence hereof there would neither be any basis for the countries to appeal tax revenue from citizens or com-panies Full tax neutrality would also be achieved if all countries had harmonized their local tax systems and created a fiscal environment impossible to get around. In a tax-neutral world individuals and businesses would invest their capital to the fullest without optimizing their investments based on tax perspectives. Future initiatives for investment would, apart from other legal restrictions, be placed where it could achieve the highest possible yield. The optimal global allocation of capital would be generated and would have created a welfare gain for the simple sharing between all countries of the world. The combination of increased globalization, technological changes and special tax regimes of certain countries has made the introduction of CFC-legislation necessary worldwide. Without an effective CFC-legislation, it would in the modern world be quite simple to move mobile or financial income abroad in order to generate profits in a low-tax country. The method would be quite legitimate and in principle might reduce the taxpayer's tax liability in the country of resi-dence. This master thesis provides an analysis of section 32 of the Danish Corporation Tax Act (in Danish "Selskabsskatteloven") (hereafter mentioned as “SEL”) as it stands today, including an analysis of the parts of the provision causing problems in relation to the application in practice of the rules on CFC-taxation. The main emphasis is on the first sub-sections in section 32 of SEL, which contains the conditions on how to be comprised by CFC-taxation and how CFC-income should be calculated. This master thesis investigates practical and theoretical possibility of structurally avoiding be-ing subject to section 32 of SEL. The master thesis examines the substance of the CFC-rules as well as the financial impact subject to the regulations. Moreover, it establishes a number of both practical and theoretical examples of how to identify the tax CFC-tax technical parent company. Finally a section will include an evaluation of CFC-rules' interaction between sec-tions 12A-12D of SEL on the Danish rules limiting the use of losses from previous income years.

EducationsMaster i Skat, (Executive Master Programme) Final Thesis
Publication date2014
Number of pages62