Rentefradragsbegrænsningsreglerne i selskabsskatteloven §§ 11, 11 B og 11 C: Analyse af fremførselsreglerne i rentefradragsbegrænsningsreglerne

Signe Scavenius Nielsen

Student thesis: Master thesis

Abstract

The overall topic of this thesis is a description and analysis of the interest deduction limitation rules in the Corporate Tax Act: Thin capitalisation (Section 11), limitation of deduction interest (Section 11 B), the EBIT rule (Section 11 C), the differences between the concern concept in thin capitalisation, limitation of deduction interest and the EBIT rules, and the carry-forward principles in the three interest deduction limitation rules. The purpose of thin capitalisation is to reduce the deductibility of financial costs on controlled debt in Danish companies where the debt exceeds four times the total equity. Thin capitalisation is applicable to controlled debts that are not on an arm’s length basis and that are over DKK 10 million. The loan can be directly borrowed by Danish companies or secured directly or indirectly from the lender. Financial costs regarding debt that meets the above requirements will be limited in the deduction. The purpose of limiting the deductibility of interest (Section 11 B) is to limit the deductibility of net financing costs to a standard interest rate, multiplied by the amount of assets specified in Section 11 B. The purpose of the EBIT rule (Section 11 C) is to limit the net finance costs to 80% of the taxable income before net finance costs and tax (EBIT). The objective of this thesis is to describe and analyse the concern concept in the interest deduction limitation rules. Thin capitalisation has its own concern concept, and the limitation of deduction interest and EBIT rules follow the concern concept known from the joint taxation rules in the Corporate Tax Act. In the limitation of deduction interest and EBIT rules, there are differences between the carry-forward principles. The limitation of deduction interest rule has two carry-forward principles, whereas the EBIT rule has only one. None of the three principles are the same. The limitation of deduction interest rule has two different principles for carry-forward of interest rate swap: One for interest rate swaps on loans secured in real estate that can be carried forward in the interest rate swap contract period, and one for interest rate swap in loans that are secured in other assets. Carry forward is limited to three years in both principles. The carry-forward principles for the two interest rate swap types are described and analysed.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2014
Number of pages104