Mia Wauder Eriksen & Pernille Louise Jensen

Student thesis: Diploma thesis


The main topic of this assignment is the legislative changes in the Danish Business Taxation Act (Virksomhedsskatteloven). The act regulates a set of rules on how self-employed business owners are taxed. The law was introduced in 1987 as a part of a comprehensive tax reform in which the general purpose was a completely new vision on how to calculate the taxable income in a more accommodative way. Self-employed business owners now had the opportunity to be taxed in ways similar to limited companies in the Danish Business Scheme (Virksomhedsordningen). The two main advantages of this new legislation were that the self-employed business owners could save up their profits by paying a preliminary company tax and furthermore interest expenses were now fully de-ductible. However, some self-employed business owners soon found loopholes to exploit this new legislation. They mainly discovered two ways to do so. One: they discovered they could deposit their private debt in their business. Two: they discovered they could make security guarantees in the assets of the business towards a third party for a private debt. This continued for many years and it was not until 2014 the Danish Ministry of Taxation realized these issues. The Danish authorities thought they had indirectly prevented unintended use of the taxation act in 1987 by implementing a self-controlling effect in the form of an interest correction (rentekorrektion). In September 2014, the Danish Parliament finally passed a law towards unintended use of the scheme, called Law no. 992 of 16/9/2014. This assignment examines the changes in the Danish Business Taxation Act (Virksomhedsskatteloven) the new law has caused. Law no. 992 of 16/9/2014 made it illegal for self-employed business owners to make security guar-antees in the assets of the business for a private debt. According to the new law, illegal guarantees should be seen as a transfer to the self-employed business owner and therefore be taxed. This as-signment analyses and calculates the consequences of Law no. 992 of 16/9/2014. It turns out there is lightheadedness in the new law, which has caused many binding replies from the Tax authority. This assignment furthermore describes and analyses the most important of these replies. The necessity of all these binding replies made the legislative power in Denmark realise that law no. 992 of 16/9/2014 did not fulfil its purpose fully. 23 February 2016 the current Minister of Taxation, Karsten Lauritzen, presented a new bill called L 123, in which he tries to clear all lightheadedness. This assignment provides a description of L 123 and shows how some issues are solved and how some issues are still left open even though the ‘’repair package’’ should have closed all of them. This assignment presents solutions for the legisla-tive power in Denmark on how to avoid all unintended use of the Danish Business Scheme (Virksom-hedsordningen) and, according to us, close all loopholes.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
Publication date2016
Number of pages106