Selskabsskattelovens § 2 D: en interdisciplinær analyse

Kasper Bring Truelsen & Kenneth Guldborg Jakobsen

Student thesis: Master thesis


The objective of this thesis is to derive the legal and economic consequences of section 2 D in the Danish Corporate Tax Law regarding dividend taxation avoidance. It will include a judicial policy analysis to determine optimal regulation. Section 2 D regulates corporate transactions circumventing the dividend withholding tax due to internal company group restructuring. This emanates from the asymmetric taxation of dividends and capital gains. Due to the regulation, remuneration for share sales that are not shares in the buying company can be requalified as dividends. For the regulation to take effect several requirements have to be met and the thesis discusses the extent of these. The provision has exceptions that are analyzed as well. The thesis processes how tax subjects are taxed and subjected to dividend tax in regard to respective domiciles. To determine the economic consequences an incidence analysis is conducted to derive the impact on the Danish capital market. A transaction analysis is then conducted to give a perspective of the affected tax subjects costs in regard to the tax burden. The conclusion is criticized by using the pecking order theory. The judicial policy chapter analyzes three initiatives to lessen the impact effects of the tax, in regard to derived criterions. The thesis concludes that Section 2 D imposes a tax liability on the legal person receiving requalified remuneration, and the acquiring entity is required to withhold dividend tax. There is no legal basis for imposing taxes, if the subjects are not domiciled in Denmark. The thesis concludes that some restructures will be comprised in contrast to the purpose of the provision. Section 2 D of that corporate tax law inflicts an increase in the demanded return on invested capital on the Danish market. This leads to investors seeking to place investments in foreign countries, and therefore creating a deadweight loss on the market. It is concluded that the increased tax base from the provision will result in a decreased ability for Denmark to compete internationally on taxation terms. The judicial policy then concludes that a conditional dispensation from the taxation will reduce the impact effects on the capitalmarket, improve the investments on the Danish capital market and lessen transaction costs.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2014
Number of pages136