Virksomhedsordningen: i lyset af lov nr. 992 af 16. september 2014

Rasmus Jakob Jensen & Simon Lind

Student thesis: Master thesis

Abstract

The thesis will examine the consequences of the Danish act no. 992 of 16 September 2014. The act was a direct intervention to hinder unwanted abuse of the Danish Business Scheme. The act is specifically aiming to prevent self-employed individuals to deposit private debt in the business scheme and by that enjoying the increased tax value of the interest deduction. The thesis outlines the pre-existing business scheme and analyzes how self-employed individuals are affected by the amendment through explanatory tax calculations and law analysis. The amendment to the business scheme can be divided into the following three protective measures, designed to decrease the incentive to abuse: x Elimination of the savings option when the deposit account is negative x A new higher interest adjustment rate when the deposit account is negative x Taxation of collateral in business assets provided for private debt A negative deposit account prohibits the use of the business scheme’s savings option, which normally allows a preliminary and lenient taxation of the business profits. The loss of the savings option is proved to be an important measure for self-employed individuals to lower taxation over several income years under the Danish progressive tax system. On that account it proves to be an effective incentive. The new and higher interest adjustment rate decreases the incentive to deposit private debt in the business scheme, but still proves to be an inadequate measure to solve the issue completely. The taxation of collateral in business assets is proved to be a somewhat misunderstood and unnecessary measure to hinder abuse. The articles in the amended act are criticized, as they were imprecisely written and difficult to understand. This is further worsened by a contradictory argumentation by the Danish tax ministry in the legislative process A general problem with the amendment act is that a negative deposit account is the designed trigger to hinder abuse. Unwanted abuse is however not always stipulated by a negative deposit account and the trigger of the protective measures will in some cases apply to struggling businesses, which does not necessarily mean abuse. It is concluded that the amendment act further complicates an already challenging taxation scheme. The amendment act is most likely overreaching in its attempt to hinder unwanted abuse and will decrease the economic advantages, which were initially intended when the business scheme were introduced in Danish tax law. The magnitude of the intervention is still to be determined, but the scarce statistics on the matter is already showing a decrease in favor.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2016
Number of pages128