Rente- og kapitalforhold i et fast driftssted

Liselotte Ringive

Student thesis: Master executive thesis


A permanent establishment established in Denmark by a foreign company is taxable in Denmark under legal basis of the Danish Corporation Tax Act (Selskabsskatteloven) § 2. Generally, the permanent establishment is subject to the same tax rules as cooperations. Danish case law has been based on the limited independence fiction, where the Supreme Court ruling of 1992 established that the interest on loans from the head office cannot be included in the permanent establishment’s taxable profit. OECD has over the past years worked to achieve greater consensus with regards to allocation of income to a permanent establishment, which has resulted in "Report on the Attribution of profit to permanent establishment". Based on the report OECD’s Model Tax Convention on income and on capital, article 7 was updated in 2010. Article 7 is now based on the unlimited independence fiction. As a consequence of the introduction of the unlimited independence fiction it rises the basis for consideration whether Danish tax case law will be affected. As the permanent establishment is not a separate legal entity, there is no legal requirements for own capital. According to OECD guidelines, there is to be allocated non-interest bearing capital to the permanent establishment. Allocation of non-interest bearing capital to the permanent establishment ensures that interest expenses allocated to the permanent establishment does not exceed what is "reasonable". This thesis will analyze the existing Danish case law in relation to the allocation of interest to the permanent establishment and clarify OECD's recommendations. Further a clarification of the OECD guidelines for capital allocation is performed.

EducationsMaster i Skat, (Executive Master Programme) Final Thesis
Publication date2016
Number of pages62