Danish CFC Taxation in a Comparative Analysis with the Base Erosion and Profit Shifting Project

Andreas Spuur Jensen

Student thesis: Master thesis


The overall purpose of this Master Thesis is to investigate whether a comparative legal analysis and an analysis within the framework of Law and Economics may contribute to an increased efficiency of Danish CFC taxation. The legal analysis examines whether the Danish CFC legislation complies with the new international standards OECD stipulates with the BEPS project. The Danish legislation fully complies with the new international standards regarding which taxpayers should be included and exemptions from CFC taxation. Equally, the Danish legislation complies with the definition of control as well as regarding computation and attribution of the income. The Danish definition of the CFC income approximately complies, besides from one definition, regarding Sales and services income. Furthermore, the Danish legislation does not provide relief for taxes paid by intermediate companies. The analysis of Law and Economics defines the optimal point regarding information, which could be available to the Danish tax authorities, within the theories of Neoclassical Economics and Information Economics. The market failure analysis and the traditional equilibrium theory provides evidence regarding efficiency opportunities revealing, that the Danish authorities does not hold all relevant information about the activities of the taxpayers. Then the thesis provides specific proposals for solutionsto the lack of information, which are able to create increased efficiency for Danish CFC legislation. This includes intensified efforts to enter into treaties with the states that still have bank secrecy and for the states to improve the exchange information between the tax authorities. In theory, the best solution regarding information problems would be more harmonization between the tax laws of the states. Finally, the thesis provides legal considerations relating to the legal comparative analysis. A reintroduction of a tax rate exemption and the transactional approach ought to be considered. Furthermore, an introduction of the CFC income definition concerning Sales and services income could be considered and it should be considered to provide relief for taxes paid by intermediate companies.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2016
Number of pages90
SupervisorsMichael Tell