Kursreguleringer omfattet af rentefradragsbegrænsningsreglerne: En beskrivelse og analyse af kursreguleringer omfattet af rentefradragsbegrænsningsreglerne

Martin Fensby Christensen

Student thesis: Master thesis

Abstract

The overall objective of this thesis is to describe and analyse the protection rules in The Danish Corporate Tax Act regarding limitation of deductibility within thin capitalization (section 11), limitation of deductible interest (section 11 B) and EBIT rule (section 11 C) and related market value adjustments of claims, debt and financial contracts. Market value adjustments of claims, debt and financial contracts are part of the finance costs that fall within the limitation of deductibility. The overall purpose of thin capitalization is to limit the deduction of finance costs in Danish companies regarding debt exceeding four times total equity, which is obtained debt controlled by foreign controlled capital owners provided on non arm's length basis and exceeds DKK 10 mil. The loan is either directly borrowed to Danish subsidiaries or security provided to borrower directly or indirectly. Finance costs regarding debt which meets the above mentioned requirements will be limited of deductibility. Thin capitalization therefore counteracts Danish tax income to vanish through disproportionate finance costs and ensure transfer pricing rules on related parties are observed. The objective of limitation of deductible interest (section 11 B) and EBIT rule (section 11 C) is firstly to limit deductible net finance costs exceeding a standard interest rate multiplied with the amount of assets, no matter the net finance costs are related or not. Secondly, the amount of deductible net finance costs is limited to 80 % of the taxable income before net finance costs and taxes (EBIT). The purpose is to limit deductions exceeding a market-based return on net operating assets and limit 80 % of taxable income to be reduced by deductible net finance costs. The thesis' objective is furthermore to describe and analyse which market value adjustments of claims, debt and financial contracts that are included in the above mentioned protection rules and the Danish Gains on Securities and Foreign Currency Act. Included market value adjustments and the following taxation process regarding possible limitation of deductibility related to negative adjustments are described. The carry-forward rules regarding market value adjustments allowed for carry-forward into positive market value adjustments in subsequent income periods are described and analyzed. The above mentioned finance costs deduction limitation rules results in limitation of deductibility which includes unrealized market value adjustments of interest rate swaps. These adjustments are subject to different carry-forward rules based on the whether the loan behind is secured within real estate or other assets. This results in major differences in tax payments because of a three-year period carry-forward limitation for carry-forwarded limited market value adjustments, except certain swaps regarding loans secured within real estate.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2012
Number of pages113