International Joint Taxation

Mads Vandal Pedersen & Thanh-Thanh Lam Pham

Student thesis: Master thesis

Abstract

Globalization has been increasing for many years, which also has affected the Danish companies. This has also expanded the opportunities to establish concerns worldwide. It is possible for Danish companies to join an international joint taxation with their foreign group companies. The Danish Ministry of Taxation has made regulations to make sure that the concerns are not abusing this opportunity for an unfortunate tax planning. However, these regulations have also made it complicated and confusing, so it questions whether or not it is an advantage or disadvantage to join an international joint taxation. The Danish tax regulation is therefore important to consider before any concern decide to join an international joint taxation. The purpose of this thesis is therefore to expose the applicable rules for an international joint taxation, which includes an analysis of pros and cons. The Danish law no. 426 of 6th June 2005 created several rules regarding international joint taxation in Denmark. For the purpose of this thesis an analysis of existing law will be conducted through primary and secondary literature. The rules imply a 10-year binding period within a concern and an administration company to administrate the joint taxation. If a withdrawal from either the binding period or the administration company happens the consequences of a full re-taxation. This can be important if the companies decide to restructure, as it will require that the binding period maintains, and it does not lead to a termination of the administration company or the ultimate mother company. Though a dissociation of the ultimate company will always lead to a full re-taxation. Companies within a joint taxation are allowed to utilize each other’s deficiencies, which can optimize the tax liabilities within a concern as a whole. Although the rules imply several restrictions for especially the foreign companies to obtain certain deductions, and it requires in general more from the foreign companies to uphold the requirements for an international joint taxation. It cannot be concluded whether if an international joint taxation in general is more of an advantage than a disadvantage, as it depends on the specific circumstances for the individual concern

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2018
Number of pages120
SupervisorsMichael Tell