Loan and Collaterals in The Danish Business Tax Scheme in a Tax Law Point of View as Well Illegal and Legal Shareholder Loans Seen from a Company Law and Tax Law Perspective: The Policy Interventions Against Private Loans to Collateral in Assets of a Company for both Physical and Legal Persons

Pernille Sandholdt

Student thesis: Master thesis

Abstract

The main purpose of this thesis is to create an analysis of the political interventions against absorbing private loans and collaterals for both small companies and for self-employed persons. Small companies are applying the company- and tax law, where the self-employed use The Danish Business Tax Scheme, which was introduced in 1987. Some company owners have been taking advantage of their ownership and use it as an opportunity to obtain bigger profits in their private economy. This thesis will analyse which opportunities and or limitations the political interventions have created for the company owners. The political interventions for companies were introduced in 2012, where the tax law LL §16E was adopted. Law number 992 of September 16th was introduced in 2014 for the self-employed. The resemblance between these two interventions is that both take action against the unintended use of the law, which have caused regulations about further taxation. Private loans in The Danish Business Tax Scheme have consequences regarding company owners. The value of the deduction of interest is reduced, so that the tax will be equal to a private loan. However, the company tax system (VSO) doesn’t allow company owners to make savings from the profit that particular year, as everything must be taxed. Collateral in The Danish Business Tax Scheme has created some difficulties since Law number 992 of September 16th was introduced in 2014. It was complicated to reach agreement for the legal base for taxing. The law changed in 2016 and made sure that collateral must be taxed in order to be raised in correlation with The Danish Business Tax Scheme §5. From year 2017 and forward, it is now possible for companies to have shareholder loans, due to a change in the company law. If the main shareholder in the company maintains a receivable, taxation will take place, according to tax law. Regardless of the fact the company law is legal, since there are not any association between the two laws.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2020
Number of pages91
SupervisorsSøren Bech