The Economic and Legal Significance of the Amendment to Section 13(1)(3) of the Danish Corporate Tax Act After the Introduction of the Requirement for a “Beneficial Owner” Assessment for Danish Companies

Abstract

This thesis explores the implications of the Danish "beneficial ownership" concept within corporate tax law, with particular focus on the legal uncertainty and administrative complexity it creates—and how these factors influence taxpayer behaviour and economic efficiency. The analysis centres on the interpretation of beneficial ownership under domestic Danish tax law, especially in light of recent legal developments requiring Danish tax-exempt portfolio companies to assess whether the recipient of dividends qualifies as the beneficial owner. By employing an interdisciplinary framework that integrates legal reasoning with transaction cost economics and game theory, the thesis demonstrates how the current application of Section 13, 1, 3) of the Danish Corporation Tax Act (Selskabsskatteloven, SEL) generates significant compliance costs and incentivises strategically motivated, yet economically inefficient, ownership structures. A key contribution of the thesis is a proposed legislative amendment: the removal of the beneficial ownership requirement from SEL section 13, 1, 3). Based on a legal and economic analysis, this proposal aims to reduce transaction costs for compliant companies, improve predictability, and minimize the so-called "lock-in" effects where firms maintain suboptimal ownership structures out of fear of retrospective tax assessments or sanctions. These effects are particularly pronounced in cases where companies engage in legitimate cross-border activities but are discouraged from restructuring due to the unclear beneficial ownership assessments. The study develops game-theoretical models to compare corporate and regulatory behaviour before and after the legislative change, showing that a stable and Pareto-improving equilibrium is more likely under a simplified legal framework. Empirically grounded case structures are analysed to demonstrate how companies currently organize ownership through holding structures, with and without real activity, and how these choices respond to regulatory ambiguity. The thesis concludes that the proposed reform offers a more proportionate approach, promoting more efficient ownership structures, reducing administrative burdens, lock in effects, and enhancing the alignment between legal frameworks and economic behaviour. Ultimately, it strengthens legal certainty and encourages compliance - without compromising the integrity of the Danish tax base.