Virksomhedsordningen: With Focus on Parental Purchases

Julie Kirk Brodde

Student thesis: Master thesis

Abstract

The purpose of this master thesis is to examine the consequences of law No. 2229 of 29th of December 2020 for abrogation of the tax advantage for parental purchases of an apartment. The amendment concerns parents who choose to be taxed after the tax regulation, in Danish called “virksomhedsordningen”. Before the amendment parents were able to deduct interest expenses directly in the company´s income and thereby reduce personal income. If the parents use the tax regulation, in Danish called “personskatteloven” which is the basic set up, where the profit before interest is included in the personal income tax. The interest is therefore deducted in the personal capital income instead of the company’s income. Parental purchases of an apartment, the regulation for “personskatteloven” and “virksomhedsordningen” will be described and afterwards there will be a description of the amendment. The implication of Law No 2229 of 29th of December 2020 is a systematic neutralization of the tax advantage of parental purchases of an apartment in “virksomhedsordningen”. The purpose of the amendment is that interest cost will have the same deduction values as taxation after “personskatteloven”. The changes will amount from 25% to approximately 56%. The master thesis examines the cause and consequences of the amendment. The aim is to produce interesting questions and not to understand or solve them. It is not clear why the Danish Parliament passed the amendment, which they have discussed in many years. The schematic solution is simple, but it doesn’t fit 100% according to the purpose. Fictive examples of this will be calculated in this master thesis. In order to illustrate how the amendment affects the choice of tax regulation, will differently examples of parental purchases of an apartment be calculated. My conclusion is that the tax consequences for parents purchases of an apartment in “virksomhedsordningen” is depending on the parent’s individual situations. In the end of the master thesis I will give my opinion on the amendment and I will also discuss other amendments to “virksomhedsordningen” because I find it interesting to set focus on the many amendments in the last decade to “virksomhedsordningen”, which have caused a complicated tax regulation.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2021
Number of pages80