Some important changes to Danish tax and company law have been introduced in the recent years. Some highlights follow.
On corporate tax:
- 30% interest withholding tax. Interest paid to a non-resident entity is now subject to a 30% interest withholding tax.
- Interest deductions & taxation. Certain interest paid by one Danish resident company to another is no longer deductible, but the corresponding income is not taxable.
- Thin capitalisation. Now applies even on debt from unrelated parties. Some aspects only apply to debt above DKK 10,000,000 (about EUR 1,300,000). To some extent the new rules tie in with the 30% interest withholding tax (above).
- Group taxation (tax consolidation/fiscal unit). These rules have been relaxed. (Incidentally, it has always been possible to include foreign subsidiaries).
- Transparent entities (check-the-box). Interest paid by certain Danish residents is not deductible if the entity is considered transparent in the recipient country.
On company law: Changes were made introducing:
- The possibility of interim dividends.
- More flexible rules concerning the holding of directors
- Clarification of rules relating to mergers and de-mergers
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.