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Jakob Bundgaard has recently published an article

“Dutch Shell Prevails in Landmark Case on Danish Hydrocarbon Tax”, April 1, 2013.

See Tax Analysts Electronic Citation: 2013 WTD 62-3.

 

About the article:

The Danish Eastern High Court recently held that interest payments and foreign exchange gains did not fall under the scope of the Danish Hydrocarbon Tax Act before 2009, a decision that establishes that any income not specifically mentioned in the provision defining the act’s ring-fence system cannot be included in its scope.

 

Read the article here.

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New book on taxation of pension schemes on the way ……!

Denmark taxes return on savings on pension schemes regardless of whether the funds are deposited in individual accounts with banks and credit institutions or in the case of savings in life insurance companies and pension funds.

The rules are contained in the Act on taxation of return on pension funds (”Pensionsafkastbeskatningsloven”).

The current rules are a result of a comprehensive reform in 2007. The reform implemented a two-tier taxation of pension funds and life insurance companies, which introduced a new type of tax subjects, namely individuals in Denmark or the EU, which have established retirement pensions, etc. in pension funds and life insurance companies.

The law is complicated and give rise to a number of technical uncertainties for banks, pension funds and life insurance companies.

Partner Kjeld Bergenfelt of CORIT Advisory P/S has co-authored a book in the form of a commentary on the topic which will be published by Karnov Group during the spring of 2013. The book examines in detail a number of problem areas that typically cause the users difficulties and will serve as a practical tool for anyone interested in how the returns from pension schemes are taxed.

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New profile at CORIT Advisory

CORIT Advisory proudly welcomes Karsten Gianelli as a new Senior Counsel as of 1 April 2013.

 

Karsten has obtained extensive experience working as a lawyer, tax consultant and tax official for more than 30 years and is widely considered a capacity within a number of important and complex areas of tax law. His areas of expertise include group taxation, group structuring and re-structuring, taxation of financial assets, tax litigation and estate tax. Karsten will continue his activities within these areas.

 

Moreover, Karsten has been lecturing on tax law for numerous years and has authored a number of articles and books on the above topics.

 

We consider the advent of Karsten Gianelli to be a perfect match and foresee great results from our cooperation

 

 

About CORIT Advisory P/S

CORIT Advisory is a highly specialized and fully independent tax boutique firm, offering tax consulting services within a range of complex areas of tax law. Our primary task is to assist businesses in identifying, addressing and mitigating tax risk in a rapidly changing environment.

 

Our ambition is to be recognized as a leading knowledge provider and business partner within the international tax consulting industry. Technical competences are highly prioritized.

 

We offer a unique combination of practical and applicable tax advisory services with the knowledge and insight of academia. This unique mix is the very core of CORIT Advisory and is the common denominator of the people behind the firm.

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Entrepreneurial tax abolished

The so-called Entrepreneurial tax in Denmark has been abolished as of 1 January 2013 with the enactment of Bill no. L 49 in the Danish Parliament.

This means that the taxation of capital gains on portfolio shares held by companies is significantly changed. Going forward a new category of shares is introduced in the form of so-called “tax exempt portfolio shares”. Such shares will be tax exempt for Danish corporate tax payers. The different categories of shares for Danish tax purposes will now consist of:

  1. Shares acquired in trading
  2. Subsidiary shares
  3. Group shares
  4. Tax exempt portfolio shares
  5. Portfolio shares

Gains/losses on shares acquired in trading and portfolio shares are taxable/deductible, while gains/losses on subsidiary- group and tax exempt portfolio shares are tax exempt/non-deductible. Gains on convertible bonds or warrants to convertible bonds are taxable while losses are deductible.

The new category of tax exempt portfolio shares solely include portfolio shares in limited liability companies (A/S and ApS) or corresponding foreign companies in which a Danish company investor holds less than 10% of the share capital. It is moreover a requirement that the issuing company is not a listed company. It is not clear which foreign companies are considered corresponding to the Danish companies mentioned. This question must be dealt with on a case by case basis.

Dividends from portfolio shares remain taxable. This different treatment of dividends and capital gains is now a significant feature of the Danish regime and should be considered carefully when structuring investments.

Certain anti-avoidance measures have also been introduced to prevent the pooling of listed shares in unlisted holding companies. Tax exempt portfolio shares in companies in which the value of the company’s listed portfolio shares on average in the last financial year exceeds 85% of the company’s equity at the end of that year are not covered. Furthermore tax exempt portfolio shares owned and controlled by such companies are disregarded in the before mentioned calculation, while the controlled company’s shares are included in the calculation. The anti-avoidance provision seems to leave some room for certain structuring opportunities to pool listed portfolio shares in existing or new unlisted companies.

Form a practical perspective the new category of shares, the tax exempt portfolio shares will definitely solve some of the issues that start-ups have faced:

  • Business angels investing through holding company can now obtain tax exempt capital gains on shares which do not exceed 10% of the share capital in the issuing company.
  • Portfolio investors in private equity and venture funds can now receive tax exempt capital gains. Please be advised that Bill no. L 10 may impact the investment fund industry.
  • Industrial investors with strategic portfolio shareholdings in other companies may also obtain tax exempt capital gains.

The above does not constitute tax advice from CORIT Advisory A/S and cannot replace actual advice based on the facts and circumstances of specific investors. If you do have any questions or comments to the above please do not hesitate to contact Jakob Bundgaard (jb@corit.dk), Kjeld Bergenfelt (kb@corit.dk) or Michael Tell (mt@corit.dk).