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Bill Targets ‘No Tax Corporations’
On 25 April 2012, a bill targeting so-called "no-tax-corporations" was presented to the Danish parliament. The bill contains various amendments to the current tax regime, among which are (i) the introduction of restrictions in the right to utilise losses being carried forward, (ii) the reintroduction of joint and several liability for group companies? payment of Danish taxes and (iii) the introduction of publicity on corporate tax matters. Taxand Denmark analyses the contents of the bill to understand how it will affect Danish taxpayers.
The bill covers restrictions in the right to utilise previous losses; joint and several liability for tax payments; publicity on corporate tax matters
The bill also contains the introduction of publicity concerning hitherto private information on corporate tax matters. In the future, information concerning (i) the taxable income, (ii) the value of losses being carried forward and (iii) the amount payable in taxes will be made public by the Danish Tax Authorities. If the company forms part of a consolidated tax group, information concerning all members of the group will be made public.
The bill must be seen as part of the ongoing efforts aimed at multinationals conducting business in Denmark without generating taxable income of any significance. Generally, the bill introduces further tax restrictions on corporations.
The introduction of joint and several liability among members of consolidated tax groups and the publication of corporate tax matters may have adverse consequences for corporations present in Denmark.
The introduction of restrictions on the right to carry forward is applicable at group level. Accordingly, it should be considered in the future, whether or not a consolidated tax group should be established when it is not mandatory.
Furthermore, minority shareholders in Danish companies being part of consolidated tax groups should consider how to handle the financial and reputational risks arising when the companies are made part of a majority shareholders? consolidated tax group.