From the newly published 2015 activity plan (“aktivitetsplan for 2015”), it is evidentthat medium-sized, large businesses and multinational groups are still a focus area of the Danish Tax Authorities.
On 17 February 2015, the Danish Tax Authorities published its 2015 activity plan called“Enforced compliance within tax”, reusing the title from last year.
Medium-sized and large businesses
In 2015, the Danish Tax Authorities will focus on medium-sized and large businesses, that is, businesses with a turnover between DKK 14m (approx. EUR 1.9m) and DKK 500m (approx. EUR 67m), or with a combined annual payroll tax of DKK 4m (approx. EUR 0.55m).
The focus of the Danish Tax Authorities in 2015 will also be on the tax and VAT treatment of transactions in connection with tax-exempt reorganisations, computation of capital gains and tax loss carry-forwards and the tax treatment of legal fees and accountancy costs.
Furthermore, the Danish Tax Authorities will focus on majority shareholders’ compliance with Danish tax law. The purpose of this work is to ensure that majority shareholders and their companies are taxed correctly on the value of free goods (e.g. cars, housing, and holiday homes), dividends, salaries, etc.
According to its activity plan, the Danish Tax Authorities will largely continue its ongoing activities in 2015 in relation to large corporates. The activities are scheduled to last several years, mirroring the often very long proceedings.
The activity plan also includes specific areas such as withholding tax on dividends, interest and royalties as well as branch offices and industries, for instance the oil industry, which is facing specific challenges regarding tax and duty. Enterprises owned by equity funds or funded by international intra-group cash pools or loans must expect the Danish Tax Authority to examine whether or not current legislation has been observed.
Withholding tax on dividends, interest and royalties
In order to ensure correct withholding tax on cash flows made to tax havens and other relevant countries, the Danish Tax Authorities will keep its focus on withholding tax on dividends, interest and royalties. The focus will be aimed at large flows of dividends, equity fund takeovers and large Danish company acquisitions.
International taxation and BEPS (Base Erosion and Profit Shifting)
Furthermore, the Danish Tax Authorities will focus on cross-border tax issues and BEPS. The purpose is to uncover the applicability of BEPS within current tax legislation. This project will, according to the activity plan, be aimed at international transactions within multinational groups.
The information derived from the project will most likely create a basis for the first cases for which the Danish Tax Authorities will test the limits of the new general anti-abuse rule, which is expected to come into force on 1 May 2015.
In 2015, the Danish Tax Authorities will continue to focus on transfer pricing, having seen a gradually increasing number of cases within recent years. The Danish Tax Authority will consolidate its efforts through fewer but bigger projects. This will ensure an improved professional expertise in dealing with transfer pricing issues and multinational groups. Intellectual property rights and multinational group financing will be given specific attention.
The continuing focus on transfer pricing in combination with new initiatives, such as BEPS, is a reason for all multinational groups to ensure that applicable legislation is observed and to give consideration as to whether there are issues in the past that needs to be handled.
The oil industry
The activity plan includes focus on the oil industry. The aim is to gather information about the oil industry, which is characterised by being governed by complex tax and duty legislation. The aim is also to examine whether or not a different strategy and legislation can help reduce the risk of incorrect payment of tax and duty.
On the basis of the activity plan for 2015 we expect that the Danish Tax Authority will keep its focus on enterprises with large turnovers, multinational groups and Danish enterprises owned by equity funds.
All of the above-mentioned enterprises are governed by the most complex part of the Danish tax legislation, and Danish tax legislation is to be found among the most complex ones globally. To ensure that they have implemented the right policies and to be able to deal with the inquiries from the Danish Tax Authorities, the enterprises will have to budget for considerable resource spending.
Finally, majority shareholders in medium-sized and large businesses should consider whether the relationship between the company and its shareholders is in compliance with current tax legislation.