Danish rules of protection against the circumvention of dividend taxation

Student thesis: Master thesis (including HD thesis)

  • Daniel Sonne Strandbech
  • Jesper Nygaard Ovesen
The initial position of this project is the limited tax liability described in SEL § 2. 1, point c, 1st clause. Companies however have the possibility to be included in the tax exemption in SEL §§ 2. 1, point c, 3rd-5th section. and 13. 1, nos. 2, as long as the company is the “beneficial owner” of the dividend as well as meeting the requirements of ABL § 4 A, paragraph 1. Based on this initial po-sition the focus of this project will be the protection against companies’ circumvention of divi-dend taxation.
The Danish law revolving around the meaning of the legal term “beneficial owner” (SEL § 2. 1, point c, 7th and 8th section) will initially be described. The reason for this is to analyze what the Danish taxation authorities mean when they use the term “beneficial owner” and show how the term is used in cases. Given the subject of this thesis, this will be used to conclude whether or not the Danish authorities’ interpretation of the term will meet the standards of the EU. As shown in the project, “beneficial owner” is a term, which is loosely used. This means that the company structures, facing this term, are not able to identify situations where one of the companies will be labeled as a conduit company. “Beneficial owner” is based in OECD-law and not EU-law which imposes a direct problem, because Denmark has to ensure that Danish law first and foremost fol-lows EU and not OECD. This will also be used when comparing Danish law to EU law. As the pro-ject will conclude the Danish understanding and usage of “Beneficial owner” will probably not be accepted by the EU because this set of rules is constructed in a way that will include holding com-panies in general. As shown in section – where EU cases revolving around conduit companies, it is acceptable for members of the EU to try and block conduit companies, because blocking conduit companies is seen as justified by imperative reasons in the public interest. However, the rules have to be specifically designed to block conduit companies and by those standards, they cannot be vague in their description. This project will conclude that the Danish rule on conduit companies are too vague in its description and usage as it is not clear whether or not it is the transaction or the substance of the company that is decisive.
Furthermore this project will not only put “Beneficial owner” in to an EU-law context, but also use the “Anti-clustering”-rules in ABL § 4 A, paragraph. 3, 2nd paragraph, nos. 1-5. This is done by describing the legislative process behind making these rules, and analyzing the problems that oc-cur when imposing this rigid set of rules. Some of the problems with “Anti-clustering”-rules will be used in testing whether or not these rules are acceptable by the EU. This project will conclude that the Danish “Anti-clustering” rules contains some internal legal problems.
LanguageDanish
Publication date11 May 2015
Number of pages71
ID: 211303466