Corporate Tax 2010 - BMR Advisors

Accura Advokataktieselskab
Denmark
capital can be paid up in cash or by contribution of assets in kind.
Under Danish law, the formation of a Danish limited company is
quite simple and can be completed within a day.
6.5 Would a branch benefit from tax treaty provisions, or some
of them
Yes, a branch can benefit from tax treaty provisions.
6.2 Are there any other significant taxes or fees that would be
incurred by a locally formed subsidiary but not by a
branch of a non-resident company
Subsidiary and branches are taxed at the same rate and subject to
generally the same taxable principles
6.6 Would any withholding tax or other tax be imposed as the
result of a remittance of profits by the branch
Profits of a branch may be remitted to the head office free of
withholding tax. In principle, there are no restrictions on the
remittance of the profits of branch to its head office.
Denmark
6.3 How would the taxable profits of a local branch be
determined
The taxable income of a branch in Denmark will basically be the
same as that of a Danish limited liability company. Generally, a
branch - just like a company - must base its inter company
transactions on the arm’s length principle, and it will be considered
as an independent operation for tax purposes. However, a territorial
principle applies to Danish companies to the effect that income
from a foreign branch is not included in the Danish income.
The Danish branch is taxed on the income deriving from the Danish
business. Expenses relating to the business of the branch can be
deducted provided that they are incurred when generating or
maintaining taxable income. Foreign exchange, gains and losses
realised in trade with third parties can also be included in the
taxable income. Tax losses can be carried forward on the Danish
tax return for an unlimited period of time.
Payments by a Danish branch to its foreign head office for items
such as royalties, interests and other expenses are, however, not
deductible for tax purposes as the branch constitutes an integral part
of the foreign head office.
7 Anti-avoidance
7.1 How does Denmark address the issue of preventing tax
avoidance For example, is there a general anti-avoidance
rule or a disclosure rule imposing a requirement to
disclose avoidance schemes in advance of the company’s
tax return being submitted
Denmark has no general anti-avoidance rule. However, according
to the case law established by the Danish courts, the real economic
aspect and the real contents of transactions are taken into account
rather than their formal appearance. As a result, the courts
sometimes refuse to recognise lawful and valid transactions without
contents in connection with tax avoidance if the real contents of
such transactions conflict with the real economic situation. Most
recently, the courts have, however, recognised decisions on the
basis of their formal appearance where such decisions have been
made in compliance with Danish company law and satisfy the
formal requirements under Danish law.
6.4 Would such a branch be subject to a branch profits tax (or
other tax limited to branches of non-resident companies)
There is no special branch profit tax. A branch will be subject to the
25% standard corporate tax.
ICLG TO: CORPORATE TAX 2010
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