|KPMG Acor Tax|
|Bech-Bruun, Taxand Denmark|
|Vistisen Tax Attorneys|
|Firms to wach|
Denmark's tax market has been heavily influenced by international trends, such as the OECD's BEPS project and the European Commission's Anti-Tax Avoidance Directive. The BEPS transfer pricing (TP) documentation requirements, including country-by-country reporting (CbCR), came into effect on January 1 2016. This has been a challenge for companies and has kept practitioners busy.
"BEPS is on everyone's mind," said EY head of tax, Vicki From Jørgensen.
"We are a small country and tax laws change, normally, all the time. However, we haven't seen a lot of amendment this past year so I would say the main emphasis and focus has been on international tendencies; it's been BEPS but it has also very much been EU related," said Jakob Bundgaard, head of tax and transfer pricing at CORIT Advisory.
Although BEPS has been a main topic this year, the anti-avoidance rules are starting to steal the spotlight. Denmark already has various anti-avoidance rules in place, including anti-hybrid entities rules, anti-hybrid loans rules and sophisticated interest limitation rules. "We now have all the BEPS reports prepared by the OECD in the last year and of course that is changing a lot of things in tax law. But I think the thing with Denmark is that in the past decade, Denmark has been the front runner in introducing anti-avoidance rules in all different areas," said Ole Schmidt, managing partner at KPMG Acor Tax.
The tax authorities have been under a lot of pressure and scrutiny after the country's biggest tax fraud. In August 2015, the authorities alerted police after foreign companies appeared to have drained more than €800 million ($893 million) from the system. This reflected negatively on multinationals' transfer pricing, an area which was already under some scrutiny from the tax authorities who have become more aggressive and have launched more audits over the past couple of years.
"They [the authorities] are struggling and trying to find the right approach and some initiatives have been launched, of course with the purpose of getting back on track," said Bundgaard. "That includes for instance a code of conduct for the employees and I'm sure they wouldn't develop a code of conduct, if the conduct was just plausible."
This has resulted in an increase in the demand for TP services. "Transfer pricing is very much in demand and general compliance and corporations have been even more cautious about their tax planning," said Nikolaj Bjørnholm, founder of Bjørnholm Law.
As taxpayers adjust to the changing tax environment and the tax authorities' attitudes, practitioners have been busy advising on all transfer pricing areas. "It has been a year where people try to consolidate and try to come to terms with what the new changes and new tax environment will be," said From Jørgensen.
(As of April 2016)
|Corporate income tax||22%|
|Capital gains tax||22%|
|Branch tax rate||22%|
Net operating losses (years)
Source: EY 2016 Worldwide Corporate Tax Guide