|KPMG Acor Tax|
|Bech-Bruun, Taxand Denmark|
|Vistisen Tax Attorneys|
Denmark has been a participant in the OECD's BEPS project from the beginning and the Danish government has adopted many of the recommended measures into domestic law. Among them are the formal standards for TP documentation: country-by-country reporting (CbCR), master file and local file. The adjustment has posed challenges for business and created plenty of work for TP practitioners.
Denmark has made great efforts to align its tax system with the BEPS project and most of the new anti-avoidance rules have been adopted by Danish law, including hybrids, controlled foreign company (CFC) rules and interest deductions, as well as treaty abuse prevention and permanent establishment status.
Although international trends have been of major importance, the leading domestic concern has been the reorganisation of the Danish tax authorities. After a series of major scandals, the Danish Tax Administration (SKAT) is due to be replaced with seven agencies in July 2018. Five of these will be based outside of Copenhagen, with a fresh intake of staff to expand SKAT's reach.
"All parties in parliament have recognised that the tax authorities are dysfunctional and something needs to be done. There is a big political will to provide the resources and make this happen," said Nikolaj Bjørnholm, founder of Bjørnholm Law.
Tax and TP professionals are generally optimistic about the reorganisation. The complete overhaul of SKAT may bring about the end of IT problems, which have hindered tax collection in recent years, as well as putting a stop to fraudulent tax refunds. However, it will still be down to the new agencies to prove they can overcome these scandals and not repeat past mistakes.
These developments have led to a rise in demand for TP services across the Danish market, particularly compliance and planning, before things go to court. Litigation and disputes are expected to be key growth areas as the tax reforms are consolidated and clients are facing greater scrutiny.
(As of July 2017)
|Corporate income tax||22%|
|Capital gains tax||22%|
|Branch tax rate||22%|
Net operating losses (years)
Source: EY and Deloitte