New EU regulation to limit methods of tax evasion etc.

26 October 2018

Anders Kiærskou, Manager, Tax |

The minister of taxation has presented a bill seeking to implement EU rules limiting methods of tax evasion and rules for complaints in cases concerning double taxation, where Denmark and one or more EU countries are involved.

It is a claimed priority of the Danish government to ensure fair and equal competition in Denmark, in the EU and globally.

Danish tax law already contains many of the rules that have been discussed internationally in recent years within the EU and OECD.

However, according to the government, to create more equal conditions of competition, it is important that other countries’ corporate tax base cannot be eroded, and that companies’ profits cannot be relocated to tax havens.

The new EU rules shall ensure the resistance of the EU countries against cross-border tax evasion methods in reference to corporate taxation.

The EU rules comprise the following five areas:

  • Limitation on deductions for interest expenses
  • Exit taxation
  • General anti-abuse rules
  • Rules for controlled foreign companies (CFC rules)
  • Hybrid mismatch

Rules on tax dispute resolution shall improve existing mechanisms for settling disputes concerning double taxation in the EU and create a more favorable tax environment – especially for businesses – which reduces compliance costs and the administrative burden, as well as ensuring legal certainty with regard to taxation.

The EU rules also contain procedural guarantees – corresponding to the guarantees of the Danish courts – of independence and that final decisions are published.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge. Please sign up here.