The new government’s overview of expected tax legislation

25 October 2019

Anders Kiærskou, Manager, Tax |

Earlier this month, the new Danish government presented its list of intended legislation for the new session of the Danish parliament.

Concurrent with opening of the Danish parliament earlier this month, the government
presented its list of intended legislation for the new session of the parliament.

The minister of taxation contributed 22 proposals – a few less than last year. Based on experience from earlier years, more than the presented list of intended legislation can be expected.

The proposals for the year ahead are diverse and most of them are of a technical nature. The following can be highlighted:

•    The minister of taxation has presented a bill to create a legal basis for laying down rules that implement the EU directive on mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements that could potentially be used for aggressive tax planning. The bill aims to provide opportunities for similar agreements with non-EU countries to be concluded.

•    A purpose of another bill is to implement the minimum requirements of the EU anti-tax avoidance directive concerning Member States' CFC rules.

Further, the bill proposes to adjust the definition of permanent establishment in accordance with OECD’s amended definition.

As a follow-up to a ruling from the European Court of Justice, the bill also proposes to grant Danish companies the possibility of deducting definite loss in foreign subsidiaries, etc. in certain instances.

Additionally, it is proposed to clarify the tax administration's option to determine taxable income on a discretionary basis, when transfer pricing documentation is not submitted in a timely manner.

It is also proposed to bring certain Danish rules in relation to reportable financial accounts with foreign ties in accordance with international standards.

•    The minister of taxation has also presented a bill to amend the VAT act. The purpose of the bill is to implement EU rules that modernize the VAT rules concerning cross-border trade in goods and services, including the abolition of VAT-exempt imports of goods with a value of less than DKK 80 and harmonization of the distance selling threshold for EU companies' sales to consumers.

These amendments are proposed - among other things - to be supported by an extension of the existing One Stop Shop system.

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.