The Danish Minister of Taxation published a draft bill on 7 October 2013, which amends the rules on exit taxation. The draft bill was the European Court of Justice (ECJ) decision of 18 July 2013, where Danish exit taxation rules were held to be incompatible with the freedom of establishment in the EU and EEA (European Economic Area).
The draft bill does not amend the existing Danish exit taxation rules. This will generate late payment interest, but a bank guarantee is not required. This rule will be applies from 2013 and onwards. A grandfathering rule is proposed for taxpayers that were subject to exit taxation in income year 2008 and onwards.
The key points of the proposed rules include the following transactions:
- Migration of a Danish company to a country that is a member of the EU or EEA.
- Transfer of the corporate seat of an EU company (SE) or a European Cooperative Society (SCE) out of Denmark.
- Transfer of assets/liabilities from a resident company to a permanent establishment (PE) in a country that is member of the EU or EEA.
- Transfer of assets/liabilities from a Danish PE to the head office of a company that is tax resident in a country that is a member of the EU or EEA, or to a PE in a country that is member of the EU or EEA. In the latter case the wording of the draft law does not require that the head office is located within the EU/EEA.
An election to defer payment of an exit tax means that an exit tax balance must be established equal to the amount of the deferred exit tax. The balance is charged late payment interest of at least 3 % per annum.
