It has been an unusually quiet year for legislative changes in the Danish tax market, but advisers have been kept busy nonetheless as the tax authorities started coming down harder on taxpayers. The authorities are under more pressure from politicians after the country's biggest tax fraud cases were reported in 2015, worth around €800 million ($894 million).
"On the legislative side 2016 has been absent of major tax reforms with new legislation targeting relatively narrow issues only," said Hans Severin Hansen, head of tax at Plesner. "Instead, attention has been on analysing and dealing with the BEPS Action Plan and its initial consequences, just as tax controversy in particular regarding transfer pricing and most notably the scope of deductible business expenses has been attracting headlines this year."
Advisers reported the authorities are struggling to find the right approach and are working hard to get back on track. They have increasingly been targeting larger structures and companies are trying to come to terms with what the new tax environment will be like.
"You can distinguish between [the authorities' treatment of] larger companies and smaller companies," said Eduardo Vistisen, head of tax at Vistisen Tax Attorneys. "The larger companies are very under scrutiny as they have been for the past few years. The smaller companies are under the radar and there is not much scrutiny."
The international tax climate has had a major impact on the Danish market, particularly BEPS – although the Project's impact in Denmark is less than that in many other countries, as the country already had a strong anti-avoidance framework.
"Denmark has been the front runner in introducing anti-avoidance rules in all different areas. Some of the things that have come up in the BEPS reports and also in the transparency package, we have had large parts of that in Denmark already," said Ole Schmidt of KPMG Acor Tax.
Anti-avoidance has been high on the agenda in Denmark and has increasingly been in the national media, resulting in more scrutiny on companies from the authorities. "In Denmark right now there's been a lot of news about tax evasion and tax avoidance. There's been a lot of focus on taxes and that, of course, also means there will be a political push to actually collect the taxes," said EY's head of tax, Vicki From Jørgensen.
Denmark has aligned its tax system to the OECD recommendations and most of the anti-avoidance rules present in BEPS are already addressed in Denmark, including hybrids CFC and interest deductions. The only rule that is currently not part of the Danish legislation is the so-called inversion rules. Advisers said the 'Panama Papers' have changed the environment in Denmark, although only a few companies and individuals with offshore accounts were identified. "The environment is changing so we need to be very careful being tax advisers in Denmark these days. We are becoming increasingly alert when we see offshore constructions," said Niclas Holst Sonne, head of tax at Horten.
He added: "Besides that we have many anti-avoidance rules in place already. Maybe the CFC rules are going to be tightened because the definition in the anti-avoidance package is broader than the current Danish rules."
Other parts of BEPS already implemented into domestic law include treaty abuse prevention, permanent establishment status, transfer pricing rules and CbCR.
Additionally, the Danish tax tribunal has been reorganising and a number of rulings have been delivered. As a result, many taxpayers are frustrated by the slow pace of the tribunal and fewer cases will be appealed to the civil courts.
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Hans Henrik Bonde Eriksen
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|Corporate Income Tax||22%|
|Capital Gains Tax||22%|
|Net Operating Losses (years)|
|Royalties from, for example, patents, know-how||22%||B|
A The 22% rate applies to payments on or after March 1 2015.
B The 22% rate applies to payments on or after March 1 2015. The rate is 0% for royalties paid for copyrights of literary, artistic or scientific works, including cinematographic films, and for the use of, or the right to use, industrial, commercial or scientific equipment. In addition, the rate may be reduced or eliminated if certain conditions are met under the European Union (EU) Interest-Royalty Directive or a double tax treaty entered into by Denmark.
C A Danish branch office or a tax-transparent entity may be recharacterised as a Danish taxresident company if the entity is controlled by owners resident in one or more foreign countries, the Faroe Islands, or Greenland and if either of the following circumstances exists:
• The entity is treated as a separate legal entity for tax purposes in the country or countries of the controlling owner(s).
• The country or countries of the controlling owner(s) are located outside the EU and have not entered into a double tax treaty
with Denmark under which withholding tax on dividends paid to companies is reduced or renounced.
Ida Gert Jensen is the head of tax and VAT at BDO, a consulting, audit and accounting firm with a forward-facing tax and VAT department. The team assists businesses and private clients on the tax and VAT aspects of financial transactions. It also advises on the purchase or sale of real estate for both restructuring and setting up operations abroad.
Tax planning is also a special element of this and the firm advises on incentive schemes and special taxes. The firm specialises in VAT and it prioritises indirect tax matters domestically, obtained responses from the tax authorities while maintaining a good relationship with them.
The tax team at Bech-Bruun, Taxand Denmark is headed by Anders Oreby Hansen. The team of lawyers and economists provides a full range of tax services including transfer pricing, M&A, restructuring, VAT, incentives, financial instruments, international tax consultancy and financial analysis.
The firm reported 2015 as one of its best years yet and has seen an increase in transfer pricing work as well as in general tax dispute and litigation work. It has a diverse client portfolio which includes Facebook, Nordea and AP Møller-Mærsk A/S.
Oreby Hansen has extensive expertise in Danish and international law and advises both Danish and international clients on strategies and dispute resolutions. This year, Arne Riis, a salary partner, left the firm. His position was filled by partner Jørgen Hemmsen, who is an economist.
After 20 years as a tax partner at several firms in Denmark, Nikolaj Bjørnholm, left a partner position at Plesner in March 2016 to start his own firm. With tax controversy and international taxation as the main focus, Bjørnholm Law provides advice to a number of clients across all industries. Bjørnholm has also previously worked as a partner and head of tax at Bech-Bruun and as partner at Hannes Snellman.
He is a recognised litigator and is highly spoken of by his peers. In 2016, he prevailed before the High Court in the first case of denial of access to the EU arbitration convention. He is working on various tax controversies in relation to transfer pricing, beneficial ownership and hydrocarbon taxation, among other things.
Bjørnholm comes highly recommended by clients and is described as one of the best lawyers in Denmark to present clients before the courts in all tax-related controversy issues. One client said: "Bjørnholm is a small boutique law firm which better than the top law firms is able to dedicate his full attention to his clients at hand. We see this as an advantage which together with our existing cooperation would recommend this firm."
Erik Banner-Voigt and Søren Lehmann are joint heads of the tax department at Bruun & Hjejle.
Banner-Voigt is a new addition to the team and has extensive experience as the former head of Deloitte's financial tax group. He is an experienced and well-known tax specialist with expertise in M&A, private equity and venture funds, financial products, alternative investments and share-based salary. Both the firm and Banner-Voigt were praised by peers, and many interviewed during the World Tax research process claimed the new addition to the team has strengthened the team's abilities and network.
Lehmann advises a range of clients on tax matters, especially tax disputes, and has special industry insight into real estate, telecommunication, the cooperative movement and the financial sector.
The team's clientele includes some of the largest companies in the Danish market including banks, private equity funds, pension companies and multinational corporations. Some of the firm's major clients during the last year were TDC, Danske Bank, DNB, NETS and Axcel management.
Clients speak highly of the firm. One said: "They are amongst the best, if not the best, firm in Denmark."
Bruun & Hjejle has a strong focus on complex transactional tax advice and litigation. This includes acquisition structures, debt structuring, comprehensive tax due diligence for foreign and national investors, transfer pricing, VAT and landmark corporate tax issues.
Jakob Bundgaard is the head of tax and managing director of the fully independent specialist tax firm CORIT Advisory. The team offers consulting services in a wide range of tax areas, although the main focus is on complex and international tax matters.
The firm provides strategic advice to multinational enterprises in the offshore, extractive, financial, energy and software industry sectors and prioritises technical competence. Another key branch of work is reviewing work for Big 4 firms and giving second opinions. Bundgaard has expertise within company and group taxation, international tax law, financial instruments, corporate finance and private equity.
Clients and peers spoke highly of the team for its high technical level and strong focus on quality. One client said: "CORIT has a special position in the Danish tax advisory market. They are independent and they have a strong focus on high quality from an academic perspective. Furthermore, they have a flexible delivery model enabling both high quality and speed. Consequently, CORIT is my preferred provider on second opinions, typically on your internal analysis."
On January 28 2016, the firm was engaged by the European Commission to carry out a study on aggressive tax planning which was made public simultaneously with the EU Anti-Tax Avoidance Directive and transparency package.
Niels Josephsen is the head of tax at Deloitte and advises a number of Danish and international groups on domestic and international tax matters. He has extensive expertise in corporate tax, international tax and tax strategy.
The team consists of more than 230 professionals, and hired more than 50 new experts in the past year. It benefits from an international network offering the full suite of services including tax advice, VAT, international tax and transfer pricing. The firm combines its expertise and insight and innovation with the sharp understanding of businesses and industries.
Aside from Josephsen, other significant partners include Søren Reinhold Andersen, head of the global business tax team, Thomas Svane Jensen, who leads the indirect tax team, Asger Mosegaard Kelstrup, head of transfer pricing and Sanne Højris, who oversees the global employer services.
The team promotes education and compliance by distributing newsletters and hosting frequent tax updates, workshops and seminars.
Vicki From Jørgensen is the head of EY's tax department, which is one of the largest tax service providers in the country. The team offers the full spectrum of services in corporate tax, indirect tax and litigation. The team consists of 28 full-time tax partners and 221 professionals working across its corporate, indirect and litigation practice areas.
From Jørgensen has a wealth of knowledge on tax matters including tax stategfy and policy, controversy, capital structures, risk managmeent, tax department structuring and cross-border mergers and demergers. She has more than eight years of experience as an EY partner and has previously worked for the Danish tax administration.
Gorrissen Federspiel's tax department is headed by Jakob Skaadstrup Andersen, who specialises in tax, compliance and corporate social responsibility. He is also a member of the International Fiscal Association, the Danish Tax Lawyers' Association and the International Bar Association.
The firm is a corporate law firm with an international outlook. The tax group offers a wide range of services related to corporate tax, VAT and various duties. The team combines commercial insight with tax expertise to assist clients and are integrated with leading tax specialists across the Nordic region and abroad.
Head of tax at Horten, Niclas Holst Sonne, comes highly recommended by peers and clients. He joined the firm in 2013 and the team has continuously grown since, taking on two new members this year.
Holst Sonne has a wealth of experience in the establishment and implementation of incentive schemes and is active in direct tax and VAT litigation. The team offers the full suite of tax services and has extensive experience within M&A, corporate tax structuring and reorganisations, cross-border taxation, real estate tax planning and transactions, the modelling and implementation of employee share schemes, VAT, as well as in litigation within tax, VAT and transfer pricing.
Other firms praised Holst Sonne and the team's performance and clients state the tax advice delivered was dedicated and professional. One client said: "My experience is that they are very professional and that they are delivering in time. I will definitely recommend Horten to others."
A new addition to the team this year was Malte Søgaard, former EY senior consultant. He advises on general direct and indirect tax and specialises in corporate tax.
Ole Schmidt is the head of tax at KPMG Acor Tax and specialises in Danish and international tax law, sales and purchases of businesses, structuring of private equity funds and general international tax planning. The team assists clients on a range of tax matters including restructuring, M&A, double taxation, transfer pricing, tax controversy, expatriate services, incentive programmes and VAT.
With an impressive client base, the firm has a strong reputation among peers and has recently introduced new and innovative tax technology services to the Danish market.
The ever-growing team consists of significant partners including Ria Falk, Flemming Mortensen, Susanne Dybdahl, Claus Bohn Jespersen and Fredrik Lundgren. The tax practice is made up of 17 partners and 57 dedicated professionals in total, and is praised for its client-focused approach.
One client said: "They have built a great team together and they are very close to the clients both professionally and personally."
The team has made a number of hires this year, one being Søren Dalby Madsen, who has over 16 years' of experience in tax and has worked at the Danish ministry of taxation, KPMG, and as the global head of tax at Arla Foods.
KPMG Acor Tax is a young firm and the fresh take on KPMG in Denmark. It was founded in 2014 after the former Danish member firm of KPMG merged with EY on July 1 2014.
Kromann Reumert is one of the leading Danish law firms and focuses on tax planning, advisory and litigation, with international taxation and VAT as a foundation. Head of tax Arne Møllin Ottosen specialises in corporate and foundation/trust law and all tax related to the real estate, financial, food and transport industries.
He works closely with Michael Nørremark, whose key focus area is within the financial sector. The firm advises on a plethora of issues, including the tax aspects of business formation and restructuring, sale advert acquisition, reorganisations, succession planning, group taxation and joint ventures, inward and outward secondment of employees, dispute resolution and representation and financial products.
Møllin Ottosen is praised by clients for making complex issues understandable and is described as "down to earth" and nice to talk to. A client of another firm said: "Kromann Reumert… is known to be the best overall tax firm in Denmark and Arne Møllin Ottosen is one of the best individuals if not the best individual within the tax world of Denmark."
LETT Law Firm's head of tax, Artur Bugsgang, has a wealth of knowledge and experience of tax and company law, VAT and other indirect taxes. He often deals with M&A and works closely with partner Jan Børjesson, who specifically focuses on ownership transfer, reorganisations and conducting tax cases before the authorities and the court. The team of dedicated professionals assist private individuals, the corporate sector and the Danish Ministry of Taxation and the municipalities in matters concerning direct and indirect tax, VAT and custom duties. The firm also advises on criminal proceedings to do with taxation.
The tax practice at Lundgrens provides its clients with advice on a range of domestic and international tax matters, including litigation, VAT, structuring and the creation, purchase and sale of large enterprises. Michael Amstrup is the head of tax and has more than 20 years of experience in tax matters and specialises in providing advice on Danish tax law and litigation. The team of professionals is multidisciplinary in its approach.
Another significant member of the team is Mario Fernandez, who is the head of indirect tax and has more than 14 years' experience in the area. Nicolai Sørensen is also a tax partner at the firm.
The firm changed its name from Rønne & Lundgren to Lundgrens on 29 April 2016.
Plesner's team of tax professionals comes highly recommended by clients and peers, particularly for its cutting-edge litigation services and its take on highly complex litigation cases. Hans Severin Hansen leads the team of five other partners and seven professionals. The team works exclusively in tax. Severin Hansen is well-known as one of the best litigators in the country.
"They have a very strong and highly trusted and respected name and brand with the Danish tax authorities and [businesses]," said one of the firm's clients. "Plesner has a reputation of being able to win the most problematic cases and especially partner Hans Severin Hansen is praised for this and called 'King of litigation' or among friends 'King Hans'."
The team offers a full range of both indirect and direct tax services across various industries, including M&A, cross-border structuring and reorganisations, capital markets, estate planning, incentives and VAT. This year, Plesner has worked on some impressive cases including representing clients in court against the Court of Greenland, the Danish Ministry of Taxation and Court of Justice of the European Union.
Other significant partners highly praised by clients are Lasse Esbjerg Christensen, Mette Juul and Tom Kári Kristjánsson. In spring of 2016, partner Nikolaj Bjørnholm left the firm.
PwC is a prominent player in the Danish tax market with 16 offices across the country. It offers the full suite of tax services, including international tax, cross-border transactions, assistance with audits and dispute resolution, transfer pricing and VAT. The department is led by Jan Huusmann, whose expertise includes indirect tax consulting, VAT, customs and excise. He advises both Danish and international organisations in the private and public sectors and actively participates in working groups for the Ministry of Taxation.
The team's client portfolio consist of major multinational corporations, high net-worth individuals and public organisations from a wide range of sectors.
Vistisen Tax Attorneys is a boutique tax litigation firm. Although it is highly specialised and niche, it has an impressive track record and extensive experience in all Danish courts, administrative tribunals and the European Courts of Justice. Eduardo Vistisen is the sole partner of the firm and works closely with one other professional. The duo offer a comprehensive service in tax litigation and auditing in all areas of tax. The firm comes highly recommended by clients and is said to be "a tax litigation power house." One client said: "They are in my opinion more thorough and experienced than most tax litigators."
Vistisen was praised by peers and clients as one of the top litigators in the country.