Exit Tax Rules For Companies To Be Amended

Following a European Court of Justice judgment holding that the present Danish exit tax rules for companies are incompatible with the freedom of establishment in the EU/EEA, a bill has been presented amending the rules. The bill maintains the existing Danish rules, but provides for deferral of the payment of exit taxes. The new rules will apply to income year 2013 and onwards. Taxpayers having suffered exit taxation in income year 2008 and onwards may elect the new rules retroactively.

Danish rules contrary to EU law

Under current Danish tax law, any transfer of assets internally within a company, e.g. to a permanent establishment (PE) outside Denmark to the effect that the assets are no longer subject to Danish tax, is regarded as a sale and is taxed as if the assets had been sold in the year of transfer. A transfer of assets between a company's different establishments within Denmark is not taxed.