Restructuring (e.g. mergers, demergers, share exchanges, drop-down of assets) can, in many cases, be carried out tax-free under the provisions of the EU Mergers Directive as implemented into Danish law. These types of restructuring can be carried out in a tax-exempt manner without prior approval from the tax authorities. However, several objective conditions must be fulfilled. Formation, merger, reorganisation, and liquidation expenses are non-deductible if related to external assistance. However, if any costs related to the restructuring are incurred as employee wages within the group, the cost of the wages can be deducted.
Danish Intergovernmental Agreement (IGA) with the United States (US)
Denmark has entered into an Intergovernmental Agreement (IGA Model 1) with the United States on the Danish implementation of the Foreign Account Tax Compliance Act (FATCA). The IGA is implemented into Danish law and is, to a large extent, an overlay to existing Danish tax reporting rules applying to Danish banks. The scope of FATCA is, however, wider than the existing rules in terms of both entities and products covered and customer due diligence procedures. The IGA implies that Danish foreign financial institutions (FFIs) must report to the Danish tax authorities instead of directly to the US Internal Revenue Service (IRS). The Denmark-US IGA contains important exceptions for both the Danish mutual fund and pension savings industries.
Common Reporting Standard (CRS)
Denmark is among the ‘early adopters’ of the CRS, whereby the first exchange of information took place in 2017.
The Council Directive 2014/107/EU, amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation, has been fully implemented in Denmark and is effective from 1 January 2016.
Reporting under FATCA/CRS
The reporting financial institutions must submit the required information under FATCA/CRS through the online system solution of the Danish tax authorities. The reporting deadline is 1 May, and is the same under both regimes.