Azets News
Finance - Q1, 2015

This newsletter presents the recent changes, deadlines, information regarding VAT, tax, new regulations and many other financial aspects of interest to small entrepreneurs and up to large international groups. 

 

Reporting about companies basic registrations at SKAT

On 1 October 2014, SKAT opened up for reporting of important information about companies basic registrations. Inter alia, this means that companies, funds and associations must make a one-off reporting of unutilised losses from the income year 2002 to the income year 2013, as well as historic tax-free restructuring associated with this until the time of reporting.
Please note that the management company which owns the subsidiary at the time of reporting must report the deficit balance once at the end of the income year 2013. A management company that adds a company to its joint return group in the income year 2014 will therefore fill in the deficit register for this company with the deficit balance at the end of the income year 2013. It is crucial that the deficit is reported before the deadline, which is the 1 August 2015, since the deficits will not apply otherwise.
The Minister for Taxation stated on 2 February 2015 that the companies tax return deadline for the tax year 2014 should be delayed to 1 September 2015. He also expected that companies that do not register their unutilised losses on time should instead pay a surcharge of DKK 5,000. We are still awaiting the adoption of the above; the law for the changes is due to enter into effect on 1 July 2015.
Azets can take care of this task for you. To do this we need access to the management company’s TAX page (SKAT TastSelv)

Public register of shareholders

The Danish Business Authority has on 15 June 2015 opened up for entries in the public register of shareholders at VIRK.dk. This registration thus replaces the requirements of the Danish Financial Statements Act. 

Newly established companies and changes to existing companies must be registered "as soon as possible" after the company has received information from the owner. As soon as possible means without undue delay. 

The obligation to keep a shareholders’ register will continue unchanged. The companies can choose to keep the shareholders’ register by themselves, or choose the Danish Business Authority’s new online shareholders’ register, for example, where selected details are automatically transferred to the shareholders’ register.

For companies established before 15 December 2014 the current owners ought to be registered at virk.dk before the release on 15 June 2015. In case the register is not made in due time, the company can be fined. The Danish Business Authority has noted that not all companies have their registrations in place as they are obliged to. The Danish Business Authority follows the development closely and will regularly asses which steps to take to get everyone aboard. 

Last deadline for submission of the annual report

Soon the last deadline will pass for submission of the annual report for companies whose financial year ended on 31 December 2014 – remember subsidiaries / parent company.
We draw it to your attention that companies for which the accounting year ended on 31 December must submit their annual report digitally to the Danish Business Authority by 1 June 2015. This applies to all types of company and subsidiary.
For the subsidiaries, it is not the subsidiary’s annual report that must be submitted but rather that of the parent company. In some instances this means that the mother company must submit its annual report to the Danish Business Authority before the submission is required in the parent company’s home country. The parent company’s annual report must not be submitted digitally but rather sent by post to the Danish Business Authority at the following address:
Erhvervsstyrelsen – The Danish Business Authority
Post Box 621
0900 Copenhagen C
If the annual report is not sent on time, each member of the management / branch management may be required to pay a charge. The charge can amount to a maximum of DKK 3,000 per member of the management / branch manager.

Please note that the formal requirements for submission of information are sent to the companies’ digital letter boxes in Digital Post; therefore please ensure that you have access to these letter boxes.
More information on this can be obtained from 
the Danish Business Authority’s website > 

Revisions to the Danish Bookkeeping Act

On 22 January 2015, the Folketing, Denmark’s national parliament, adopted a revision of the Danish Bookkeeping Act.

The change entered into force on 1 March 2015. Its provisions state that electronic accounting records may be stored abroad, without a prior request to this effect or this fact being registered with public authorities, provided that the relevant company fulfils a number of specific requirements, including:

  • The accounting records must be stored in compliance with the Danish Bookkeeping Act (bogføringsloven)
  • The company must at all times be able to present the records and provide access to them in Denmark (this typically involves online access)
  • The company must store the system descriptions and necessary passwords in Denmark
  • The company must ensure that the accounting records can be printed in clear text or can be made available in an acknowledged file format.

New telephone access to SKAT

Effective as of 1 December 2014, new direct numbers to SKAT have been issued to make access easier. Direct number to auditors and other advisers: 72 22 18 17.

Subject Telephone number
  • Tax when you are practising a trade or are owner of a business
  • Deductions
  • The ordinance governing return on capital (kapitalafkastordningen) and the ordinance governing businesses' organisational arrangements (virksomhedsordningen)
 72222881

Limited companies and limited partnerships, funds and associations

 72222882
Value-added tax 72222867

Starting, closing and changing a business

 72222827
Wages to employees (e-income) 72222824

 See all numbers on the website >

Hotel VAT

Taking effect on 1 January 2015, the deduction for VAT on hotel stays is raised from 75 % to 100 %. Thus the VAT is fully deductible on hotel stays that are strictly for work purposes.

No change is made to the rules governing deductions of VAT on breakfast: it remains the case that only a quarter of the VAT is deductible. It remains a requirement that the invoice specifically itemises the overnight stay, breakfast and any other meals that the employee consumed at the hotel.

Tax-free conversion of form of company

Privately-owned businesses have the opportunity to convert their privately-run business into a company, i.e. to form a limited partnership or a limited-liability company.

Often it proves to be advantageous to make use of the rules in the law on tax-free conversion of a company, whereby the tax-payment obligation in the event of a sale that is liable to taxation is transferred to the sum for the acquisition of the shares and thereby to the company.

Conversion of the company’s form on a tax-free vs. taxable basis
The purpose of performing a tax-free conversion of a privately-owned business’s form into a limited partnership or a limited-liability company is to reduce the liquidity with regard to taxation that may apply and that becomes due for payment in connection with sale or cession to a company.

The principal taxes potentially payable in this context relate to goodwill, capital gains on real estate and equipment in relation to the book value, as well as capital gains from the amount of saved-up surplus that may be on the account, which can also give rise to a large tax obligation when a business’s existing company-form arrangements are discontinued.
These taxes can often prove to be large amounts. By applying the law on tax-free conversion of the company’s form, these tax payments are deferred; the latent tax is not charged by the tax authorities but rather is deducted from profit in the statement of accounts relating to the sum used to acquire the shares.

Conversely, if the statement of accounts shows that the latent tax payments do not amount to a significant sum of money, it is appropriate to consider whether the conversion of the company form should be made on a taxable basis instead; this means that assets and liabilities are transferred to commercial values, and what may prove to be a smaller tax demand is taken into account.

A tax-free conversion of a company’s form can be made with retroactive effect, meaning that no later than 30 June it can be implemented so as to be effective as of 01 January of the same year.



Now the annuale tax returns is here! So what now?

On Monday 9 March 2015, SKAT officially unveiled whether you are to have a tax refund in 2014 or whether there is outstanding tax still to be paid.

We recommend everyone to go through their annual tax assessment notice so as to check that all items of information have been reported. This can include items of information that you must personally add/correct on your annual tax assessment notice.

This may include:

  • Deductions for transport
  • Deductions for use of artisans’ services
  • Alimony/child support
  • Subsistence allowances
  • Private incoming and outgoing loans, with the associated interest payments, etc.
  • Take care to ensure that SKAT has the correct information with regard to purchase and sale of homes
  • Renting out of a room/holiday home
  • Etc.

Any tax refund up to DKK 100,000 will be paid into your Nemkonto on Tuesday 7 April. Larger amounts are paid at a later date because, prior to payment, SKAT reviews the annual tax assessment notice manually to ensure that it is correct. Any tax refund amounting to less than DKK 100 is not paid out, but rather transferred to next year.

Last deadline for submission of income tax return by self-employed individuals and others

For standard tax returns, 1 May is the last day on which you can submit or insert any corrections or additions applicable to the tax assessment notice for 2014.
Starting from 11 May, it is possible to reopen your 2014 tax assessment notice. If you have forgotten an item of information, you can provide that information via SKAT’s self-service module(“tast selv”). However, you must insert a reason for the change.

1 July 2015 is the final deadline for the following: digitally submitting or mailing an extended income tax return, tax returns for persons with limited tax liability, tax returns for foreign income and tax returns for foreign corporate income. The same deadline applies to individuals participating in limited-partnership-based projects and also to individuals married to someone within one of the above categories.
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