Taxation of Principal Shareholders

If you run your business as a company, you need to pay special attention to the use of the company's assets and the transfer of funds from the company to your private finances.

Under Danish tax law, the private use of a company's assets or loans from the company may have significant financial consequences.

As a principal shareholder, you are basically taxable on all transfers of financial value from the company to you personally.

TVC Law Firm has extensive experience handling cases in which SKAT takes the view that a principal shareholder has bought an asset from a company under its control too cheaply or sold an assets at too high a price. If SKAT has brought such proceedings against you or your company, you may want to contact us for an assessment of the case.

Payments in kind or transfers to the principal shareholder's next of kin are considered to have been made by the shareholder, and the principal shareholder is therefore taxed on them. This may lead to the company, the shareholder and the next of kin being taxed where, for example, accommodation has been provided to a next of kin. This triple taxation sometimes results in the tax on the payment in kind exceeding the value of the payment in kind.

A frequent example of a case in which the company, the principal shareholder and a third party end up being taxed is where the purchase of a flat by parents for their child is recognised in the accounts of the parents' company.

If you are planning major financial transfers and investments, we recommend that you seek the advice of a tax attorney in advance. We can help you obtain a binding assessment notice from SKAT to prevent any unforeseen tax consequences from your transactions.

If you need to act quickly, we can assist with the negotiation and wording of a reservation for the effect of tax in the contract. This can ensure that disproportionate, unforeseen tax consequences of a contract result in its cancellation with retroactive effect for tax purposes.

Contact

Torben Bagge

Partner, Attorney-at-Law (H), Head of tax and Chairman of the board

D: +45 87 34 75 30

M: +45 24 82 24 84

E: tb@tvc.dk

Leo Jantzen

Manager, Partner, Attorney-at-Law (H)

D: +45 87 34 75 31

M: +45 21 37 01 38

E: lj@tvc.dk

Kasper Bech Pilgaard

Partner, Attorney-at-Law (L), LL.M.

D: +45 33 18 61 58

M: +45 24 27 78 11

E: kbp@tvc.dk

René Bjerre

Partner, Attorney-at-Law (H)

D: +45 87 34 74 34

M: +45 25 34 53 10

E: rbj@tvc.dk

Henrik Rahbek

Partner, Attorney-at-Law (H), HD (R)

D: +45 87 34 74 32

M: +45 30 88 20 88

E: her@tvc.dk

Karin Østergård Mathiasen

Partner, Attorney-at-Law (H)

D: +45 87 34 74 31

M: +45 30 33 75 80

E: kl@tvc.dk

Kasper Kelm Demant

Partner, Attorney-at-Law (L)

D: +45 87 34 74 36

M: +45 51 92 53 58

E: kkd@tvc.dk