Main shareholder taxation
Main shareholder taxation
Main shareholder taxation
If you run a business through a company, as a major shareholder you must be especially mindful of how you use the company’s assets and funds. Even small transactions between you and the company can have significant tax consequences if not handled correctly.
At Bachmann/Partners, we advise major shareholders and their companies on tax matters related to both ongoing transactions and larger transfers. We help ensure that the interaction between you and your company is conducted on market terms and without risk of subsequent taxation.
Use of the company’s assets
When, as a major shareholder, you are provided with the company’s assets, such as a car or a home, you should be aware that, as a general rule, the private use is subject to taxation.
This also applies even if the asset is used privately only to a limited extent, or if you pay part of the expense yourself.
For example, we help assess the taxable value of a company car (including in cases of split leasing and shared leasing) and prepare the necessary agreements, so you avoid challenges from the Danish Tax Agency later.
Transfers and payments between major shareholder and company
Transfers of assets between you and the company must always be at market value. If the Danish Tax Agency determines that something was sold too cheaply or purchased too expensively, the difference may be considered disguised dividends. This can involve transfers of real estate, cars, or other assets.
At Bachmann/Partners, we assist with documentation and agreement frameworks so that transactions can withstand scrutiny from the tax authorities. If the Danish Tax Agency has already initiated a case regarding disguised dividends or related-party transactions, we can handle the case, communicate with the authorities, or represent you in an appeal to the National Tax Tribunal.
Contact us today for assistance
Payment adjustment and reversal
In certain cases, a major shareholder or a company can subsequently correct an unfavorable pricing. This is done through a payment adjustment under § 2, subsection 5 of the Danish Tax Assessment Act, or in special cases through a reversal under § 29 of the Danish Tax Administration Act.
We advise on when a correction or reversal can be used and assist in preparing the necessary statements and requests to the Danish Tax Agency.
Tax reservations – when swift action is required
Sometimes decisions must be made or agreements entered into before all tax matters are clarified. In such situations, a tax reservation can be crucial.
A properly drafted tax reservation can ensure that an agreement can be reversed if the tax authorities later assess the matter differently than anticipated. At Bachmann/Partners, we help formulate tax reservations that are robust and reliable.
Prevention and planning
Most cases involving major shareholder taxation can be avoided with timely advice. For significant financial transactions, we assist in obtaining binding rulings from the Danish Tax Agency and preparing the necessary agreements, so you can act confidently and avoid unforeseen tax consequences.
Here you can find answers to the most frequently asked questions
What is disguised dividend?
Disguised dividend occurs when the company provides you with a financial benefit, for example by selling at too low a price or paying your personal expenses. The benefit is taxed as dividend for you, and the company cannot deduct the expense.
Can I correct it if the Danish Tax Agency believes I have transacted at the wrong price?
Yes, in some cases you can make a payment adjustment and pay the difference, so the taxation is reversed. In other cases, you can apply for a reversal, so the transaction is completely annulled.
What if my family uses the company’s property?
If the company provides a home for close relatives, the Danish Tax Agency may consider it disguised dividend to you.
This can result in triple taxation. Therefore, such agreements should always be reviewed by a tax lawyer.
When am I taxed on a company car?
If you have access to the company car, you are generally taxed on it as a company car, even if you use it only occasionally for private purposes. With proper split leasing or shared leasing, taxation can be avoided.
When does it make sense to use a tax reservation?
A tax reservation is relevant when you enter into agreements with uncertain tax consequences. This can, for example, occur in a sale between related parties. The reservation can ensure that the agreement can be annulled if the tax authorities assess the matter differently.
Do you need advice on major shareholder taxation?
Do you need advice on major shareholder taxation?
Bachmann/Partners has some of Denmark’s leading experts in their field, making us well-qualified to guide you safely through complex processes related to Principal Shareholder Tax. Our specialists can lead you confidently through the process, ensuring that the outcome meets your expectations.
Contact us today for a non-binding meeting about your case.
Contact us today for a non-binding meeting about your case.
Regardless of your situation, we can help you create the most advantageous solution. We have Denmark’s best
team of lawyers and experts, so you can be confident you are receiving the best advice.
We have offices in Copenhagen, Aarhus, and Aalborg, so you always have access to tax advice near you.
Contact us today
- +45 33 23 90 90
- kontakt@bachmann-partners.dk
Or fill out the form to learn more about how we can help you or to book a meeting with us.