News Finance - Q3, 2015

This newsletter presents the recent changes, deadlines and information regarding payroll and HR matters from Q3 – 2015 of interest to small entrepreneurs and up to large international groups.

REMEMBER TO HAND IN YOUR ANNUAL REPORTS

Please note that companies whose financial year ended December 31, 2014 already should have submitted their annual reports to the Danish Business Authority by June 1, 2015. This applies to all types of companies and branches.

For branches, it is not their own annual report which needs to be submitted, but rather the parent company's annual report. This means that in some cases, the parent company is required to submit their annual report to the Danish Business Authority before submission is required by the country in which the company is based. The parent company's annual report should not be submitted digitally, but instead sent by post to the Danish Business Authority at the following address:

Danish Business Authority

Langelinie Allé 17

DK-2100 Copenhagen Ø

If the annual report is not submitted before the deadline, this may result in a charge levied on each member of the board/branch manager. The maximum charge amounts to: 3,000 DKK per member of the board/branch manager.

Please be aware that requirements concerning submission of annual reports are sent to the companies' digital mail boxes, so make sure you have access to those.
Tax on account

Interest on liaison accounts

During our review of the companies' accounts for 2014, we also found that many companies are not calculating interest on liaison accounts in accordance with legal requirements.

The usual market interest rate must be paid.  The market interest rate is the rate that two independent parties would have agreed to in a corresponding lending scenario. The interest is both deductible and taxable.

The courts have in a number of cases established a locking of the minimum lending rate at 4%.  This locked interest rate may be approved if there is a concrete justification for it being the best expression of market rate.

Once the rate has been locked, it could be advantageous to compare it to other loans in the corporation.

Corporate income tax returns

It has become compulsory to digitally report income tax returns for companies, foundations and associations. The deadline for the 2014 financial year has been pushed to September 1, 2015.

In the future, "taxable income before losses" must be noted in income tax returns. All companies, including subsidiaries, must report "taxable income before losses" on their income tax returns.

The calculation module allocates and forwards losses and calculates taxable income/joint taxation income. The calculation module also updates the tax loss register on an ongoing basis in line with the income tax return process depending on what will be used of a deficit and new deficits that may occur.

In addition, the form used for controlled transactions has changed, and is now an integral part of the tax return. If the total amount of controlled transactions exceeds 5 million DKK, the form must be completed.

It has also recently been decided that the specific amounts must be reported per transaction type and thus must not be checked in a range. The amount can be rounded off. For instance, if the amount exceeds one million DKK, the amount is rounded to the nearest million; amounts under one million DKK may be rounded to the nearest 100,000; amounts under 100,000 DKK may be rounded to the nearest 10,000; amounts under 10,000 DKK may be rounded to the nearest 1,000, though at the very least to 1 DKK.

Voluntary advance tax

Before the Danish general election was called, the Minister for Taxation proposed legislation concerning changes to interest rates for companies' back taxes and excess tax payments, as well as a implementing an upper limit to the tax account. The bill may be re-proposed after the election.

The bill proposes to place an upper limit on the tax account of DKK 200,000. SKAT will amend this maximum on the date the legislation takes effect. In addition, it will be possible to make voluntary advance tax payments up to February 1 in the calendar year following the end of the financial year.

Companies which have already made voluntary advance tax payments for 2015 could, according to the proposed bill, submit a request to SKAT for repayment of the already paid voluntary advance tax before August 1, 2015. It is expected that this date will change.

Interest on liaison accounts

VAT corrections must now be corrected directly in VAT returns

On 21 April this year, SKAT added the function to digitally amend VAT returns in E-tax for businesses (TastSelv Erhverv). Companies should no longer use form 31.009 to submit amendments for earlier periods.

Instead, you can now make amendments to a previous accounting period directly in E-tax for businesses. The feature allows amendments to be made for periods dating back three years, calculated by the deadline for the VAT return. If you require to amend older accounting periods, you can file a request for extraordinary resumption with SKAT.

You can choose to enter new values either in the "Change" or "Result" columns. If you enter a new amount in the "Change" column, the system calculates the accounting period's new result, and conversely, if an amount is entered in the "Result" column, the change is calculated. Once you have entered the amounts and approved the change, you are immediately shown the result of the calculations. You can pay any outstanding amounts either via Nets LeverandørService or through bank transfer. You can find payment details for bank transfers on E-tax for businesses via the Tax account => Core data.

It is advisable to use the comment field to briefly explain why the earlier return has required amending.

Check your 2015 preliminary income statement

Your preliminary income statement includes SKAT's expectations for your income and the total tax calculation for 2015.

Visma encourages everyone to check their preliminary income statements and ensure that SKAT's specified amount is correct.

Now that we have all submitted our tax returns for 2014, we have also received our financial statement for 2014. Some have been given a tax refund; others have received an extra bill from SKAT. It is therefore advisable to once again examine the taxes you are paying for 2015.

The preliminary income statement is in most cases based on the 2013 tax return, so if there have been significant changes in relation to those figures, it may be worthwhile to make amendments to the preliminary income statement.

Significant changes can be:

  • Company profits have not been realistically estimated
  • New job with higher or lower salary
  • New job with longer or shorter commute
  • Purchase/sale of a house/apartment or similar
  • A re-mortgage that has led to lower or higher interest rates
  • Expectations differing from SKAT concerning the company's estimated surplus
  • Pension contributions

There are many circumstances that would require you to amend your preliminary income statement to ensure that you do not run into any unpleasant surprises.

Election contributions

Campaign contributions

Contributions related to election campaigns may have tax consequences. There is no tax deduction for campaign contributions, and if you are a joint stock company, it can also have an impact on the main shareholder.
Contributions to charitable associations and similar entities can be deducted from the company, provided that the relevant conditions are fulfilled. The deduction may not constitute more than the fixed amount of DKK 15,000 (2015).

However, organisations that pursue political, economic or corporate interests are not considered non-profit.

Therefore, contributions to political parties or contributions going towards a certain political purpose are not tax-deductible, regardless of how closely or directly the contributions are linked to ongoing income generation.

In the case of campaign contributions paid from a joint stock company, the contribution may be deemed to be granted in the main shareholder's personal interest. This would have the consequence of being regarded as 'masked dividends' or additional pay for the main shareholder with taxation to follow.

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.
Visma 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. 

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