Denmark new opportunities

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Denmark new opportunities

• Taxways Limited, Cyprus 2003
• Krzysztof Kubala

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The Danish Holding Company

• Inbound Dividends No income taxation.
• Requires a 20, or greater ownership in the
  subsidiary is held for more than 12 months
  during the period in which the dividend payments
  are made.

• Outbound Dividends No withholding taxation to
  companies located in any of the 85 double tax
  treaty countries.
• Requires a 20, or greater ownership in the
  subsidiary is held for more than 12 months
  during the period in which the dividend payments
  are made.

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Straight Forward Distribution
Withholding taxation
Ownership Requirements
US Company
0 on dividends, royalties, interest.
gt 20 Ownership
Danish Company
gt 20 Ownership
0 on dividends, royalties, interest.
French Company
Dutch Company
South African Company
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Offshore Parent Companies
Withholding taxation
Ownership Requirements
Cyprus Company
0 on dividends, royalties, interest.
gt 20 Ownership
Danish Company
gt 20 Ownership
0 on dividends, royalties, interest.
Iceland Company
Swiss Company
Singapore Company
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The Danish Holding Company

• No stamp duties and
• No taxation on capital contributions or loans.

• No withholding tax on interest paid by the
  Danish company to any entity outside of
  Denmark.

• Interest paid by the Danish holding company is
  deductible in Denmark.

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• The Danish Holding Company
• Internal Leveraging -

Structural Activity
Withholding taxation
Non-qualifying Parent Company
0 interest payment made on loans/internal
financing.
Loan to the Danish subsidiary.
Danish Company
0 on dividends, royalties, interest.
Potential to place back to back financing.
Subsidiary

• The regulations on thin capitalization apply.

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The Danish Holding Company - A Financial Vehicle
-

• No capital gains on a liquidation or sale of
  shares when held more than 3 years.
• No minimum ownership requirement.

• Holding period can be reduced to 1 year through
  a redemption of shares.

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Liquidation of the Holding Company
The first three years
After three years
2.) Note profits as liquidation
proceedings (No WHT)
Non-qualifying Parent Company
Non-qualifying Parent Company
3.) Interest note repayment (No WHT)
Original Danish Company
Successor Danish Company
Original Danish Company
Dividends (tax-exempt)
Dividends (tax-exempt)
1.) Exchange of subsidiary shares for a note
Subsidiary
Subsidiary
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Controlled Foreign Co. (CFC) Income

• Where the Danish parent company directly or
  indirectly owns 25 or more of the share capital
  or has 50 or more of the voting rights.
  and

• The foreign subsidiary is considered to conduct
  mainly a financial business.
  and

• Where the profit of the subsidiary is
  effectively subject less than 22.5 tax. or

• The subsidiary is allowed to defer taxation on
  considerably more advantageous terms than as
  permitted under the Danish tax rules.

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Other Danish Structures
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The Aircraft Structure

• The VAT on the purchase of aircraft by a Danish
  company, when registered in Denmark, is 0.
• Leasing/rental activities to anywhere in the
  world are exempt from VAT charges.

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The Aircraft Structure
Aircraft Purchaser
Bank or Inter-company financing
The Seller
Aircraft Loan
Aircraft
Ownership
Danish Aircraft Company
Aircraft lease agreement
The End Operator/ User
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The Commercial Ship Structure

• The VAT on the purchase of large commercial ships
  by a Danish company, when registered in Denmark,
  is 0.
• Leasing/rental activities to anywhere in the
  world are exempt from VAT charges.

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The Commercial Ship Structure
Ship Purchaser
Bank or Inter-company financing
The Seller
Ship Loan
Ship
Ownership
Danish Ship Company
Ship lease agreement
The End Operator/ User
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The Royalty Company

• Structure Benefits
• Artistic royalties include rights to motion
  pictures/ programs, publishing, trademarks,
  artwork, images (personal).
• The intangible owner/creator licenses the
  rights to the use of the intangible to a
  Danish company.
• The Danish company sublicenses these use
  rights throughout the world.
• Inbound royalties have either no or a very low
  withholding tax imposed by country of origin.
• Outbound royalties are (by Danish law) exempt
  from Danish withholding tax.

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The Royalty Company
BVI or US Co.
IP Holding Company
Royalty Income 0 WHT
Royalty License
Arms Length 3-6 Profit Remains
Controlled Danish Royalty Company
Sublicenses
Sublicenses
Royalty Income 0 WHT
France
Germany
South Africa
Zero or significantly reduced withholding rates.
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The Royalty Company

BVI or US Co.
IP Holding Company
Royalty Income 0 WHT
Royalty License
NO REQUIRED SPREAD Only a negotiated fee left in
Denmark
In-house, Danish Owned Royalty Company

• Danish treaty benefits are maximized, as the
  in-house royalty company is an unrelated Danish
  owned company.
• There is no required minimum spread between DanCo
  and the ultimate shareholder. As such, ultimate
  shareholders profitability is enhanced.
• Can be utilized for one-off transactions or
  on-going royalty flows.

Sublicenses
Sublicenses
Royalty Income 0 WHT
France
Germany
South Africa
Zero or significantly reduced withholding rates.
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The Trading Company

• Structure Benefits
• The trade company functions essentially as a
  Commissionaire
• The possibility for the reduction of taxation
  on sales income
• Reduction of transfer pricing spreads between
  controlled transactions (non-client owned
  structure)
• Disconnection between the Principal seller and
  the final sales jurisdiction
• The non-disclosure of the Principal seller
  within the final sale jurisdiction and to the
  customers.

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The Trading Company
Product supplier/ producer (could be a third
party)
Principal
100 Ownership
Products
Danish Trading Company Agent
Sales orders and purchase money received,
commissions paid to DK-Trade
Sales and Income
French Customers
German Customers
Japanese Customers
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The Trading Company
Principal BVI, Jersey, Cayman, etc.
Danish Owned Parent/Amicorp
Introduction Fee 95 - 97.5 of margin

• DTC remits the purchase costs to the supplier.
  
• A portion of the remaining profits from the
  sale to the customers is forwarded on to the
  Principal as an introduction fee.
• The portion retained by the DTC varies
  depending upon the sales volume (e.g., 5 - 2.5
  profits retained).
• All sales documentation is prepared by and
  executed in the name of the DTC.

DK buys for 150
Danish Trading Company Independent
Seller / Product producer
Margin 100
Products
DK-Trade sells for 250
Japanese Customers
French Customers
German Customers
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The Finance Company

• Structure Benefits
• Denmarks double income taxation treaty
  network provides that interest payments to
  Denmark have either no or a very low withholding
  tax imposed applied country of origin.
• No withholding taxation is applied to interest
  payments made from Denmark to anywhere in the
  world.
• This structure assists the client by providing
  them the ability to employ the favourable Danish
  withholding tax rates to their financing
  activities.

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The Finance Company
BVI or US Co.
Original note holder
Interest an principle Income 0 WHT
Loan
Nominal Service Fee Retained
Controlled Danish Finance Company
Back-to-Back Loan
Back-to-Back Loan
Interest and Principle Income 0 WHT
France
Spain
Germany
Zero or significantly reduced withholding rates.
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The DK New Zealand Trust Structure

• Structure Benefits
• No withholding tax from a Danish company to
  New Zealand (given gt20 ownership of the Danish
  company)
• No taxation of accumulating foreign sourced
  profits in New Zealand
• Foreign dividends received in New Zealand are
  not subject to local taxation
• New Zealand law permits tax free contributions
  of funds between New Zealand companies and New
  Zealand trusts
• New Zealand foreign trusts (where the
  settlor/beneficiary is not a New Zealand
  resident) are not subject to local taxation
• There is no capital gains taxation, transfer
  tax or stamp duties in New Zealand providing
  an excellent exit strategy
• The trusts funds may be distributed to any
  beneficiary, anywhere, without any tax
  consequences in New Zealand
• There are no beneficial ownership disclosure
  requirements for both structures and bank
  accounts.

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The DK New Zealand Trust Structure
Beneficiaries (anywhere in the world)
Withholding taxation
Taxation Applied
Trustees (New Zealand Resident)
0 Tax
New Zealand Offshore Trust
0 WHT
New Zealand Company
0 Tax
0 WHT
DK Holding Company
0 Tax
0 or low interest WHT
Switzerland, France, Canada
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Denmarks Main Advantage

• A company in Denmark is considered to be in an
  onshore jurisdiction and not a tax haven as other
  traditional holding company jurisdictions.