New rules on thin capitalization and withholding tax adopted

On 6 April 2006, the Danish Parliament adopted bill L 116 on new rules on thin capitalization and on withholding tax to cover debt financing by equity funds.

The requirement that the related company is treated as a separate entity for tax purposes is abolished. Consequently, general partnerships, limited partnerships and any other entity disregarded for tax purposes are covered.. Separate investments made in a Danish company by a group of investors are not c…