Contents
►This section describes the rules on tax-free mergers, demergers and transfer of life insurance portfolios (succession) between providers liable to taxation under PAL, i.e. life insurance companies and pension funds.◄
►The section covers◄
►
- Which transfers are covered?
- Conditions for tax-free succession
◄
Which transfers are covered?
►The rules apply when◄
►1) a provider liable to PAL taxation transfers its assets and liabilities as a whole to another provider liable to PAL taxation, ◄
►2) two or more providers liable to PAL taxation merge into a new provider liable to PAL taxation (merger), ◄
►3) a provider liable to PAL taxation demerges into two or more independent providers liable to PAL taxation (demerger), ◄
►4) a provider liable to PAL taxation transfers a life insurance portfolio to another provider liable to PAL taxation under Section 204 of the Danish Financial Business Act, or ◄
►5) an administration estate as mentioned in Section 1(2), Item 8 or 12 of PAL handles the administration of a life insurance company's insurance portfolio or a pension fund's portfolio of pension commitments. ◄
Conditions for tax-free succession
►The following conditions must, however, be fulfilled in order to apply the provision set out in Section 17 of PAL on tax-free succession:◄
►a) The receiving provider shall be subrogated to (succeed) the transferring provider's tax position if the final tax statement for the first year of taxation affected by the succession is prepared subject to this condition. See Section 18(2) of PAL.◄
►b) The date of the opening balance sheet prepared for the receiving provider in connection with the transfer is deemed to be the transfer date for tax purposes. See Section 18(3) of PAL.◄
►c) The transfer date is the same as the closing date for the receiving provider's financial year. See Section 18(3) of PAL.◄
►d) The provider must submit a copy of the documents prepared in connection with the transfer to SKAT. This must take place at the time of submitting the final tax statement for the first year of taxation affected by the succession. See Section 18(4) of PAL.◄
►The rules on tax-free succession can only be applied in connection with the transfer of all or parts of the insurance and/or pension activities to other providers liable to PAL taxation if the conditions therefor are otherwise fulfilled.◄
Re b)
►For the transfer to take place with succession under Section 18 of PAL, it is a condition that the receiving provider is liable to PAL taxation on the date of the opening balance sheet prepared in connection with the transfer. ◄
►Transfers to companies etc. which are only liable to corporation tax or tax on funds at the time of the transfer take place under Section 19 of PAL. See section C.3.3 Transfer of activities to newly established subsidiaries.◄
Providers covered by both PAL and the Danish Corporation Tax Act (Selskabsskatteloven (SEL)) (Section 18(5) of PAL)
►Tax-free succession under Section 18 of PAL can only take for mergers, demergers or transfers where both the transferring provider and the receiving provider are liable to taxation under PAL and SEL if the following conditions are fulfilled:◄
►1. If the transfer takes place as mentioned in Section 18(1), Items 1-4 of PAL with succession under the Danish Merger Tax Act (Fusionsskatteloven (FUL)), the rules set out in Section 18(2)-(4) of PAL must also be applied.◄
►2. If the transfer takes place as mentioned in Section 18(1), Items 1-4 of PAL with succession under Section 18(2)-(4) of PAL, the rules set out in FUL must also be applied.◄
►This means that, if the transfer can only take place with succession under PAL, but not under FUL, the transfer must be carried out as a taxable transfer both in terms of corporation tax and PAL tax.◄
See also
►For more information about the tax rules on tax-free mergers, demergers and transfer, see Assessment Guide 2008, Companies and shareholders, section◄