Binding ruling
Binding rulings are an essential tool when planning Danish taxation.
The Danish tax legislation is comprehensive and complicated. There will often be only little difference between taxation or non-taxation on capital gains, profits on property, using different kinds of advantageous tax schemes and if the Danish authorities have tje competence to tax at all.
Numerous verdicts regarding taxation involves criterias of intention. The tax payers intention can so to speak be crucial in the assessment if there is a taxable income or profit, or if there is a private tax-free gain.
In an apply for a binding ruling you have the opportunity to ask the tax authorities on a certain disposition before you act. This way you may clarify and then plan your actions and whereabouts in order to achieve the position you prefer.
If a reply on a binding ruling is positive, you will benefit that the tax authorities are bound by their ruling for 5 years. And if the reply is negative, you will have a justification that may make you able to navigate in a more appropriate way – and then maybe ask again.
I the potential tax incident has already occurred you may also clarify the tax implications before you report the annual tax return. This way you are certain that you get it right. And that you have not illegally avoided any taxes. It can some times be hard to tell the difference between a legal and profitable action and an illegal one.
Regardless if you apply for a binding ruling is made before or after the incident or situation you ask about it is further more important to know that the tax authorities prefers that you ask and show the situation. This shows clearly on the replies we receive.