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Abstract:
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In Denmark, there are many different options when choosing a corporate form, because the
shareholders have to consider the tax treatment and the liable for the entire debts.
This Master thesis is about the Danish corporate form Partnership. This subject has been chosen
because this corporate form is being referred to as the better of two worlds. The two worlds are the
Danish civil law and the Danish tax law. Despite the many references this corporate form is not
much used in Denmark even though it was created in the late 18th century.
This thesis will answer the question, what is a partnership and how the Danish civil law may be
used in corporation with the Danish tax law. Therefore the overall questions this thesis will answer
are if the corporate form partnership really is the better of two worlds?
The partnership has a corporation of two shareholders, one general partner and one limited partner.
The general partner is liable for the entire debts, while the limited partner is liable for the debts
limited.
The partnership is regulated by Danish law, which means that the partnership has to follow the law.
Due to the legislation the capital owners have the possibility to compare different corporate forms
against each other and thereby choosing the one best suiting their needs. One of the things that
separate the partnership from other corporate forms is how they pay tax. The partnership is
transparent tax wise. This means the partnership is not an individual tax subject, the tax is being
paid by the capital owners. Due to the tax transparency the capital owners can influence their own
personal tax income which is one of the greatest benefits in the partnership corporate form. In
Denmark it is possible for the capital owners in a partnership to use the business taxation scheme.
The Partnership is the better of two worlds, if it is combined with at limited company as the general
partner and with a personal company using the business taxation scheme for the limited partner.
This Master thesis shows that the partnership is the better of two worlds, but with some
modifications. The modification is related to business activity, as it has to have some kind of risk.
Another consideration to be taking in the beginning is, if it is necessary to transform a current
public limited company to a partnership is it likely to be connected with some kind of tax payments.
The tax payments are related to share profit for the shareholders and terminations taxation for the
company. |
