Taxation of Foreign Foundations in Light of EU Law

Abstract

In Denmark the qualification for tax purposes of a foreign foundation has so far been decided on the basis purely of national tax law. This article argues that it is necessary to consider European law in the testing because it creates a restriction on the freedom of establishment and capital movement if the foundation is not approved as the ‘beneficial owner’ of the income received by the foundation. Such restriction must be able to be justified on the grounds of compelling reasons, suitability and proportionality.