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Denmark has joined the list of countries with mandatory investment screening regimes. New rules came into force on 1 July 2021 affecting foreign direct investment and special financial agreements. The rules apply to investments and agreements which are due to be closed after 1 September 2021.
The purpose of the screening regime is to ensure that foreign direct investments and special financial agreements do not pose a threat to national security and public order in Denmark. The screening consists of two mechanisms: mandatory screening and voluntary screening.
Screening is mandatory for foreign direct investments if the foreign investor directly or indirectly gains possession of or acquires control over ownership interests or voting rights or the equivalent control by other means in a Danish company, explain the Ecovis experts. Furthermore, the investment must take place in one of the following sectors, which are defined as particularly sensitive:
Screening is also mandatory on special financial agreements within the same sectors if the investor resides outside the EU or EFTA and obtains control over or has considerable impact on the Danish company.
If a foreign direct investment is covered by the mandatory screening requirements outlined above, the foreign investor must apply in advance for permission to conclude the transaction. The Danish Business Authority must either permit or prohibit the transaction within 60 business days of the date of the complete filing (or 90 days if the period is extended).
Are you planning to invest in Denmark? We can advise you on all questions relating to the new investment screening.Niels Løber, Partner, ECOVIS Legal Denmark, Copenhagen, Denmark
In addition to mandatory screening, the investment screening regime also introduces voluntary cross-sectoral screening. A foreign investor in any sector may apply to the Danish Business Authority for screening if the investment could constitute a threat to national security or public order, and if the foreign investor directly or indirectly obtains possession of or control of 25% or more of the shares or voting rights in a Danish company. Screening is voluntary, but the Danish Business Authority may initiate an examination of the investment within 5 years of completion if the investment has not been notified but is considered a threat. If the Danish Business Authority examines the investment and concludes that the investment is a threat to national security or public order, it may require that the investment is rolled back.
The new investment screening rules imply that at an early stage in their investment considerations, foreign investors contemplating investing in Danish companies must factor in that the investment may need to be approved by the Danish Business Authority before closing. In this context, it might be difficult for investors to assess whether the investment falls within the scope of voluntary screening and if screening should be carried out, advise the Ecovis consultants.
Niels Løber, Partner, ECOVIS Legal Denmark, Copenhagen, Denmark
Email: nlo@bach.law
Julie Hald, assistant attorney at law, ECOVIS Legal Denmark, Copenhagen, Denmark
Email: julie.hald@ecovis.dk
Withholding tax may be levied on certain income that non-residents – who are not natural persons – receive in the Republic of Croatia. Income subject to withholding tax includes, for example, interest, dividends, or royalties.
Withholding tax is a tax on profits made by non-residents in the Republic of Croatia. The Croatian paying agent must calculate, withhold and pay the withholding tax, or reduce the payment of the agreed fee by the amount of withholding tax, explain the Ecovis advisers.
Withholding tax is payable on interest, dividends and carried interest, royalties and fees for other intellectual property rights, fees for market research services, tax and business consultancy services, audit services and fees for performances by foreign performers (artists, entertainers and athletes) when they are paid to non-residents other than natural persons.
We can support you in all matters relating to corporation tax, withholding tax, VAT and other special taxes in Croatia.Marija Bubnjić, Account Manager, ECOVIS FINUM, Zagreb, Croatia
If the Republic of Croatia has concluded a double taxation treaty with the foreign taxpayer’s country of residence, and the domestic paying agent has, prior to payment, obtained a certified application for the reduction of the tax base or a certificate of residence issued by the foreign tax authority to the foreign taxpayer, the reduced rate of withholding tax specified in the treaty may be applied. Depending on the provisions of the treaty, it may also be possible to completely avoid the payment of withholding tax.
Marija Bubnjić, Account Manager, ECOVIS FINUM, Zagreb, Croatia
Email: info@finum.hr
China’s new data protection law regulates how companies must handle personal data. Failure to comply can lead to penalties. Companies must act now and implement the new rules.
The Personal Information Protection Law (PIPL) came into effect on 1 November 2021. Together with the PIPL, three laws now form the framework for data protection in China:
The PIPL regulates the protection of personal data, for example how consent is to be obtained and how transparent data processing must be. Those who break the law can be fined up to RMB 50 million (approx. USD 8 million). In serious cases, there is even a risk of a business ban and criminal prosecution, explains the Ecovis expert. Individuals responsible for data protection can be fined up to RMB 1 million (approx. USD 160,000).
The Chinese data protection law has its drawbacks. We can support you in the correct implementation.Richard Hoffmann, Lawyer, Ecovis Heidelberg, Germany
It gets tricky for foreign companies if they transfer personal data from China to other countries. Companies must ensure that the handling of data abroad complies with the PIPL regulations and the foreign data protection law. They must also designate those responsible for data protection. It is particularly important that personal data must be stored in China if it exceeds a certain (and as yet undefined) amount.
The law affects the data of all Chinese people. Therefore, it also affects companies outside of China that process this data. It is still unclear which data the law defines as “important”. Companies must submit such data to a further security check before it can be transmitted.
Richard Hoffmann, Lawyer, Ecovis Heidelberg, Germany
Email: richard.hoffmann@ecovis.com
