Guide to m&a tax 2022

h. asset Purchase advantages
• 
The purchase price (or a proportion) can be depreciated or amortised for tax purposes.
• 
A step up in the cost base for tax purposes is obtained.
• 
No previous liabilities of the company are inherited.
• 
No acquisition of a tax liability on retained earnings.
• 
Possible to acquire only part of a business.
• 
Greater flexibility in funding options.
• 
Profitable operations can be absorbed by loss making companies in the buyer’s group, thereby effectively gaining the possibility to use the losses.
i. 
asset Purchase Disadvantages
• 
The investment cost is typically higher, as the buyer is paying for the assets at market value and not just the net value of the assets. Furthermore, the seller’s tax 
cost is usually higher when selling assets, which is typically reflected in the purchase price;
• 
The buyer may need to renegotiate supply, employment, or technology contracts;
• 
A higher capital outlay is usually involved (unless the debts of the business are also assumed);
• 
accounting profits may be affected by the creation of acquisition goodwill;
• 
The buyer cannot benefit from any losses incurred by the target company, since such losses remains with the seller;
• 
The seller might still need to sell any assets not purchased and liquidate the company, which may be unattractive for the seller and thereby increasing the 
purchase price; and
• 
The asset acquisition may in general be unattractive to the seller and thereby increasing the purchase price for the buyer.
16 
Denmark
RETURN TO CONTENTS PAGE

---

TAXAND GLOBAL GUIDE TO M&A TAX 2022
5. ACQUISITION VEHICLES
a. General Comments
The structuring of investments in Denmark may be achieved by using local and foreign companies, trusts, and mutual funds. Acquisitions will often involve a SPV 
(single or special purpose vehicle) set up for the transaction.
Where SPVs are used, it may be important for the seller to ensure that the underlying investors also accept the purchase agreement as security for the fulfilment of the 
buyer’s obligations.