Tax footprint & reporting
Global tax footprint FY 22/23
At Lars Larsen Group we strive to act with integrity and continue to be a responsible corporate member of global society, positively contributing to the societies and people we work with.
Paying our fair share of taxes is in our DNA, and we want to be open about our tax payments in the countries where we operate. We believe that providing transparency about our contributions enhances trust between our business and our stakeholders.
Therefore, we are disclosing the taxes borne by the Lars Larsen Group (taxes borne), which reflect a cost to our group, as well as the taxes we are responsible for collecting and paying to the tax authorities on behalf of others (taxes collected). Together, these taxes demonstrate our total tax contribution to public finances.
Our global tax footprint for the period amounts to more than 8,805 mDKK (FY 2021/22 mDKK 9,234). Above the tax footprint for the ten largest countries are shown and below the global tax footprint is shown split between tax types and the countries where the taxes are paid.
Corporate income taxes 1,192 mDKK (FY 2021/22 1,290 mDKK)
Corporate entities in the Lars Larsen Group are subject to corporate income taxes and this includes taxes paid on profits, capital gains or revenues including withholding taxes on remittances.
People taxes 2,871 mDKK (FY 2021/22 2,788 mDKK)
These are taxes arising in relation to salary payments to our employees and includes primarily withheld taxes on salary and paid social security contributions.
Indirect taxes 4,742 mDKK (FY 2021/22 5,156 mDKK)
Indirect taxes are product and service taxes and include taxes and duties levied on delivery of goods, rendering of services or in respect of the use of goods or permission to use goods.
The majority of our product taxes relate to net VAT (value added tax). VAT is charged by our companies to the customers primarily on products sold. The way that the VAT system works, the company deducts the VAT it has paid on its purchases, from the VAT it has collected and pays the net amount to the tax authorities. This means, on a net basis, VAT is only charged and paid on the value added by the company.
The ten largest countries contribute to 75% of our global tax footprint.
Taxes borne 2,182 mDKK) (FY 2021/22 2,272 mDKK)
Taxes borne include corporation taxes, withholding taxes within Lars Larsen Group, social contributions, property taxes, customs duties and other local taxes and duties. Taxes borne are a direct cost for the Group. For example, the corporate income tax of a business or a tax payable on the occupation of a business’ premises is a tax charged upon and borne by the company.
Taxes collected 6,623 mDKK (FY 2021/22 6,962 mDKK)
Taxes collected are taxes collected from employees and customers on behalf of governments and include payroll taxes and VAT/sales tax. For example, personal income tax charged upon employees is a tax on the employee, however, the employer collects that tax and pays it to the tax authority.
Tax systems across the world are complex and can often be difficult to compare. Certain payments to governments may be classified as a tax in one country, but not in another. Therefore, we have used the OECD’s Classification of Taxes and Interpretive Guide to decide in a consistent manner what payments constitute a tax and should be included in Lars Larsen Group’s total tax contribution.
We have adopted the cash criterion as a general principle for representing tax data, considering it to be the most adequate for disclosing the actual tax contribution. For example, a corporate income tax settlement made during the period, which relate to previous tax years represent a tax contribution, whereas a final tax accrual for the period that is expected to be paid in the future does not.
Tax reporting FY 22/23
We believe in an open and transparent dialogue with our stakeholders; this also applies to our tax reporting. As part of our ongoing journey of increased tax transparency, we will continue to explore how we can further enhance the details of our tax reporting.
Below we present additional details regarding our view on tax in tax havens and use of tax incentives for FY 22/23.
We consider countries on the “EU’s list of non-cooperative tax jurisdictions – annex 1” as tax havens. Based on the latest updated list available at end of our financial year at 31 August 2023 (14 February 2023) we do not have companies in tax havens in Lars Larsen Group. In our role as an investor we ensure that investments activities by our partners live up to the ever-developing best practices, such as the tax code of conduct established by a number of Danish pension funds, when investing in portfolio companies and not investing through intermediary holding companies incorporated or tax residents in tax havens.
The use of companies in tax havens follows our tax principles “we do not accept aggressive tax planning” and “our responsibility as a tax payer extends to our investment activities”
We utilize an available local tax incentive when our business activity qualify for this type of incentive and it complies with relevant legislation.
The use of tax incentives follows our tax principles “we recognise tax as a business cost in line with all other business costs” and “we do not accept aggressive tax planning”
In FY 22/23 companies in Lars Larsen Group have utilized the following tax incentives, which are primarily offered to encourage investments:
|Enhanced depreciation rates on selected assets
|Reduced tax base by 80% as an investment subsidy due to regional investments
|Reduction in corporate income tax payment based on value of investments in plant and machinery
|People's Republic of China
|Reduced tax rate as entities meet requirements for small and low profit entities
|People's Republic of China
|50% reduction on urban construction tax, education surcharge, local education surcharge, and stamp duty as entities meet requirements for small and low profit entities
|Tax free business income from manufacturing of furniture in special economic zone
|Reduction in corporate income tax payment depending on development in equity
|Reduction in corporate income tax payments equal to sponsorships of entities on preapproved list
|Reduced tax base by 40% of value of investment in IT equipment
|Annual investment allowance with enhanced depreciation rates on specific plants and machinery
|Reduced tax rate on business income from manufacturing of outdoor furniture after investing in a newly established factory