As a general rule, Danish tax law distinguishes between operating costs on the one hand, and capital and establishment costs on the other. Operating costs are, for tax purposes, deductible, while capital and establishment costs are not. Acquisition costs generally do not fall within the category of operating costs and are therefore generally not deductible. Because Danish tax law is based on a net income principle, under which only net income or net gain is taxable, such non-deductible acquisition costs are instead added to the purchase price of the asset in question and therefore may be depreciated or may reduce any taxable capital gains realised upon a subsequent sale of the asset.
However, pursuant to section 8J of the Danish Tax Assessment Act (TAA), acquisition costs paid to lawyers and auditors in connection with the establishment of a new business or the expansion of an existing business may be deductible, unless the costs are to be considered an addition to the purchase price or a deduction from the sales price of an asset. TAA section 8J does not provide for deductibility of costs paid to advisers other than lawyers and auditors.
