Our global tax footprint
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 company, 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.
As part of our ongoing journey of increased tax transparency and a simplified group structure, we will continue to explore how we can further enhance the details of our total tax footprint across the world and thereby reflect our overall contributions to society.
In financial year 2020/21, we have included taxes borne for our most significant group companies accounting for 90% of our global revenue. There will be additional amounts which are paid to local tax authorities (either as taxes borne or taxes collected) which therefore currently have not been taken into consideration in this report.
Our total tax footprint for financial year 2020/21 amounts to more than DKK 8.3 billion of which 28 % are ‘taxes borne’ and 72 % are ‘taxes collected’. Below the total tax contribution is shown with split between tax types and the countries where the taxes are paid.
Corporate income taxes (1,245 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 (2,337 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 (4,786 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.
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.
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 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.