Unit 18 Inheritance tax and the family company Reading tasks A.

. Understanding main points Read the text on the opposite page about the Danish lego group and answer these questions. 1. Who owns the capital in Lego? Kjeld Kirk Kristiansen. 2. What does the present owner of Lego fear will happen to the company financially when he dies? It will have to pay a very large sum of money in inheritance tax. 3. How is the company in Switzerland that controls lego defined? 4. It is defined as a finance company. Under the new tax system, would an inheritor have to pay tax on the value of a company based in country with higher taxes than Denmark? No. Which country has the highest tax-to-GDP ratio, according to the text? Sweden. What change in Danish tax legislation has affected this company? The law has changed so that an inheritor has to pay tax on the capital value of a company based in a foreign country. What would Lego do with the money if they did not have to pay the tax? The money would be used for investment in the company and jobs. How is the new inheritance tax going to affect other major Danish family owned companies, according to the text? Not at all.

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B.

Understanding details Answer these questions 1. When did the inheritance law in Denmark change? Recently. 2. What plans might not be carried out by the children of the owner? To keep Lego family-owned. 3. When the owner of Lego dies, who does he think will buy his company? Foreigners. 4. Are all the Lego companies registered in Denmark? No. 5. Which ratio is named as being higher in Denmark than in Switzerland? 6. 7. 8. Tax-to-GDP. How much tax will the lego inheritors have to pay? DKr3bn ($437m). Is Lego the only company in Denmark to have to pay this kind of tax? Yes, so far. Is the holding company in Switzerland bigger or smaller than Danish holding company in term of annual turnover? Smaller.

Vocabulary tasks A. Describing company structures Use an appropriate word or phrase from the box to complete each sentence. Companies capital company corporate domiciled holding inherit inheritance tax inheritor shares 1. The Lego group is made up of several companies. 2. When the owner dies, his children will inherit the firm. 3. At the moment, it looks as though they will have to pay a huge amount of money in inheritance tax. 4. Any company that is set up in another, lower tax country, is subject to this. 5. The Danish law says that any finance firm domiciled abroad must pay 6. 7. 8. 9. 10. differential tax. The corporate structure of Lego was designed for business reasons, not taxation reasons Part of the lego company is controlled through a holding company abroad. The person who receives money from someone who dies is the inheritor. The Danish inheritor will pay tax on the capital value of the company. The equity or ownership of a family company or public company is divided into shares which can be bought or sold.