The statement should be seen in the context of a recent draft bill (“L 150”) which is currently subject to public hearing.
L 150 introduces new rules which specifically apply to payments made from Danish companies to group companies resident in jurisdictions listed on the EU Blacklist.
The statement addresses two specific measures to be adopted which are in line with the recommendations from the Council of the European Union.
Firstly, Danish companies will not be able to deduct payments, or otherwise include these in their calculation of taxable income when they are paid to group companies resident in jurisdictions on the EU Blacklist. This means that Danish companies will not be able to obtain a tax deduction on e.g., interest payments or payments for purchase of goods made to group companies resident in these jurisdictions.
Secondly, dividend payments paid from a Danish company to a parent company/ultimate owner resident in a jurisdiction on the EU Blacklist will be subject to a 44% withholding tax in Denmark as opposed to the current standard withholding tax rate of 27% applicable to such jurisdictions.
The draft bill is proposed to enter into force on 1 July 2021. If passed, accordingly payments made (or deemed to be made) on or after this date will be comprised by the new rules.
Furthermore, the Danish Ministry of Taxation also issued another statement on 25 February 2021 of its intention to terminate the Danish double tax treaty with Trinidad and Tobago as the country is listed on the EU Blacklist. The intention is to terminate the double tax treaty with effect from 1 January 2022.
If anything, L 150, and the subsequent statements from the Danish Ministry of Taxation demonstrate Denmark’s dedication in the fight against the use of non-cooperative jurisdictions.
At Lundgrens, we will closely monitor and follow the development of L 150 and Danish tax law in general.
