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Denmark Corporate - Withholding taxes

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WHTs on payments to foreign corporations and non-resident aliens

Dividends

Dividends paid to a parent company in another EU member state or a state with which Denmark has a DTT are exempt from WHT, provided that the shares qualify as subsidiary shares (and the taxation should be reduced/lapsed according to the DTT or EU Parent-Subsidiary Directive). The same applies for dividends paid on group shares (that are not also subsidiary shares, i.e. holdings below 10%), provided that the recipient company is resident within the EU/EEA.

However, the dividends are not exempt from WHT if they are regarded as a redistribution of tax-exempt dividends that the Danish company has received from a foreign subsidiary where the Danish company cannot be regarded as the beneficial owner.

As of 1 July 2016, the tax rate on dividends distributed from a Danish company to foreign corporate shareholders is 22%. For dividends distributed from Danish companies to shareholders situated in the EU/EEA, the tax rate has been reduced retrospectively and applies to dividends distributed on 1 January 2007 or later. For the income years 2007 to 2013, the applicable tax rate is 25%; for the income year 2014, it is 24.5%; and for the income year 2015, it is 23.5%. It should be noted that the WHT rate has not been reduced but remains 27%. The shareholders must reclaim the difference between the higher WHT rate and the lower tax rate. Specific transitional rules apply.

If the portfolio shareholder (shareholding below 10%) is situated in a country with which Denmark has a tax information exchange agreement (TIEA), the tax rate on the dividend is reduced to 15% and the difference between the higher WHT rate (27%) and the lower WHT rate may be reclaimed. However, the reduced rate does not apply if the shareholder is resident outside the European Union and together with related entities owns more than 10% of the capital in the Danish distributing company.

Interest

Interest is generally not subject to WHT unless paid to a foreign group member company that is tax resident outside the European Union and outside any of the states with which Denmark has concluded a tax treaty. In this situation, interest WHT is levied at 22%. Certain other exemptions apply, mainly relating to CFC taxation.

For recipients resident in countries within the European Union with which Denmark does not have a tax treaty, it is a condition that the paying company and the recipient company are associated as mentioned in the EU Interest/Royalty Directive.

Royalties

Royalties are subject to a 22% WHT. In most cases, the WHT rate can be reduced in accordance with the tax treaty applicable to the payee. Also, the EU Interest/Royalty Directive may provide an exemption from WHT if the payee is an immediate parent, sister, or subsidiary company resident in the European Union.

Treaty WHT rates

Recipient WHT (%)
Dividend Interest (2) Royalty
Qualifying companies (1a+b) Others
Resident corporations 0 22 (10) 22 (10) 22 (10)
Resident individuals   27/42 (10) (10)  (10)
Non-treaty (4):        
Non-resident corporations 27 (11) 27 (11) 22 (3, 5, 9) 22 (5, 9)
Non-resident individuals   27 (11) 0 22 (9)
Treaty:        
Argentina 0 (1a) 15 0 3/5/10/15 (7)
Australia 0 (1a) 15 0 10
Austria 0 (1a+b) 15 0 0
Bangladesh 0 (1a) 15 0 10
Belgium 0 (1a+b) 15 0 0
Brazil 0 (1a) 25 0 15/25 (7, 9)
Bulgaria 0 (1a+b) 15 0 0
Canada 0 (1a) 15 0 0/10 (7)
Chile 0 (1a) 15 0 5/15 (7)
China, People’s Republic of 0 (1a) 10 0 10
Croatia 0 (1a) 10 0 10
Cyprus 0 (1a+b) 15 0 0
Czech Republic 0 (1a+b) 15 0 5
Egypt 0 (1a) 20 0 20
Estonia 0 (1a+b) 15 0 5/10 (7)
Faroe Islands 0 (1a) 15 0 0
Finland 0 (1a+b) 15 0 0
Georgia 0 (1a) 10 0 0
Germany 0 (1a+b) 15 0 0
Ghana, Republic of 0 (1a+b) 5/15 0 8
Greece 0 (1a+b) 18 0 5
Greenland 0 (1a) 15 0 10
Hungary 0 (1a+b) 15 0 0
Iceland 0 (1a+b) 15 0 0
India 0 (1a) 25 0 20
Indonesia 0 (1a) 25 0 15
Ireland, Republic of 0 (1a+b) 15 0 0
Israel 0 (1a) 15 0 10
Italy 0 (1a+b) 15 0 5
Jamaica 0 (1a) 15 0 10
Japan 0 (1a) 15 0 10
Kenya 0 (1a) 28 0 20
Korea, Republic of 0 (1a) 15 0 10/15 (7)
Kuwait 0 (1a) 15 0 10
Kyrgyzstan 0 (1a) 15 0 0
Latvia 0 (1a+b) 15 0 5/10 (7)
Lithuania 0 (1a+b) 15 0 5/10 (7)
Luxembourg 0 (1a+b) 15 0 0
Macedonia 0 (1a) 15 0 10
Malaysia 0 (1a) 0 0 0
Malta 0 (1a+b) 15 0 0
Mexico 0 (1a) 15 0 10
Morocco 0 (1a) 25 0 10
Netherlands 0 (1a+b) 15 0 0
New Zealand 0 (1a) 15 0 10
Norway 0 (1a+b) 15 0 0
Pakistan 0 (1a) 15 0 12
Philippines 0 (1a) 15 0 15
Poland 0 (1a+b) 15 0 5
Portugal 0 (1a+b) 10 0 10
Romania 0 (1a+b) 15 0 4
Russia 0 (1a) 10 0 0
Serbia (6) 0 (1a) 15 0 10
Singapore 0 (1a) 10 0 10
Slovak Republic 0 (1a+b) 15 0 5
Slovenia 0 (1a+b) 15 0 5
South Africa 0 (1a) 15 0 0
Sri Lanka 0 (1a) 15 0 10
Sweden 0 (1a+b) 15 0 0
Switzerland 0 (1+a) 15 0 0
Taiwan 0 (1a) 10 0 10
Tanzania 0 (1a) 15 0 20
Thailand 0 (1a) 10 0 5/15 (7)
Trinidad and Tobago 0 (1a) 20 0 15
Tunisia 0 (1a) 15 0 15
Turkey 0 (1a) 20 0 10
Uganda 0 (1a) 15 0 10
Ukraine 0 (1a) 15 0 10
United Kingdom 0 (1a+b) 25 0 0
United States 0 (1a) 15 0 0
Venezuela 0 (1a) 15 0 5/10 (8)
Vietnam 0 (1a) 15 0 15
Zambia 0 (1a) 15 0 15

Notes

  1. Denmark does not operate a system of WHT on dividends when the parent company holds:
    1. at least 10% of the share capital of the distributing Danish company, provided the receiving company is resident in a EU/EEA member state or a state with which Denmark has entered a DTT (subsidiary shares) and that Denmark is obligated to reduce or waive taxation according to the Parent/Subsidiary Directive or a DTT, or
    2. less than 10% of the share capital in the distributing company, provided the receiving company is an EU/EEA-resident, the distributing and the receiving company are affiliated companies (group shares), and that Denmark is obligated to reduce or waive taxation according to the Parent/Subsidiary Directive or a DTT.
  2. Interest is generally not subject to WHT unless paid to a foreign group member company that is tax resident outside of the European Union and outside of any of the states with which Denmark has concluded a tax treaty. In this situation, interest WHT is levied at 22% for interest accrued or paid on 1 March 2015 or later (25% for interest that is accrued or paid before 1 March 2015).
  3. Exemptions apply if the receiving company is directly or indirectly controlled by a Danish parent company or if the receiving company is controlled by a company resident in a state with which Denmark has a double tax convention and that company may be subject to CFC taxation. Finally, an exemption applies if the receiving company establishes that the foreign taxation of interest is not less than three-quarters of the Danish corporate taxation and that the interest is not paid to another foreign company subject to taxation that is less than three-quarters of the Danish corporate taxation.
  4. Denmark has terminated its treaty with Spain and France with effect from 1 January 2009. The termination means that each country will tax the relevant income according to its domestic tax rules. New treaties are not expected to be agreed in the near future. Companies in Spain and France receiving dividends from a Danish company may, however, qualify for tax exempt dividends since they are EU member states.
  5. The EU Interest/Royalty Directive may provide an exemption from WHT if the payee is an immediate parent,sister, or subsidiary company resident in the European Union.
  6. Serbia has succeeded in the treaty between Denmark and Yugoslavia.
  7. Different rates apply depending on the characteristics of the assets on which royalty is paid.
  8. The 10% rate is applicable for royalties, whereas the 5% rate is applicable to fees for technical support.
  9. The WHT rate is 25% for interest and royalties that are accrued or paid before 1 March 2015.
  10. Dividends, interest, and royalties received by a company resident in Denmark are included in the taxable income and taxed in accordance with the current tax rate for companies (22%). It is possible to get credit for foreign taxes on the received dividends, interest, or royalties. For individuals resident in Denmark, received dividends are included in a special share income that is taxed at 27% of the first DKK 50,600 of share income and at 42% for the rest. Interest and royalties are included in the person’s taxable income and are taxed in line with other taxable income.
  11. As of 1 July 2016, the tax rate on dividends distributed from a Danish company to foreign corporate shareholders is 22%. For dividends distributed from Danish companies to shareholders situated in the EU/EEA, the tax rate has been reduced retrospectively and applies to dividends distributed on 1 January 2007 or later. For the income years 2007 to 2013, the applicable tax rate is 25%; for the income year 2014, it is 24.5%; and for the income year 2015, it is 23.5%. It should be noted that the WHT rate has not been reduced but remains 27%. The shareholders must reclaim the difference between the higher WHT rate and the lower tax rate. Specific transitional rules apply. If the portfolio shareholder is situated in a country with which Denmark has a TIEA, the tax rate on the dividend is reduced to 15% and the difference between the higher WHT rate and the lower WHT rate may be reclaimed. However, the reduced rate does not apply if the shareholder is resident outside the European Union and together with related entities owns more than 10% of the capital in the Danish distributing company.

Last Reviewed - 08 December 2017

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