Taxable income is generally calculated as income determined for accounting purposes, which is adjusted and modified for several items as prescribed by the tax laws. One typical timing difference is depreciation.
There are no formal rules about inventory valuation in Greenland. Generally, inventory is valued at acquisition cost according to a first in first out (FIFO) principle.
Capital gains are subject to capital gains taxes. See Capital gains taxes in the Other taxes section for more information.
Income from dividends is generally included in taxable income. There is no relief, such as participation exemption or the like, meaning that any form of Greenlandic holding structure is generally inefficient. Dividends from foreign companies, however, are tax free, provided that the recipient holds at least 25% of the shares in the distributing company for at least one year.
Interest income is generally included in taxable income.
Rental income is generally taxable in Greenland; however, rental income from real estate located outside of Greenland is not taxable.
Royalty income is taxable in Greenland.
Partnership income is treated similarly to other income. Partnerships are generally fiscally transparent.
Unrealised gains/losses are not taxable in Greenland. Greenland does not use a mark-to-market principle on capital gains.
Gains and losses on equity transactions are taxable.
Foreign currency exchange gains/losses
Foreign exchange gains/losses are taxable in Greenland if realised; however, only foreign exchange gains/losses on receivables are taxable, not on debentures.
Greenlandic companies are taxable to Greenland on their worldwide income, except for certain income relative to foreign real estate; consequently, income from foreign PEs is taxable to Greenland.
The income of a foreign subsidiary may be taxed in the hands of its Greenlandic parent company if the subsidiary constitutes a controlled foreign company (CFC). See Controlled foreign companies (CFCs) in the Group taxation section for more information.