Corporate - Income determination

Last reviewed - 06 December 2023

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.

Inventory valuation

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

Capital gains are subject to capital gains taxes. See Capital gains taxes in the Other taxes section for more information.

Dividend income

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.

Exception regarding chapter 3b

For Greenlandic companies with activity within the industries of mineral resources, exploitation of water resources for energy production, and who have elected to be taxed under chapter 3b, the below special differences/treatments apply (note that the rules below do have certain aspects and conditions):

  • Dividends received from Greenland resident or non-Greenland subsidiaries are not taxable.
  • No deduction for dividend distribution (contrary to the existing unique rule in Greenland)(remains taxable if chapter 3b is not chosen).
  • Dividend WHT of 24% will apply on dividend distributions (42% to 44% if chapter 3b is not chosen). However, if the dividend recipient is also covered by chapter 3b, the WHT is zero unless the distributing Greenland company is a conduit company and the dividend comes from foreign subsidiary.

If a taxpayer decides to be taxed under chapter 3b, the taxpayer is bound to the chapter for at least five income years.

Interest income

Interest income is generally included in taxable income.

Rental income

Rental income is generally taxable in Greenland; however, rental income from real estate located outside of Greenland is not taxable.

Royalty income

Royalty income is taxable in Greenland.

Partnership income

Partnership income is treated similarly to other income. Partnerships are generally fiscally transparent.

Unrealised gains/losses

Unrealised gains/losses are not taxable in Greenland. Greenland does not use a mark-to-market principle on capital gains.

Stock transactions

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.

Foreign income

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.