The Danish parliament has adopted an amendment to the Danish rules on withholding tax on dividends, royalties, interest and capital gains on debt claims. The Danish parliament has adopted an amendment to the Danish rules on withholding tax on dividends, royalties, interest and capital gains on debt claims.
The new rules enter into force from April 1st 2008 in order to bring the Danish withholding tax rules in conformity with the European Community law.
Under Sec. 2 of the Corporate Income Tax Law (selskabsskatteloven), and Sec. 2 of the Source Tax Law (kildeskatteloven), the Danish withholding tax rate on dividends is 28%. The new bill reduces the rate to 15%, provided the following requirements are met:
– the recipient holds less than 10%* of the company distributing the dividends; and
– the tax authorities in the state where the recipient is resident are obliged to exchange information with the Danish tax authorities either according to bilateral tax treaties or other international treaties or conventions, or according to an administrative agreement on aid in tax cases.
(* Dividends paid to non-resident companies in respect of substantial shareholdings are exempt from dividend withholding tax if certain conditions are met – this remains unchanged.)
Further, the bill reduces, from 30% to 25%, the withholding tax rates on royalties, interest, and capital gains on debt claims (premium), received by foreign companies. There is no withholding tax if the recipient is a foreign entity protected by the Interest and Royalties Directive 2003/49/EC.
If you have questions regarding the above mentioned please do not hesitate to contact us.
Inwema ApS
+45 3169 3169
info@inwema.dk
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