The Danish Ministry of Taxation has issued a release announcing that it has entered into an agreement in principle with Finans Danmark on a new model for the taxation of dividends that would better protect Denmark from tax fraud. Finans Danmark (Finance Denmark) is an organization representing the interests of the financial industry in Denmark.
Under the current model, tax is generally levied at the full domestic rate, after which a refund may be claimed for a lower rate, such as under a tax treaty. However, this model has a high administrative burden and has resulted in significant tax fraud involving fraudulent dividends tax refund claims.
With the new model, tax could be withheld at beneficial rates without the need to claim a refund. The model includes that foreign shareholders must be registered with the Tax Agency and have a unique identification number, so that the correct amount of dividends tax is withheld and paid when paying dividends. The new model also provides that banks would be held liable for the payment of tax if it is shown that too little dividends tax has been withheld.
Further information on the new model's implementation will be published once available.
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