Denmark on 28 March ratified the income tax treaty with France via Act No. 322, as published 29 March in the Danish official gazette.
The treaty, which was signed in Paris on 4 February 2022, will prevent Danish citizens from relocating to France to take advantage of a lower tax rate because Denmark will have the right to tax pension payments made to its citizens residing in France. It is also expected to benefit Danish businesses by strengthening trade with France.
Under the treaty, dividends are taxable at 0 percent if the beneficial owner is a resident of the other contracting state and is a company that directly owns at least 10 percent of the capital of the payer company throughout a 365-day period that includes the date of payment of the dividends. In other cases, a 15 percent rate applies.
Interest and royalties are taxable only in the beneficial owner's state of residence. Both countries generally use the credit method to eliminate double taxation. The treaty will enter into force after ratification instruments are exchanged, and its provisions will generally apply from January 1 of the year following entry into force.