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Denmark

2 February 2021

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Draft Bill Submitted in Danish Parliament for Deduction Restriction and Increased Dividend Taxation for Payments to Non-Cooperative Jurisdictions

The Danish government has submitted in parliament draft bill L 150, which provides for the introduction of new anti-avoidance rules (defensive measures) based on the EU list of non-cooperative jurisdictions. The draft bill is in line with the draft consulted on earlier and includes:

  • A restriction on the deduction of payments made to:
    • an associated person that is resident or registered in a jurisdiction listed by the EU as non-cooperative; or
    • a person that is not the beneficial owner and the payment is passed on to a recipient in a jurisdiction listed by the EU as non-cooperative; and
  • An increased withholding tax of 44% on dividends paid to:
    • a person that is resident or registered in a jurisdiction listed by the EU as non-cooperative; or
    • a person that is not the beneficial owner and the dividend is passed on to a recipient in a jurisdiction listed by the EU as non-cooperative.

The deduction restriction or increased withholding tax would not apply, however, if the relevant jurisdiction is an EU/EEA Member State or has a tax treaty with Denmark. A list of specific non-cooperative jurisdictions for the purpose of the rules is provided as part of the draft bill, which is based on the EU list of non-cooperative jurisdictions: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, U.S. Virgin Islands, and Vanuatu.

Note, Trinidad and Tobago is not included in the draft bill list, despite being listed by the EU. This is due to the aforementioned tax treaty exclusion, which, as previously reported, will be resolved through the termination of the tax treaty.

Subject to approval, the new rules will enter into force on 1 July 2021.

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