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6.3. Deduction of Cross-Border Payments and Non-Deductible Expenses

The following are not deductible for Danish tax purposes or have limited deductibility:

  • Any expenses not incurred for the production of taxable income are not deductible;
  • Expenses incurred for establishment or expansion are not deductible. However, effective from 1 January 2018 payroll and related costs in connection with establishment of new business or expansion of existing business are deductible;
  • Fines or penalties paid as a result of criminal offenses are not deductible;
  • Interest payments due to late tax or custom duty payments are not deductible;
  • Bribes paid if the payment of the bribe would constitute a violation of the Danish Penal Code if paid in Denmark are not deductible;
  • Business entertainment expenses incurred in excess of 25% are not deductible; and
  • Effective 1 July 2021, the deduction of payments to  associated persons resident or registered in a non-cooperative jurisdiction as listed by the EU is disallowed (see Sec. 13.5. for list of non-cooperative jurisdictions). The same applies where the payment is made to  a person who  is not the beneficial owner and the payment is passed on to a recipient in a listed non-cooperative jurisdiction. However, the  restriction does not  apply if the relevant jurisdiction is an EU/EEA Member State or has a tax treaty with Denmark.