On 7 December 2023, the Danish Parliament passed legislation to implement the Pillar 2 global minimum tax (GloBE) rules. This legislation closely adheres to the framework established by the Council Directive (EU) 2022/2523 of 14 December 2022. On 23 June 2023, the Danish Ministry of Taxation introduced a draft bill for public review, with the objective of incorporating the EU minimum tax directive.
Key features of the Act:
- Minimum Tax Rate: The Act imposes a global minimum tax rate of 15% on covered groups with annual consolidated revenue exceeding EUR 750 million in at least two of the previous four fiscal years.
- Income Inclusion Rule (IIR) and Undertaxed Payment Rule (UTPR): The Act implements both the IIR and UTPR to ensure the minimum tax is achieved.
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- The IIR applies to financial years commencing on or after 31 December 2023.
- The UTPR applies to financial years commencing on or after 31 December 2024, with specific exceptions.
- Temporary Safe Harbor: Taxpayers have the option to apply a temporary safe harbor based on country-by-country reporting.
- Qualified Domestic Minimum Top-Up Tax: The Act introduces a qualified domestic minimum top-up tax to ensure that Danish group members are effectively taxed at a rate of at least 15%.
