Denmark’s parliament is considering a draft law L 186 in order to strengthen the country’s minimum tax regime and align it with international standards.

The proposal, submitted by the Tax Ministry on 30 April, 2024, aims to ensure full compliance with the OECD’s model rules and administrative guidelines on minimum taxation.

Key highlights of the proposed reform include:

Safeguard Measures
The draft bill introduces safeguard rules to prevent groups from exploiting a special transitional rule in the Minimum Taxation Act, which allows for setting the surcharge at zero based on country-by-country reports. This move aims to curb potential circumvention strategies employed by entities to evade tax obligations.

Simplified Calculation Rules
In alignment with the Organisation for Economic Co-operation and Development’s (OECD) Administrative Guidelines from December 2023, simplified calculation rules are set to be established. This aims to streamline the application process for the permanent exemption provision (safe harbour), a significant step towards ensuring clarity and consistency in tax assessments.

Defensive Measures Against Non-Cooperative Jurisdictions
The proposed amendments extend beyond domestic concerns, with revisions slated for the list of jurisdictions facing Denmark’s defensive measures. Aligning with the EU’s list of non-cooperative tax jurisdictions, countries like the Bahamas, Belize, the Seychelles, and the Turks and Caicos Islands face removal from Denmark’s list, marking a strategic move towards international tax cooperation.

The proposal suggests updating the list of nations subject to Danish defensive measures to align with the EU’s list of non-cooperative tax jurisdictions. The proposed bill is anticipated to take effect from 1 July, 2024.