Denmark

U.S signs a bilateral competent authority agreement with Denmark on exchange of CbC reports

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According to an IRS announcement on its website, the competent authorities of the U.S. and Denmark have concluded an arrangement on the exchange of Country-by-Country Reports. The competent authority arrangement (CAA) for exchange of country-by-country reports is on the basis of a double tax convention (DTC). The agreement was signed on 21 June 2017.

Under the arrangement, both countries desire to increase international tax transparency and improve access by their respective tax authorities to information regarding the global allocation of the income, the taxes paid, and certain indicators of the location of economic activity among tax jurisdictions. The country-by-country report is an annual report filed by large multinational groups to be used by tax administrations. The CbC Report is one element of a standardized approach to transfer pricing documentation with a view to assessing high-level transfer pricing risks and other base erosion and profit shifting related risks, as well as for economic and statistical analysis.

The first fiscal year for which the U.S. and Denmark intend to exchange CbC Reports is the fiscal years of MNE Groups commencing on or after January 1, 2016. The CbC Report is intended to be exchanged as soon as possible and no later than 18 months after the last day of the fiscal year of the MNE Group to which the CbC Report relates. CbC Reports with respect to fiscal years of MNE Groups commencing on or after January 1, 2017 are intended to be exchanged as soon as possible and no later than 15 months after the last day of the fiscal year of the MNE Group to which the CbC Report relates.

The Competent Authorities intend to exchange the CbC Reports automatically through a common schema in Extensible Markup Language (XML).

Denmark introduces tax incentives for hydrocarbon activities

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The Danish government on 26 June 2017, published a draft bill regarding tax incentives for the Danish hydrocarbon activities. The draft bill is subject to a public hearing (consultation) until 14 August 2017.

As a result, Danish hydrocarbon companies and branches are taxed according to the following rules:

  • 22% corporate income tax rate applies to other income;
  • 25% tax rate applies to Hydrocarbon Chapter 2 corporate tax income; and
  • 52% tax rate applies to Hydrocarbon Chapter 3A income.

The new proposal introduces a new chapter 3B, which provides for additional deductions for the calculation of Chapter 3 A taxable income.

Japan and Denmark have agreed on a new DTA

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On May 15, 2017, the Japanese Ministry of Finance announced that the two countries (Japan and Denmark) have agreed in principle on the new Convention replacing the convention between Japan and the Kingdom of Denmark for the avoidance of double taxation with respect to taxes on income which came into force in 1968.

This new agreement will be signed after the necessary internal procedures have been completed by each of the two governments. Thereafter, the new Convention will enter into force after the completion of the approval procedure in both countries.

Singapore, Denmark Competent authority agreement on automatic exchange of information signed

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The Competent Authority Agreement on Automatic Exchange of Information (2016) between Singapore and Denmark was signed on 13 March 2017. The agreement provides details of what types information will be exchanged and when, in accordance with OECD Automatic Exchange of Information Agreement (2014).

¬†Denmark: Publishes Budget for 2017

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The Ministry of Finance on 8 February 2017, published the Budget for 2017 as enacted on 15 December 2016. The enacted budget details also available on the ministry of finance’s website.

Denmark: Publishes new guidelines on TP documentation

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The Minister of Taxation issued order BEK no. 401 and 402 regarding transfer pricing documentation. The new documentation guidelines BEK no. 402 will replace the previous guidelines of BEK no. 42. The new guidelines include more specific documentation requirements than under the previous documentation guidelines. The new documentation guidelines are applicable from 1 January 2017.

The documentation requirements:

  • According to to the new rules, taxpayers must use the prices and terms of business with related persons comparable to those used in independent transactions and depending on their size when calculating taxes or income.
  • Taxpayers also need to prepare themselves and keep written records of the prices and conditions for the controlled transactions.
  • The documentation contains following two parts: (i) Master file documentation on the entire group and (ii) country-specific documentation for each taxpayer in the group.
  • Language: The documentation can be prepared in Danish, Norwegian, Swedish or English.
  • Timing: The requested documents must be sent to the Danish tax authority (SKAT) within 60 days.

TIEA between Denmark and Vanuatu enters into force

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The Exchange of Information Agreement regarding tax matters (TIEA) between Denmark and Vanuatu has been entered into force on 9 September 2016. The agreement generally applies from 9 September 2016 for criminal tax matters and from 1 January 2017 for other tax matters.