Denmark

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.

Denmark: Budget for 2017 legislated

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The Budget Bill for 2017 was enacted on 15 December 2016 and the proposed changes regarding corporate taxation are summarized below:

The following measures relate to corporate tax:

i) An allowance for corporate equity (ACE) will be introduced from 2019.ii) An additional deduction is introduced for further investments in research and development (R&D). iii) Similarly, small and medium-sized enterprises may write off 150%, and large enterprises 125%, of their qualifying R&D investments between 2017 and 2025. and iv) New enterprises set up between 2017 and 2019 with taxable profits up to DKK 7 million will be exempt from corporate income tax for a period of 3 years.

Denmark: CJEU decision regarding exemption for interest income

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The Court of Justice of the European Union (CJEU) on 21 December 2016, published a judgment in the case of:Masco Denmark and Damixa about the Danish corporate tax rules that provide an exemption from tax for interest income on loans provided by a Danish resident company to its Danish affiliated companies, if the corresponding interest expenditure deduction is denied the debtor because of application of the thin capitalization rules. Such an exemption from tax is denied when the affiliated debtor company is a resident in another EU Member State.

Contrary to the Opinion issued by Advocate General (AG), the Court concluded that this difference in treatment constitutes a restriction on the EU freedom of establishment. Furthermore, the difference in treatment was found not to be justified under either the balanced allocation of taxing rights or tax evasion.