Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

February 13, 2019
2019-5214

Denmark adopts easement of taxation of Danish and foreign investment funds

The bill regarding easement of taxation of Danish and foreign investment funds was adopted by the Danish Parliament on 24 January 2019. For background on the bill, see EY Global Tax Alert, Danish Government proposes to ease taxation of Danish and foreign investment funds, dated 5 October 2018.

The key changes include:

  • The taxation of Danish individual investors investing in “equity-based” mutual investment funds classified as “investment companies” under Danish tax law is changed. Under the new rules, returns from shares and units in Danish and foreign “investment companies” that primarily invest in equities (a 50% test) are taxed as “equity income” for Danish individuals. Further, losses from listed equities and “equity-based investment institutes with minimum taxation” can be offset against returns from “equity-based investment companies.”
  • The rules on Danish taxation of dividends received by nonresident investors from Danish mutual investment funds are changed. Following the changes, nonresident investors are tax exempt on dividends from Danish “investment companies“ and “investment institutes with minimum taxation.” The exemption on Danish outbound dividends will only apply if the Danish mutual investment fund pays tax at a rate of 15% on dividends received by the fund from Danish equities. The Danish mutual investment funds will still be required to withhold tax at a rate of 27% on dividend distributions to foreign investors and the foreign investor must file a reclaim to recover the Danish withholding tax.
Update of timeline
  1. According to the law, the tax easements on returns from equity-based “investment companies,” are effective from the income year 2020.
  2. The dividend withholding tax exemption for nonresident investors is effective from 1 March 2019.

For additional information with respect to this Alert, please contact the following:

Ernst & Young P/S, Copenhagen
  • Jesper Frøkjær | jesper.froekjaer@dk.ey.com
  • Amanda Mathiesen | amanda.e.matthiesen@dk.ey.com
Ernst & Young LLP, Nordic Tax Desk, New York
  • Antoine Van Horen | antoine.vanhoren@ey.com
  • Henry Cowan | henry.cowan@ey.com

ATTACHMENT:

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2023, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct