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

June 18, 2024
2024-1209

Denmark introduces new reporting obligation on royalty payments

  • From 1 July 2024 all payments of royalties to nonresidents must be reported to the Danish tax authorities irrespective of whether the recipient is exempt from Danish taxation on the royalty.
 

The Danish Parliament's enactment of a bill this spring (Bill No. L 119 C; see Act No. 333 of 4 April 2024), expanding the obligation to report royalty payments under section 66 A of the Danish Withholding Tax Act, will affect royalty payments to nonresidents made on 1 July 2024 and thereafter.

Resident individuals and companies making royalty payments to nonresident individuals and companies have thus far only been required to report royalty payments if the nonresident recipient was liable for Danish tax on the royalty. Nonresidents are not subject to Danish taxation on royalties if the royalty is exempt from Danish taxation under:

  • The European Union (EU) Interest and Royalty Directive
  • A tax treaty, if the Danish entity has obtained a preapproval from the Danish tax authorities not to apply withholding tax to the royalty payments

As of 1 July 2024 and thereafter, Danish payors must report to the Danish tax authorities all royalty payments made to nonresidents, unless the recipient is tax exempt under the EU Interest and Royalty Directive. The reporting obligation applies irrespective of whether the recipient is subject to Danish tax on the royalty, and irrespective of whether the recipient is affiliated with the payor.

The reporting must be made no later than the last banking day in the month of payment or accrual of the royalty for large companies, and no later than the tenth day of the month following the payment or accrual of the royalty (for royalties paid in December, the deadline is 17 January) for small companies. In this respect, a company is treated as a small company if its payment of labor market contribution (referred to as AM-contribution) does not exceed 250,000 Danish krone (DKK250,000) per year, or its payment of salary withholding tax (referred to as A-tax) does not exceed DKK1m per year.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

EY Denmark, Copenhagen

EY Denmark, Aarhus

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
 
 

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 © 2024, 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 Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more