Double Tax Agreement Denmark

Double tax agreement Denmark – Everything you need to know

Denmark is one of the most attractive destinations for businesses and investors. The country has a stable economy, skilled workforce, and a business-friendly environment. Moreover, Denmark has a network of double tax agreements with other countries, which makes it an even more attractive destination.

In this article, we will discuss everything you need to know about the double tax agreement Denmark.

What is a double tax agreement?

A double tax agreement (DTA) is an agreement between two countries that aims to avoid double taxation of the same income in both countries. A DTA determines which country has the right to tax certain types of income, such as dividends, interest, and royalties. DTAs also provide relief to taxpayers from the additional tax burdens of foreign taxation.

Denmark has signed double tax agreements with more than 90 countries worldwide.

Benefits of double tax agreement Denmark

The double tax agreement Denmark provides several benefits to businesses and investors:

1. Avoidance of double taxation – The double tax agreement ensures that income is taxed only in one country, instead of being taxed twice. This reduces the tax burden on businesses and investors.

2. Reduced withholding tax rates – The double tax agreement reduces withholding tax rates on certain types of income such as dividends, interest, and royalties. This results in increased cash flow for businesses and investors.

3. Protection against tax discrimination – The double tax agreement ensures that taxpayers are not subject to discriminatory tax treatment in the other country.

4. Certainty and predictability – The double tax agreement provides certainty and predictability to taxpayers. They can be sure of the tax treatment of their income in both countries.

Types of income covered under double tax agreement Denmark

The double tax agreement Denmark covers various types of income, including:

1. Dividends – The double tax agreement limits the withholding tax on dividends to a maximum of 15% in most cases.

2. Interest – The double tax agreement limits the withholding tax on interest to a maximum of 10% in most cases.

3. Royalties – The double tax agreement limits the withholding tax on royalties to a maximum of 15% in most cases.

4. Capital gains – The double tax agreement provides that capital gains are taxable only in the country where the taxpayer is resident, with a few exceptions.

How to claim relief under double tax agreement Denmark

To claim relief under the double tax agreement Denmark, you need to follow the following steps:

1. Determine your tax residency – You need to determine your tax residency in both countries to determine which country has the right to tax your income.

2. Complete the necessary forms – You need to complete the necessary forms to claim relief under the double tax agreement.

3. Submit the forms – You need to submit the forms to the relevant tax authorities in both countries.

Conclusion

The double tax agreement Denmark provides several benefits to businesses and investors. It ensures that income is taxed only once, reduces withholding tax rates, protects against tax discrimination, and provides certainty and predictability to taxpayers. If you need to claim relief under the double tax agreement, you need to determine your tax residency and complete the necessary forms. With the double tax agreement in place, Denmark remains an attractive destination for businesses and investors worldwide.