Denmark: Proposed change of dividend withholding tax rate for associations and investment institutions
The Danish Government has presented to the Parliament a new bill proposal, that includes a proposal to make foreign associations and investment institutions eligible for the same withholding tax rates on dividend distributions as domestic associations and investment funds, in accordance with European Union law.
The proposal foresees that Danish and foreign associations will be taxed on dividends received from Danish equities as follows:
- Danish charities and non-profit associations will continue to be eligible for full tax exemption on dividends received from Danish equities. To be in line with the existing European law, this exemption will now be extended to foreign charities and non-profit associations under certain conditions;
- Special Danish Investment Associations (not issuing certificates) will continue to be eligible for withholding tax exemption. To be in line with the existing European law, this exemption will now be extended to foreign associations under certain conditions;
- Danish investment institutions will be subject 15% withholding tax on derived from Danish equities. This will ensure equality between Danish and foreign investment institutions, as foreign investment institutions are typically subject to a 15% withholding tax rate on dividends received from Danish equities.
The effective date of the proposal, if the law is voted, is expected to be 1 July 2021.
We continue to monitor the Danish market for new developments and will provide more information as it becomes available.
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