June 4, 2021
Denmark passes bill on CFC taxation
On 3 June 2021, the Danish Parliament passed Bill No L 89 on controlled foreign company (CFC) taxation. The law implements the CFC rules of the European Union’s (EU) Anti-tax Avoidance directive (Council directives (EU) 2016/1164 and (EU) 2017/952) (the ATAD) into Danish law.
The ATAD provides Member States with two options for CFC taxation:
Existing Danish CFC taxation is based on model A and CFC taxation requires that more than 50% of the income is of a financial nature and that more than 10% of the assets are of a financial nature. The existing rule is applicable irrespective of the level of taxation for the CFC.
The new law retains model A with the following key changes:
The new rules are applicable for income years starting 1 July 2021 and thereafter.
For additional information with respect to this Alert, please contact the following:
Ernst & Young P/S, Copenhagen
Ernst & Young P/S, Aarhus
Ernst & Young LLP (United States), Nordic Tax Desk, New York