Tax News Update    Email this document    Print this document  

December 7, 2023
2023-2014

Denmark passes Pillar Two

On 7 December 2023, the Danish Parliament passed Bill No. L 5 implementing Pillar Two into Danish law.

The global minimum tax rules are incorporated into a new law, the Minimum Taxation Act (Minimumsbeskatningsloven). The law closely follows the structure of Council Directive (EU) 2022/2523 of 14 December 2022 and includes clarifications and interpretations published by the OECD in 2022 and 2023. Among other things, taxpayers can elect to apply a temporary safe harbor based on country-by-country reporting. The law also introduces a qualified domestic minimum top-up tax.

The Income Inclusion Rule (IIR) is applicable for financial years beginning on 31 December 2023 or thereafter, whereas the Undertaxed Payment Rule (UTPR) is applicable for financial years beginning on 31 December 2024 or thereafter. However, the UTPR is applicable from 31 December 2023 in relation to a low-tax constituent entity that is resident in a country that has elected to not to apply the IIR and the UTPR for six consecutive fiscal years beginning from 31 December 2023.

———————————————

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

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 © 1996 – 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.

 

EY US Tax News Update Master Agreement | EY Privacy Statement