Fund taxation e-alert 2016-05

Fund taxation alert 2016-05

In a recent statement, the Danish minister of taxation proposed a decrease in the time limitation period for dividend withholding tax (WHT) reclaims to three years.

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Proposed change in Danish time limitation for dividend WHT reclaims

In a recent statement, the Danish minister of taxation proposed a decrease in the time limitation period for dividend withholding tax (WHT) reclaims to three years.


Background


The general time limitation period for taxation purposes in Denmark is three years. Specifically for dividend WHT reclaims in Denmark based on EU law, the statutory time limitation period currently applied is five years based on the interpretation of the Danish Tax Authorities. Such a time limitation period is calculated from the date of payment of the tax, which is the tenth day of the month following the dividend date.


Development and news


The proposed change of the statute of time limitation should align the specific time limitation for WHT reclaims based on EU law to the general time limitation of three years. For tax reclaim purposes, the changes should, depending on the exact moment of entry into force, most likely impact WHT levied between June 2011 and June 2013. If the Danish Tax Authorities change their interpretation and apply the three year time limitation retroactively, recoverable WHT suffered in those years may face the risk of being time-barred. An official administrative guide (Styresignal) is expected to be issued by the Danish Tax Authorities shortly and will most likely coincide with the date that the proposed changes take effect.


KPMG comments


It is likely that the interpretation of the Danish Tax Authorities in regards to the applicable time limitation for WHT reclaims will be amended. For the purpose of securing the claimants’ rights, WHT reclaims for dividend WHT suffered between June 2011 and June 2013 should therefore be prioritised before the administrative guidance is issued.

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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