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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Double Taxation Relief Manual: Guidance by country: Denmark: Dividends

The 1996 agreement (see DT5901) altered the rate of withholding tax deducted at source from dividends paid by a Danish company. Dividends paid by a Danish company to a United Kingdom company which holds directly at least 25 per cent of the issued share capital of the company paying the dividends are exempt from Danish tax. This is in line with the EC Directive mentioned at INTM164030.

The level of capital required to obtain the 0% rate under the Directive is reduced to 20% from 1 January 2005, 15% from 1 January 2007 and 10% from 1 January 2009.

Dividends received by any other United Kingdom resident are subject to Danish withholding at the rate of 15 per cent. This exemption or reduction of Danish tax as above is not due if the dividend is effectively connected (see INTM153110, fifth sub-paragraph) with a permanent establishment or fixed base which the United Kingdom resident recipient has in Denmark.

Where a dividend is paid by a Danish company to a United Kingdom company which controls, directly or indirectly, not less than 10 per cent of the voting power in the Danish company, credit is also due for the underlying tax (see INTM164010 (d)) in accordance with Article 22(1)(b).