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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: Offshore activities

Article 28A of the agreement, which was introduced by the 1991 amending agreement (DT5901), contains provisions for the treatment of activities in connection with the exploration for or exploitation of oil or gas in the seabed and subsoil (offshore activities). The Article provides that

  1. an enterprise of one country which carries on such activities in the other country is deemed to be carrying on a business in the other country through a permanent establishment;
  2. a resident of one country who carries on such activities in the other country consisting of professional services or other activities of an independent character is deemed to be performing those activities from a fixed base in the other country;
  3. notwithstanding (b), profits derived by an enterprise of one country from the operation, in connection with such activities, of ships or aircraft which are in their existing state designed primarily for transporting supplies or personnel, or of tugboats or anchor handling vessels, are taxable only in the country in which the place of effective management of the enterprise is situated. This applies to profits from the operation of ships or aircraft unless they are contracted to be used mainly for purposes other than transporting supplies or personnel to or between places where offshore activities are being carried on.

There are also provisions for the taxation of residents of each country on earnings from employments in connection with such activities. Guidance on this can be found in EP8196 et seq. Refer any problems in this connection to Business Services, Employers Unit, Shipley.