Denmark Tax Agency Clarifies Taxation of Royalty Payments to Nonresident Companies

The Danish Customs and Tax Administration Dec. 10 posted online National Tax Court Decision No. SKM2025.703.LSR, clarifying the taxation of royalty payments to nonresident companies. The taxpayer, a Cypriot company owned by two individuals, received royalties from Danish companies and applied for an exemption from Danish withholding tax. The Tax Agency denied the exemption, with previous exemptions revoked for future payments. On appeal, the National Tax Court upheld the Tax Agency’s decision, finding that: 1) the taxpayer managed intellectual property rights, and most royalty income was transferred to the shareholders through dividends, loans, and repayments; 2) under Danish law and ...