Denmark proposes 22% withholding on more interest-like payments

Limited tax liability would broaden

The proposal would add two categories to section 2(1) of the Corporate Tax Act (selskabsskatteloven). New paragraph (i) would cover other interest-like amounts from Danish sources relating to controlled debt. New paragraph (j) would cover interest and interest-like amounts from Danish sources relating to debt held by specified foreign entities. The bill remains a consultation draft and has not changed current law.^[1][2]

Existing qualifications still matter

The explanatory notes say the proposal is intended to capture returns that can substitute for interest but fall outside the existing domestic definition. The draft also adjusts related controlled-debt, international joint-taxation and tax-control provisions. Existing statutory exceptions and treaty or EU-law relief would remain relevant, so the proposal is not a blanket tax on every cross-border financing return.^[2]

A 22% gross withholding mechanism

A linked amendment would insert section 65 D(4) into the Withholding Tax Act (kildeskatteloven). For a covered payment to a company subject to the proposed limited tax liability, the person for whose account it is paid would generally have to withhold 22% of the gross interest or interest-like amount. The draft carries across specified exceptions in section 65 D(1) and (2) and makes a corresponding Tax Control Act change.^[2]

Proposed April 2027 cutover

The draft proposes commencement on 1 April 2027 for the relevant Corporate Tax Act, Withholding Tax Act and Tax Control Act amendments. The notes specify that the changes would apply to interest, capital gains and interest-like amounts paid on or after that date. Danish companies and payment intermediaries should map cross-border related-party financing, classify profit-linked or hybrid returns and assess withholding and reporting processes, but retain existing treatment unless and until the bill is enacted.^[2]

If enacted, each payment would still require review of the final statutory scope, relevant exceptions, treaty entitlement, beneficial ownership and any EU-law relief. The consultation close is a material proposal-stage milestone; it does not verify parliamentary passage, final wording or commencement.^[1][2]