The Danish Ministry of Taxation launched draft bill on Pillar 2
On 23 June 2023, the Danish Ministry of Taxation launched a draft bill for public consultation to implement the EU Minimum Tax Directive in Danish national legislation.
The Directive is based on the OECD’s Global Anti-Base Erosion (“GloBE”) rules, often referred to as “Pillar 2”. The Danish steps towards implementation are aligned with the Directive’s requirements to implement the rules ultimately by 31 December 2023.
The wording and construction of the Danish draft bill is very close to the Directive, meaning that for calendar-year taxpayers the rules will have an impact as of 1 January 2024 through the so-called “Income Inclusion Rule” (IIR), with the “Under-Taxed Profits Rule” (UTPR) to come into effect one year later. In addition, the bill also includes a “Domestic Minimum Top-up Tax” (DMTT) with effect from 1 January 2024. That being said, on certain specific points, the treatment under the minimum tax rules is still unclear, which have to be clarified both within Danish law and the OECD in the coming months.
Read the draft bill here.
Our recommendations
Danish taxpayers have until 18 August to provide comments to the consultation process. We highly encourage you to provide inputs to the consultation where your company has currently identified grey areas in the rules in the application to your specific fact-pattern. We would be happy to assist you in this respect. Please reach out if you need assistance on this matter.
As previously emphasised, the rules are complex and novel in many respects. There are likely difficulties in compiling and analysing the necessary data, when applying the rules. For this reason, additional resources may be required during the remainder of this year and beyond, ranging from new accounting ledgers, expanding tax reporting packages, system upgrades, training of tax and finance people, etc. Your tax and accounting teams will need to work closely, as will central/local teams. Additionally, realigning of processes may also be required.
Let us assist you
Our dedicated Pillar 2 team, consisting of both tax technical and data transformation experts, is ready to assist you to become Pillar 2 compliance-ready. Please let us know in case of any questions or concerns.
