Danish Tax Agency updates dividend tax refund guidance

Key Changes

The Danish Tax Agency (Skattestyrelsen) has published updated guidance on the procedure for claiming refunds of Danish dividend withholding tax, reflecting the recent Danish Supreme Court decision confirming that refund claims are subject to a five-year limitation period.

The updated guidance confirms that:

Refund claims must be submitted within five years from the date the dividend tax was withheld.
The Danish Tax Agency will automatically reopen refund claims that were previously rejected solely because they were filed outside the former three-year limitation period but within the five-year period.
Taxpayers do not need to submit a separate request for reopening where their claim falls within the conditions identified by the Danish Tax Agency.
Refund claims must be submitted electronically using the Danish Tax Agency's online platform (or the dedicated bulk submission process for representatives filing on behalf of multiple shareholders).

Implications for Investment Funds

The updated guidance provides greater certainty regarding the practical administration of Danish dividend withholding tax refund claims and creates additional opportunities for eligible non-resident investors.

Potential consequences / effects / ramifications include:

Digital filing process

Refund applications must be submitted electronically, with representatives handling multiple claims able to use the dedicated bulk filing solution.
Comprehensive documentation required:

The Danish Tax Agency continues to require detailed documentation demonstrating entitlement to treaty or domestic law benefits before any refund will be granted.

Key Considerations

Taxpayers must demonstrate that the statutory refund conditions are satisfied including:
- the claimant is entitled to claim the refund;
- Danish dividend tax has been withheld;
- the claimant was the beneficial owner of the shares at the relevant ex-dividend date; and
- the withholding tax exceeded the final Danish tax liability under an applicable tax treaty, the EU Parent-Subsidiary Directive, or Danish domestic law.
A certificate of tax residence issued by the competent foreign tax authority will generally be required unless a valid Danish dividend tax exemption card is available.
Representatives submitting claims must hold appropriate powers of attorney from the relevant shareholders.
Due to the extensive verification procedures introduced following historical dividend tax fraud cases, processing times remain lengthy. Where processing exceeds six months, interest may be payable under the Danish Withholding Tax Act.

Conclusion

The Danish Tax Agency's updated guidance provides welcome clarity on the practical application of the Supreme Court's decision and the procedures for claiming Danish dividend withholding tax refunds.

Investment funds and other non-resident investors should review historical Danish dividend income to identify potential refund opportunities within the confirmed five-year limitation period and ensure that the required documentation is available before submitting claims.