Denmark: Withholding tax refund claims are subject to five-year limitation period (Supreme Court decision)

The Danish Supreme Court on June 11, 2026, held that refund claims for Danish withholding tax (WHT) on dividend and royalty payments submitted by nonresident taxpayers are subject to a five-year limitation period, rather than the general three-year limitation period applied by the Danish tax authorities since 2016.

The decision was issued in the joined cases BS‑36976/2025‑HJR and BS‑36974/2025‑HJR.

Background

Section 67A of the Danish Withholding Tax Act was introduced in 2010 and was initially interpreted by the Danish tax authorities as providing a five-year limitation period for refund claims brought by nonresident taxpayers. In 2016, however, the Danish tax authorities changed their administrative practice, taking the position that such claims were instead subject to the ordinary three-year limitation period under Danish law.

The joined cases involved three taxpayers that were subject to Danish WHT on dividend and royalty payments. In 2017, the taxpayers applied for refunds of tax withheld in excess of the amounts ultimately due under the applicable income tax treaties to address double taxation. The Danish tax authorities rejected part of these claims as time-barred, arguing that the ordinary three-year limitation period had expired before the refund applications were submitted. Following proceedings before the lower courts, the dispute reached the Danish Supreme Court, which was asked to determine whether the claims were governed by the general three-year limitation period or by the special five-year limitation period in section 67A of the Danish Withholding Tax Act.

Supreme Court decision

The Supreme Court noted that the wording of section 67A does not clearly identify all categories of claims covered by the special limitation period. The Court therefore examined the legislative history of the provision and concluded that the most natural interpretation is that refund claims brought by taxpayers with limited tax liability in Denmark fall within the scope of the five-year limitation period.

In reaching this conclusion, the Court emphasized that refund claims submitted by nonresident taxpayers are among the most common types of claims covered by the WHT rules. The Court also attached significance to the fact that, following the introduction of section 67A, the Danish tax authorities themselves interpreted and administered the provision as applying to such claims for several years before changing their practice in 2016.

The Supreme Court therefore held that section 67A applies to claims for repayment of tax on dividends and royalties withheld in excess of the final tax liability determined under an applicable income tax treaty to address double taxation. As a result, the taxpayers' refund claims were subject to the five-year limitation period and were not time-barred.

Read a July 2026 report prepared by KPMG’s EU Tax Centre