Share with your friends

Denmark: Withholding tax on dividends distributed to non-resident investment funds

Denmark: Withholding tax on dividends

Denmark’s high court in 2019 issued its decision in a case following the 2018 judgment of the Court of Justice of the European Union (CJEU) concerning the compatibility with EU law of the Danish withholding tax on dividends distributed to non-resident investment funds.


Related content

Under the tax law in Denmark, Danish investment funds that have invested in Denmark are not subject to Danish withholding tax, provided they satisfy certain requirements of Danish tax law (specifically, article 16C that requires, inter alia, that the funds redistribute their income to their shareholders or submit the calculation of a notional distribution which is subject to tax). On the other hand, foreign UCITS funds are subject to withholding tax on dividends from Danish companies, even if they satisfy the requirements of article 16C.

The case concerned two investment funds that had registered offices, one in the UK and the other in Luxembourg. The funds asserted that the rules treating Danish investment funds differently from foreign funds was contrary to the free movement of capital, and requested a refund of the tax. The Danish high court referred the case to the CJEU for a preliminary ruling, and in June 2018, the CJEU issued its judgment finding that the dividend withholding tax that Denmark imposes on foreign investment institutions, based on their country of residence, constituted a restriction to the free movement of capital.

The case was returned to the Danish high court which considered the question whether foreign funds are entitled to the same tax benefits as a Danish fund, regardless whether the requirements were satisfied or not. The Danish high court answered this question in the negative. The case has now been appealed to the Danish supreme court.

Read a June 2019 report prepared by the KPMG member firm in Luxembourg

© 2021 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today

Sign up today