Double taxation agreement with France finally in place
10 February 2022
The Danish Ministry of Taxation has finally agreed with France on a double taxation agreement.
We are still waiting for the content of the agreement to be published. However, so far it has been announced that when it comes to pensions paid from Denmark to pensioners residing in France, Denmark will retain the right to tax the pensioners, but Denmark will have to take the tax paid in France into account. In other words, one should expect to be taxed at the Danish tax level on pensions paid from Denmark.
We expect that the agreement will also contain provisions on permanent establishment, tax residence and right to tax dividends, which we have been waiting for since 2008. The fact that Denmark and France will have a double taxation agreement, which contains a definition of permanent establishment and a dividend provision, will be particularly significant for Danish companies that in one way or another have engagement in France.
For Danish persons who work in both countries and obtain residence in both countries or otherwise become taxable in both countries, it will also be of great importance that they are now able to determine their tax residence based on a double taxation agreement. This means that they do not have to juggle the tax laws of two countries to avoid double taxation, and that citizens hopefully will be able to determine the right to tax dividends. The last element will be particularly important if the Danish Tax Agency and the Danish Ministry of Taxation adhere to some more flexible principles for recovering dividend tax for persons residing in countries with which Denmark has agreed on a double taxation agreement - which we expect to happen.
We hope that the content of the agreement will be published soon, and we hope for a rapid ratification in both countries. Finally, we hope that a similar agreement with Spain will be in place soon.
If you have any questions about the new double taxation agreement, you are welcome to contact our Tax Department: Tanja Stocholm on +4530936422, Anders Kiærskou on +4541961833 or Morten Neumann Jørgensen on +4524295018.