Beneficial owners eligible for a standard refund - Danish equities
The following types of beneficial owner are recognised for tax purposes in Denmark:
- Residents of a Double Taxation Treaty (DTT) country;
A reclaim of withholding tax on dividends from Danish equities is available through LuxCSD via standard refund if the beneficial owner qualifies for the benefit of a reduced rate of withholding tax in accordance with a DTT between its country of residence and Denmark.
Relief at source from withholding tax on dividends is not available through LuxCSD.
- Tax exempt entities;
A full reclaim of withholding tax is available through LuxCSD if the beneficial owner is a tax exempt entity approved by the Danish Tax Authorities as tax-exempt.
- Qualifying U.S. pension funds;
A full reclaim of withholding tax is available through LuxCSD if the beneficial owner is a qualifying U.S. pension fund within the terms of the Double Taxation Treaty (DTT) between the U.S.A. and Denmark.
The Double Taxation Treaty (DTT) between the U.S.A. and Denmark refers, in its Articles, to “qualifying pension funds" as follows:
- Article 4 (Residence) defines “pension fund” as follows:
“A legal person organized under the laws of a Contracting State and that is generally exempt from tax in that State and is established and maintained in that State either to provide pensions or other similar benefits to employees, including self-employed individuals, pursuant to a plan.”
- Article 10 (Dividends) provides an exemption from tax on dividends paid to a beneficial owner that is a “qualifying pension fund”.
- Article 22 (Limitations of Benefits (LOB)) stipulates that a tax-exempt pension fund that is a resident of the U.S.A. shall qualify for entitlement to the benefits of the treaty if more than 50% of its beneficiaries, members or participants are individuals who are residents of the U.S.A.
- Residents of a country with an international treaty or convention with Denmark.
A reclaim of withholding tax is available through LuxCSD if the beneficial owner qualifies for a 15% rate based on the following eligibility criteria:
- He holds no more than 10% of the company that is distributing the dividend; and
- He is resident in the EU or in a country whose local tax authorities exchange information with the Danish Tax Authorities according to an international treaty or convention other than a Double Taxation Treaty (DTT).
Note: Beneficial owners that reside outside the EU cannot, together with group connected companies, own more than 10% of the capital of the company that is distributing the dividend.
Beneficial owners will continue to be subject at source to the standard rate of withholding tax. Those whose circumstances meet the specific requirements mentioned above must apply for a refund of the difference between the standard rate withheld and the 15% rate for which they qualify.
Note: Beneficial owners may be entitled to more beneficial reductions according to their specific DTT.