First Danish Judgement On "Beneficial Ownership"

The Danish High Court has just handed down its judgment in the first ever Danish court case laying down the Danish tax meaning of beneficial ownership (the "ISS matter"). The Court held that a Luxembourg holding company receiving dividends from its Danish subsidiary was the beneficial owner of the dividends and therefore entitled to the zero rate of withholding tax provided for under the Danish participation exemption regime.

Facts

A Danish subsidiary (FS Equity A/S) distributed dividends to its Luxembourg parent company (FS Invest II S.a.r.l.). On the same day a similar – but not identical – amount was lent back from the Luxembourg parent to the Danish subsidiary, which on the same day carried out a share capital increase in its Danish subsidiary (FS Funding A/S). This latter Danish subsidiary used the amount to buy the Danish listed company ISS A/S.