Information Exchange Agreements Trigger Taxation

Denmark has recently entered into several information exchange agreements with low-tax countries ("tax havens"). This may have severe adverse tax implications for foreign companies with Danish branches and Danish transparent entities such as limited partnerships with non-resident partners.

Tax classification of certain branches and transparent entities

In June 2008 a new anti-avoidance rule, "Section 2C" of the Danish Corporation Tax Act, was introduced. Section 2C entails that branches and limited partnerships, etc., which are otherwise considered for Danish tax purposes to be tax transparent, in certain circumstances are reclassified as non-transparent entities and deemed resident "companies" for Danish tax purposes.