Reclaim of withholding taxes

Although the judgment from The Danish Easter High Court (High Court) concerns only dividend and royalty withholding tax, the same rules apply to interest withholding tax, hence, following the judgment, the five-year statute of limitations should apply to claims for repayment of interest, dividend, and royalty withholding tax. 

The Danish Tax Agency (DTA) had maintained that the deadline for claiming repayment of excess dividend, interest, and royalty withholding tax is three years; whereas the deadline for the DTA to raise assessments for payment of withholding tax is five years. The current rules were adopted in 2010 and based on the wording of the rules and on the comments to the legislation, a statute of limitations of five years was applied in both situations, beginning from the time the DTA receives the report on the withheld amount—generally no later than the 10th of the month following the month in which the obligation to withhold the tax is triggered by the payment of the dividends, interest, or royalty. However, in 2016, the DTA published administrative guidelines stating that the statute of limitations for taxpayers to submit claims to recover excess withholding tax on dividends was reduced from five years to three years and the DTA has applied this in practice since that date. In 2021 the National Tax Tribunal decided that the statute of limitations for claims for a refund of dividend withholding tax was five years. The Ministry of Taxation appealed the tribunal’s decision before the courts and the High Court has now ultimately judged in favor of the taxpayer.

The Ministry of Taxation has four weeks to appeal the High Court’s judgment. If the judgment is not appealed, the DTA would be expected to issue administrative guidelines allowing cases to be reopened where claims filed within five years have been rejected owing to the application of the three-year statute of limitations.