Germany-Denmark Double Tax Treaty

Double tax agreement between Germany and Denmark

Germany’s list of double taxation treaties contains more than 60 states. Among the countries Germany has signed conventions for the avoidance of double taxation with is also Denmark. The Germany-Denmark double taxation agreement was signed and enforced in 1996. New provisions for the exchange of tax information were added a few years back. The agreement covers the following taxes:

• -          the income tax,
• -          the capital gains tax,
• -          the inheritance and gift taxes,
• -          other similar taxes in both contracting countries.

The double taxation treaty applies to both natural persons and companies residents of one or both countries.

Definitions under the Germany-Denmark double tax treaty

One of the first chapters of the double taxation agreement between Germany and Denmark defines the persons and types of companies benefitting from the provisions of the convention. The treaty also defines how residency is established in order to take advantage from the reduced tax rates. While the word “person” refers to any private individual receiving income under the provision of the treaty, the term “company” refer to legal entities entitled to benefit from the agreement.

The Germany-Denmark double tax treaty also covers the aspect of permanent establishments which are deemed to fall under the governance of the agreement once they have been settled in the other country for at least 12 months. Our German lawyers can provide you with information about the sites considered permanent establishments under the double tax agreement with Denmark.

Taxation under the Germany-Denmark double taxation agreement

The double taxation treaty between Germany and Denmark provides for the taxation of different incomes as it follows:

• -          incomes derived from direct use, sale or rental of immovable property located in one of the signatory countries can be taxed in the other state,
• -          business profits will be taxed in the company’s country of residence,
• -          profits resulted from international traffic by land, sea or air will be taxed in the country the company operating the vehicles, vessels or aircrafts is registered.

With respect to the taxation of dividends, interests and royalties, if derived in one country they can be taxed in the other state. For information about applicable tax rates under the double tax treaty with Denmark, do not hesitate to contact our law firm in Germany.