Guide to m&a tax 2022

c. Status of anti-avoidance and beneficial ownership cases
A general trend in Danish tax law is the prevention of tax avoidance and abuse which in recent years has led to stricter anti-avoidance rules and the introduction of a 
general anti-avoidance rules (“GAAR”). The GAAR includes both a general anti-avoidance provision (implementation of the EU Anti-Avoidance Directive (2016/1164) 
Article 6) and a specific provision on the abuse of double taxation treaties.
Denmark generally applies a very strict beneficial ownership test looking at the actual funds’ flow. In recent years, the Danish Tax Authorities (“DTA”) have had a 
significant focus on the issue of beneficial ownership and several cases are currently pending at the Danish courts with respect to how the term ”beneficial ownership” 
should be determined and furthermore, judgments by the Danish courts have recently been rendered on the issue.
In addition, with respect to the term ”beneficial ownership”, it is important to note that the DTA are not only focusing on substance but are also focusing on (deemed) 
flows of funds. Thus, irrespective of substance at the level of an intermediary non-Danish holding company, the DTA have in some cases viewed entities with significant 
substance as conduit entities for Danish tax purposes.
Upon an audit by the DTA, it is likely that in order to assess the beneficial ownership, the DTA will put emphasis on whether the dividends received by an intermediary 
holding company from a Danish company have in fact been re-routed up the ownership chain as e.g. dividends, interest or other contributions or considerations (i.e. 
the character of the funds flow is not of importance).
A factor which is usually given significant importance by the DTA is whether an intermediary holding company has the authority to control the received dividend (as 
opposed to a recipient which immediately repays the funds to a company further up in the structure in a back to back kind of arrangement).
In 2021, the Danish High Courts have mostly ruled in favour of the tax authorities. The decisions have been appealed to the Danish Supreme Court.