Survival of the Richest

Denmark
Taxation
Tax treaties
Tax treaties remain the solitary domain of the Ministry of
Taxation. 325 In 2016, the Minister for Tax announced that he
now wished to secure that more tax treaties were concluded
with countries where there had previously been none. 326
The more recent tax treaties that Denmark has signed
with developing countries tend to follow the OECD model
rather than the UN model, diminishing taxing rights of the
developing country treaty partners. 327 After civil society
organisations manifested themselves as critical voices in
the debate about the conclusion of the tax treaty between
Denmark and Ghana in 2015, the Minister has expressed
a wish to initiate a dialogue also with civil society as
stakeholders, 328 which is positive. However, as the Ministry
of Taxation does not allow for the participation of external
stakeholders when tax treaties are negotiated, there is a
real challenge in terms of access to information about the
actual conclusion of the treaties.
Unfortunately, and despite encouragement from NGOs
specifically on this, the Ministry of Taxation has no plans to
perform a spillover analysis of Danish tax treaties, in order
to grasp the developmental impact that these treaties have
upon the signing country. 329 The treaties do not contain any
specific anti-abuse clauses. 330 However, they are subject to
a “Super General Anti-Abuse Rule” adopted in 2015, 331 which
made all Danish tax treaties subject to an anti-abuse clause,
largely inspired by the OECD BEPS Action 6 on “Preventing the
Granting of Treaty Benefits in Inappropriate Circumstances”. 332
A more preferable solution would be to have the anti-abuse
clauses written into the actual treaty texts.
At the moment, Denmark has 37 tax treaties with developing
countries, which is below average (42 treaties) among
the countries covered in this report. The average rate of
reduction of tax rates within those treaties – 3.8 percentage
points – is exactly average. 333 What the average number does
not show, however, is that Denmark has several specific
treaties which are 'very restrictive', and include strong
limitations on the taxing rights of the developing countries
which are signatories. Research by ActionAid showed that
five such treaties are currently in place. 334
Harmful tax practices
In Denmark, a multinational company can obtain an advance
pricing agreement. There is no known intention to make
any information about specific advance pricing agreements
public. At the end of 2015, Denmark had a total of 16
advance pricing agreements in force, which is relatively low
compared to other EU countries. 335
Based on the EU wide comparison of harmful tax practices
done by Ramboll for the European Commission, Denmark
has the least harmful tax practice features compared to
other Member States. 336 Denmark only has four indicators
and they are all passive.
Denmark does not have a patent box and generally Denmark
has, where they have been identified, been trying to
assess the impacts of harmful tax practice features such
as the notorious “kommandit selskaber” (Limited Liability
Partnerships). This practice merited a special effort by tax
authorities that issued a report concluding that this type of
partnership can constitute a means to avoid tax, and should
be looked at further. 337
Global solutions
The Danish government does not support the establishment
of an intergovernmental tax body under the United Nations. 338
Instead, the Danish government believes that the current
international system, where the OECD, and to some extent the
G20, is the primary forum for international tax negotiations, is
to be preferred. The government argues that it is concerned
about the proliferation of institutions and is of the opinion
that it is better to focus on improving cooperation among the
existing bodies while at the same time making sure that all
countries are in a position to participate and fully benefit from
increased transparency at an international level. 339
Conclusion
By introducing a public register of beneficial ownership,
Denmark has taken a progressive stance. The same is
not the case for transparency around where multinational
corporations do business and what they pay in taxes, since
Denmark is currently not supportive of full public country by
country reporting.
Denmark has very few indicators of harmful tax practices,
which is very positive. Also when it comes to tax treaties,
there are currently fewer reasons for concern than with
many other EU countries. However, there is a trend of more
recent treaties lowering tax levels and also taking away a
greater part of the taxing rights of developing countries than
previously, as Denmark tends to adhere to the OECD model.
Transparency around tax treaty negotiations, to ensure that
civil society can contribute in an informed and meaningful
manner, would help to ensure that this remains the case as
Denmark initiates new tax treaty negotiations.
It is problematic that Denmark still opposes the creation
of an intergovernmental UN tax body, which would give
developing countries a chance to participate on a truly equal
footing in the setting of global tax standards.
Survival of the Richest • 61