Double Tax Agreement Template for Denmark

A Double Tax Agreement is essential when entities or individuals from two countries engage in cross-border business activities, investments, or employment. This document becomes necessary to prevent the same income from being taxed twice and to provide clarity on which country has the right to tax specific types of income. The agreement, governed by Danish law, typically follows the OECD Model Tax Convention framework while incorporating specific provisions relevant to Denmark's tax system and EU regulations. It includes detailed provisions on various types of income (business profits, dividends, interest, royalties), residency rules, permanent establishment definitions, and methods for eliminating double taxation. The agreement also establishes procedures for mutual agreement processes, exchange of information between tax authorities, and measures to prevent tax avoidance. This document is particularly important for businesses expanding their operations between Denmark and the other contracting state, as well as for individuals working or investing across these jurisdictions.

1. Parties: Identification of the contracting states entering into the agreement

2. Background: Context of the agreement and statement of intent to prevent double taxation and tax evasion

3. Definitions: Key terms used throughout the agreement, including 'resident', 'permanent establishment', etc.

4. Scope of Agreement: Taxes and persons covered by the agreement

5. Residency Rules: Criteria for determining tax residency and tie-breaker rules

6. Permanent Establishment: Definition and rules regarding permanent establishments

7. Income from Immovable Property: Taxation rules for real estate and related income

8. Business Profits: Rules for taxing business income and profit attribution

9. Shipping and Air Transport: Special provisions for international transport income

10. Associated Enterprises: Transfer pricing and related party transaction provisions

11. Dividends: Taxation rules for dividend payments between the contracting states

12. Interest: Provisions governing taxation of interest payments

13. Royalties: Rules for taxation of royalty payments

14. Capital Gains: Treatment of gains from alienation of property

15. Employment Income: Rules for taxing salaries and wages

16. Elimination of Double Taxation: Methods for preventing double taxation (credit or exemption method)

17. Non-Discrimination: Provisions ensuring equal tax treatment

18. Mutual Agreement Procedure: Process for resolving disputes between tax authorities

19. Exchange of Information: Framework for information sharing between tax authorities

20. Entry into Force: Provisions regarding when the agreement becomes effective

21. Termination: Conditions and process for terminating the agreement