Denmark has seen two significant corporate tax developments in recent months. In June 2026, the Supreme Court confirmed that nonresident taxpayers have five years, rather than three, to reclaim excess Danish withholding tax. Separately, the government's legislative programme for 2026/2027 includes proposals ranging from a lower corporate income tax rate to new rules on software development costs and crypto-assets, subject to parliamentary approval.
On 11 June 2026, the Supreme Court clarified the limitation period for refund claims involving excess Danish withholding tax on dividends, interest and royalties by nonresident taxpayers. The court held that these claims are subject to the special five-year limitation period in Section 67 A of the Withholding Tax Act, rather than the general three-year limitation period under the Limitation Act.
The judgment overturns the administrative practice applied by the Danish Tax Agency since 2016, under which refund claims filed more than three years after the tax was withheld were generally considered time-barred. In reaching its decision, the Supreme Court emphasised that both the legislative history of Section 67 A and historical administrative practice support applying the five-year limitation period to refund claims made by nonresident taxpayers. The ruling may also affect resident taxpayers.
Following the Supreme Court ruling, refund claims within its scope generally may be submitted within five years of the date tax was withheld. The Danish Tax Agency has announced that it will reopen relevant cases, including those previously rejected on statute of limitations grounds, provided the claims have not become time barred.
Taxpayers with historical or pending refund claims should review their Danish withholding tax reclaim position in light of the Supreme Court decision. Any special limitation rules under applicable tax treaties should also be taken into account.
The government published its legislative programme for 2026/2027 on 8 October 2026, which includes several proposals affecting businesses, such as a lower corporate income tax rate, enhanced tax deductions for in-house software development, and changes to the tax treatment of crypto-assets and capital gains. Some measures have already been introduced as bills, while others are expected later; none has been enacted to date.
Lower Corporate Income Tax and Reduced Administrative Burdens
The government proposes to reduce the corporate income tax rate by three percentage points over three years, from 22% to 19%, although the financial sector would not benefit from the full reduction. The bill is expected to be introduced in February 2027 as part of a broader legislative package implementing the tax initiatives in the government’s programme, but the effective date has not been announced. The government also is expected to present an entrepreneurship package aimed at reducing the administrative burden on Danish businesses by 25% by 2035.
The government proposes to improve the deductibility of internal payroll expenses incurred in connection with in-house software development. The bill would allow qualifying salary expenses of up to DKK 5 million annually (the 2026 level) to be deducted immediately in the year incurred. Because the measure is proposed to apply to expenses incurred from 1 January 2025, it could also cover qualifying costs that businesses have already incurred.
The bill would not change the general rules on deductions for acquired software or external development services:
The government proposes to reduce the compensation payable when corporate income tax paid on account exceeds the final tax liability. For the 2027 income year, the fixed supplement used to calculate the compensation rate would fall from 0.75 to 0.2 percentage points, while the final compensation rate would continue to depend on prevailing interest rates. Because the proposal would make excess prepayments less advantageous, businesses may wish to review their expected tax payments.
Deposit Scheme for Tax Claims in Tax Disputes
As part of an initiative to enhance legal certainty, the government proposes a deposit scheme for cases where the Ministry of Taxation and Growth files a court claim or appeals a judgment. Taxpayers would be able to deposit the disputed amount and avoid additional interest accruing while the case is pending. The scheme could have significant financial implications in long-running tax disputes. The bill is expected to be introduced in January 2027.
Crypto-Assets: More Symmetrical Taxation
The government is expected to introduce a bill aimed at creating a more balanced framework for taxing crypto-assets. The proposal is intended to address the asymmetrical treatment of gains and losses and make it easier to calculate and pay the correct amount of tax. Because the legislative programme does not describe the specific model, it remains unclear how different types of crypto-assets and transactions would be treated. The bill is expected to be introduced in February 2027.
Extended Limited Tax Liability on Interest and Capital Gains
To counter tax avoidance, the government intends to expand the rules on limited tax liability for interest and capital gains applicable to nonresident companies and other entities. Changes are also proposed to the list of jurisdictions subject to defensive measures against tax havens. The bill is expected to be introduced in December 2026.
Together, the Supreme Court ruling and the government's legislative programme create immediate opportunities, as well as developments that warrant monitoring. The withholding tax decision applies now, whereas the legislative proposals remain subject to parliamentary approval and may be amended before they are enacted.
Businesses with Danish operations, investments or income should consider the following actions:
Arne Riis
Natascha Van Wonterghem
BDO in Denmark
Supreme Court Ruling on Five-Year Limitation Period for Withholding Tax Reclaims
On 11 June 2026, the Supreme Court clarified the limitation period for refund claims involving excess Danish withholding tax on dividends, interest and royalties by nonresident taxpayers. The court held that these claims are subject to the special five-year limitation period in Section 67 A of the Withholding Tax Act, rather than the general three-year limitation period under the Limitation Act.The judgment overturns the administrative practice applied by the Danish Tax Agency since 2016, under which refund claims filed more than three years after the tax was withheld were generally considered time-barred. In reaching its decision, the Supreme Court emphasised that both the legislative history of Section 67 A and historical administrative practice support applying the five-year limitation period to refund claims made by nonresident taxpayers. The ruling may also affect resident taxpayers.
Following the Supreme Court ruling, refund claims within its scope generally may be submitted within five years of the date tax was withheld. The Danish Tax Agency has announced that it will reopen relevant cases, including those previously rejected on statute of limitations grounds, provided the claims have not become time barred.
Taxpayers with historical or pending refund claims should review their Danish withholding tax reclaim position in light of the Supreme Court decision. Any special limitation rules under applicable tax treaties should also be taken into account.
Government Proposes Tax Law Changes for Businesses
The government published its legislative programme for 2026/2027 on 8 October 2026, which includes several proposals affecting businesses, such as a lower corporate income tax rate, enhanced tax deductions for in-house software development, and changes to the tax treatment of crypto-assets and capital gains. Some measures have already been introduced as bills, while others are expected later; none has been enacted to date.Lower Corporate Income Tax and Reduced Administrative Burdens
The government proposes to reduce the corporate income tax rate by three percentage points over three years, from 22% to 19%, although the financial sector would not benefit from the full reduction. The bill is expected to be introduced in February 2027 as part of a broader legislative package implementing the tax initiatives in the government’s programme, but the effective date has not been announced. The government also is expected to present an entrepreneurship package aimed at reducing the administrative burden on Danish businesses by 25% by 2035.
Improved Deduction Opportunities for Software Development
The government proposes to improve the deductibility of internal payroll expenses incurred in connection with in-house software development. The bill would allow qualifying salary expenses of up to DKK 5 million annually (the 2026 level) to be deducted immediately in the year incurred. Because the measure is proposed to apply to expenses incurred from 1 January 2025, it could also cover qualifying costs that businesses have already incurred.The bill would not change the general rules on deductions for acquired software or external development services:
- Costs of acquiring or improving software would remain subject to the Danish tax depreciation regime for business assets and may be depreciated at up to 25% per year; and
- Maintenance costs and costs of time-limited software licenses would remain fully deductible when incurred.
The government proposes to reduce the compensation payable when corporate income tax paid on account exceeds the final tax liability. For the 2027 income year, the fixed supplement used to calculate the compensation rate would fall from 0.75 to 0.2 percentage points, while the final compensation rate would continue to depend on prevailing interest rates. Because the proposal would make excess prepayments less advantageous, businesses may wish to review their expected tax payments.
Deposit Scheme for Tax Claims in Tax Disputes
As part of an initiative to enhance legal certainty, the government proposes a deposit scheme for cases where the Ministry of Taxation and Growth files a court claim or appeals a judgment. Taxpayers would be able to deposit the disputed amount and avoid additional interest accruing while the case is pending. The scheme could have significant financial implications in long-running tax disputes. The bill is expected to be introduced in January 2027.
Crypto-Assets: More Symmetrical Taxation
The government is expected to introduce a bill aimed at creating a more balanced framework for taxing crypto-assets. The proposal is intended to address the asymmetrical treatment of gains and losses and make it easier to calculate and pay the correct amount of tax. Because the legislative programme does not describe the specific model, it remains unclear how different types of crypto-assets and transactions would be treated. The bill is expected to be introduced in February 2027.
Extended Limited Tax Liability on Interest and Capital Gains
To counter tax avoidance, the government intends to expand the rules on limited tax liability for interest and capital gains applicable to nonresident companies and other entities. Changes are also proposed to the list of jurisdictions subject to defensive measures against tax havens. The bill is expected to be introduced in December 2026.
What These Developments Mean for Businesses
Together, the Supreme Court ruling and the government's legislative programme create immediate opportunities, as well as developments that warrant monitoring. The withholding tax decision applies now, whereas the legislative proposals remain subject to parliamentary approval and may be amended before they are enacted.Businesses with Danish operations, investments or income should consider the following actions:
- Revisit withholding tax reclaims now: Identify Danish dividend, interest and royalty withholding tax that may be reclaimable under the five-year limitation period, including claims previously rejected as time-barred. Act promptly, as older claims will continue to expire, and take into account any limitation rules under applicable tax treaties.
- Assess software development costs: Determine whether salary costs for in-house software development incurred from 1 January 2025 could qualify for the proposed immediate deduction of up to DKK 5 million per year and keep track of these costs in case the bill is adopted.
- Reconsider prepayment strategies: Review corporate income tax prepayment plans for the 2027 income year, as the reduced compensation rate would make overpaying tax on account less advantageous.
- Model the impact of a lower tax rate: Consider how a phased reduction in the corporate income tax rate from 22% to 19% could affect forecasts and investment decisions, bearing in mind that the effective date has not been announced and that the financial sector would not benefit from the full reduction.
- Evaluate exposure in tax disputes: Taxpayers involved in, or anticipating, tax litigation should follow the proposed deposit scheme, which could limit the interest accruing on disputed amounts while a case is pending.
- Review cross-border structures: Nonresident companies and other entities that receive Danish interest or capital gains, or that have links to jurisdictions subject to defensive measures, should assess their potential exposure under the expanded limited tax liability rules.
- Monitor crypto-asset developments: Businesses that hold or transact in crypto-assets should watch for details of the new model, as the treatment of specific assets and transactions remains unclear.
Arne Riis
Natascha Van Wonterghem
BDO in Denmark