EU Commission requests DENMARK to amend its rules on the taxation of dividends paid to charities

The Commission decided today to send a letter of formal notice to Denmark asking it to amend its legislation regarding the taxation of dividends paid to charitable organisations.

Under Danish tax law, dividends paid to domestic charities are exempt from tax, whereas dividends paid to charities established in other EU Member States or EEA States are taxed at a rate of 22%, or at a reduced rate of 15%, if the competent authority in the state in which the charity is domiciled exchanges information with Danish authorities.

This difference in treatment of domestic and cross-border dividend distributions constitutes a restriction on the free movement of capital, guaranteed in Article 63 TFEU and Article 40 EEA.

If Denmark does not act within the next four months, the Commission may send a reasoned opinion to the Danish authorities.

Daniel Ferrie