• Professional News
  • 19 June 2012

New double taxation treaty with China

On 16 June 1012, Denmark and China signed a new double taxation treaty, replacing the existing treaty from 1986.

The new treaty has been drafted on the basis of the OECD model agreement and contains significant amendments to the treaty from 1986.  

A new provision of particular interest concerns tax on dividends from China to Denmark in cases where a Danish company owns at least 25% of the capital in the Chinese company. In such case, dividend tax payable will, under the new double taxation treaty, be reduced to 5% as opposed to the existing 10% payable under the double taxation treaty in force today.

Furthermore, the new double taxation treaty introduces, among other things, an amendment to the provision on permanent establishment and a changed method for the abolishment of double taxation.

The coming into force of the new treaty is subject to official approval in China and Denmark. We expect the Minister of Taxation to introduce a bill this autumn on the enactment of the new treaty by the Danish Parliament. 

The full wording of the double taxation treaty is available on the website of the Ministry of Taxation.

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