New Tax Treaty between Denmark and the Cayman Islands

The agreement concerns three topics:

   1. Exchange of information in taxation matters.

This enables Denmark to obtain information from the Cayman Islands for the purpose of taxation. If the authorities of the Cayman Island do not already hold the concerned information, they are obliged to obtain information from the relevant companies and persons. Consequently, the withholding tax on outbound dividends drops from 28 percent to 15 percent for shareholders holding less then 10 percent of the profit-yielding company, cf. the Danish Corporation Tax Act. In tax criminal cases, special rules apply relating to the date of effect.

   2. Access to mutual agreement procedures in connection with the adjustment of profits of associated enterprises.

The tax authorities of the two jurisdictions are obliged to contribute in resolving double taxation conflicts resulting from a controversy concerning transfer pricing by intercompany transactions.

   3. Avoidance of double taxation of either individuals or enterprises operating ships or aircraft in international traffic.

Other Similar Agreements

Similar exchange of information agreements have been made with Aruba, Bermuda, the British Virgin Islands and the Netherlands Antilles.

Furthermore, as for Bermuda and the British Virgin Islands, the agreements also concern avoidance of double taxation and mutual agreement procedures in connection with the adjustment of profits of associated enterprises.

On 12 December 2009 the agreement with Bermuda was announced. It came into force on 1 January 2010. None of the remaining agreements have come into force or been announced.

Conclusion of all these agreements is part of OECD’s effort to fight harmful tax practices.