Double Tax Avoidance Agreement Template for Denmark

The Double Tax Avoidance Agreement serves as a crucial international treaty for preventing double taxation of income and capital between Denmark and partner countries. This document becomes necessary when there is significant cross-border economic activity, investment flows, or business operations between Denmark and another jurisdiction. It provides clear guidelines on taxing rights, incorporating Danish tax laws, EU regulations, and international tax principles. The agreement typically follows the OECD Model Tax Convention framework while accommodating specific requirements of Danish law and the partner country's tax system. It includes comprehensive provisions for various types of income (business profits, dividends, interest, royalties), methods for eliminating double taxation, dispute resolution procedures, and information exchange protocols. This agreement is particularly important for businesses operating in both jurisdictions and individuals with cross-border income sources.

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

2. Background: Context of the agreement, including the desire to promote economic cooperation and avoid double taxation

3. Definitions: Detailed definitions of key terms including 'resident', 'permanent establishment', 'dividends', 'interest', etc.

4. Scope of Agreement: Specification of taxes and entities covered by the agreement

5. Residence: Rules for determining tax residence and handling dual residence situations

6. Permanent Establishment: Definition and rules regarding what constitutes a permanent establishment

7. Income from Immovable Property: Treatment of income derived from real estate and natural resources

8. Business Profits: Rules for taxation of business profits and attribution to permanent establishments

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

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

11. Dividends: Treatment of dividend payments between the contracting states

12. Interest: Rules governing taxation of interest payments

13. Royalties: Provisions regarding taxation of royalty payments

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

15. Employment Income: Rules for taxation of salaries, wages, and other employment remuneration

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

17. Non-discrimination: Provisions ensuring fair treatment of residents of both states

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