Five Years Instead of Three: Danish Ruling on Withholding Tax Refunds

There is important news from Denmark for German companies and investors: On June 11, 2026, the Danish Supreme Court (Højesteret) ruled that claims for reimbursement of excess withholding tax are not barred by the statute of limitations until five years have passed. Previously, the Danish tax authorities had applied a three-year statute of limitations.

The decision specifically concerns withholding taxes on:

• Dividends
• Royalties
• in some cases, this applies to interest payments

This opens up the possibility for numerous German investors and companies to have reimbursement claims, which were previously considered time-barred, re-examined.

How do Withholding Tax Refunds Work?

For cross-border payments between Denmark and Germany, Danish withholding tax is often withheld initially. The tax actually owed is determined in particular by the double taxation agreement (DTA) between Germany and Denmark, European Union regulations, and Danish regulations on withholding tax relief. As a result, more tax is often withheld than is ultimately owed. Generally, the difference can be reclaimed.

This particularly affects German corporations, family holding companies, private equity funds, and other institutional investors.

What is the statute of limitations for refund claims by foreign persons with tax obligation in Denmark?

“The central issue in the proceedings was whether foreign taxpayers’ claims for refunds are subject to a three- or five-year statute of limitations. While the Danish Tax Administration had been applying the general three-year statute of limitations since 2016, numerous foreign taxpayers challenged this practice, arguing that the Danish Withholding Tax Act provides for a specific five-year statute of limitations.

The Supreme Court agreed with this line of reasoning: In the court’s view, both the legislative history and historical administrative practice support the conclusion that the extended five-year statute of limitations also applies to refund claims by foreign taxpayers.

What does the ruling mean for German companies and investors?

The decision could have significant financial implications for German investors:

1. Old cases can be reopened: The Danish tax authority has already announced that it will reexamine cases that were previously rejected solely because of the three-year statute of limitations that had been assumed until now.
2. Additional refund claims may be possible: Historical dividend distributions should be reviewed again, particularly for larger investments, as this could result in significant refund amounts.
3. Interest may also be relevant: In addition to the actual tax refund, there may be cases where interest claims arise.

Questions regarding Withholding Tax: What Are the Risks In the Context of Cross-Border Cases?

Current developments show that withholding tax issues remain among the most significant cross-border tax risks in Europe. Of particular relevance are:

• Holding structures with little economic substance
• Intra-group license payments
• Fund structures
• Cross-border financing models

Tax authorities in Germany and Denmark are increasingly examining whether the recipient company is in fact the beneficial owner or merely acting as an intermediary.

Danish Withholding Tax: What Should Those Affected Do Now?

In light of the ruling, companies and investors should now assess whether

• Danish withholding tax has been withheld over the past five years.
• Refund claims have been denied.
• There are outstanding claims arising from dividend, interest, or royalty payments.
• The requirements of the DTA are met.
• The beneficial ownership is sufficiently documented.

An early review can help secure claims for reimbursement and avoid the risk of claims becoming time-barred.

Greater Care in Withholding Tax and DTA Compliance: Our Assessment

The Danish Supreme Court’s ruling of June 11, 2026, strengthens the rights of foreign investors and opens up additional opportunities for German companies to reclaim excess withholding tax. At the same time, the decision highlights the growing importance of careful compliance with withholding tax and double taxation agreements (DTA).

For German investors with holdings in Denmark, it is therefore worthwhile to conduct a systematic review of past distributions and any refund proceedings already underway. Our specialist, Jeanette Rodegro-Dohrn , can assist you with any questions you may have regarding previously unclaimed refund entitlements. Simply get in touch.