Denmark Passes Law to Implement June 2024 and January 2025 OECD Administrative Guidance

The Danish Minimum Taxation Act was enacted as Law No. 1535 of December 12, 2023. This implemented the Pillar Two Global Minimum Tax as provided in the EU Minimum Tax Directive. 

On June 3, 2025, the Danish Parliament passed Bill 2024/1 LSV 194 A. This provides for further amendments to the Danish Minimum Tax Act for the June 2024 and January 2025 OECD Administrative Guidance. The proposed amendments apply for financial years beginning on or after December 31, 2023.

OECD Administrative Guidance

The amendments in the June 2025 amending law include amendments for the June 2024 and January 2025 OECD Administrative Guidance (AG). This includes:

– Reversal of DTLs that accrued before the Transition Year (Article 1.2.2 June 2024 AG)

– 5 year unclaimed accrual election (Article 1.2.2 June 2024 AG)

– Recalculated deferred tax where GloBE carrying value differs from accounting carrying value (Article 2.1.2 June 2024 AG)

– Extension of the Substitute Loss Carry-forward DTA to PEs, Hybrids and Reverse Hybrids (Article 4.1 June 2024 AG)

– Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity (Article 5.2.2 June 2024 AG)

– Non-group owners: Partially owned Flow-through Entities (Article 5.3.2 June 2024 AG)

– Non-group owners: Indirect minority ownership (Article 5.3.5 June 2024 AG)

– Taxes allocated to a flow-through entity (Article 5.4.2 June 2024 AG)

– Extension of taxes pushed down to include Reverse Hybrids (Article 5.6.2 June 2024 AG)

– Amendments to the Switch-Off rule (Article 6.1.4 June 2024 AG)

– New definition: Securitization Entity (Article 6.1.4 June 2024 AG)

– New definition: Securitization Arrangement (Article 6.1.4 June 2024 AG)

– Amendments to Article 9.1 of the GloBE Rules for the deferred tax transition rules (governmental arrangements including new CIT regimes and a grace period) (January 2025 AG).

Safe Harbour & Transitional Penalty Relief

The June 2025 amending law also includes some further amendments to the Safe Harbours to reflect the January 2025 OECD Administrative Guidance:

– Amendments to CbCR Safe Harbour for Article 9.1 amendments (January 2025 AG); and

– Amendments to QDMTT Safe Harbour for Article 9.1 amendments (January 2025 AG).

Switch-Off Rule

The amended Section 34 in the June 2025 amending law applies the OECDs Switch-Off rule  (including the amendments in the June 2024  and January 2025 OECD Administrative Guidance) for the QDMTT Safe Harbour where a QDMTT jurisdiction decides:

-not to impose a QDMTT on Flow-through Entities created in its jurisdiction;

-to allow the DTA reversals of deferred tax assets that are attributable to certain governmental arrangements to be taken into account for adjusted covered taxes;

-to include JVs or members of a JV Group within the scope of the QDMTT but imposes the liability on Constituent Entities of the main group instead of directly on the members of the JV Group;

-not to apply a QDMTT on a Constituent Entity that is a Securitisation Entity

Payment/Registration

Payment of top-up tax was required 16 months after the last day of the reporting year (increased to 19 months in the commencement year). The June 2025 amending law increases the payment deadline to 17 months after the last day of the reporting year (increased to 20 months in the commencement year).