Impact of Danish beneficial ownership cases on Member States’ tax legislation


An updated version of this article with the latest BO factsheet is available here.

The Beneficial Ownership factsheet (the “BO factsheet”) is a deliverable of the EU Beneficial Ownership network that is coordinated by the PwC NL Tax Knowledge Centre. The trigger for this initiative was the issuance of the so-called “Danish beneficial ownership cases” by the Court of Justice of the European Union (“CJEU”) in February 2019. In these judgments, the CJEU ruled that Member States must deny a benefit from the Interest and Royalty Directive (“IRD”) and the Parent-Subsidiary Directive (“PSD”) even if there is no national (or bilateral) provision tackling abuse. Furthermore, the CJEU provided indicators for the assessment of an abusive arrangement. Finally, the CJEU appears to introduce a beneficial ownership (“BO”) requirement for the PSD to apply.

The results of the BO factsheet are based on the input that was provided by the members of PwC’s EU Direct Tax Group (EUDTG) from 27 countries (Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden, Switzerland and the UK).

What does this mean for you?

It is expected that the Danish beneficial ownership cases will trigger amendments to some Member States’ tax legislation. So far, there are developments in Spain, the Netherlands, Poland and Italy.

Developments in relation to Danish BO cases


In response to the Danish BO cases, several amendments have been made to the Dutch Corporate Income Tax Act (“CITA”) and the Dividend Withholding Tax Act. These amendments entered into force as per 1 January 2020 to ensure compliance with the Danish BO cases. More information on the new provisions can be found here.

Furthermore, the Dutch Supreme Court (“Court”) in its judgment of 10 January 2020 referred to the Danish BO cases when reviewing the compatibility of the Dutch substantial interest rules with EU law. More specifically, the Court stated that the application of the anti-abuse clause of the substantial interest rules is in line with the EU fundamental freedoms and the PSD. 


In that regard, the Court ruled that, although the rule results in a restriction on the freedom of establishment, it can be justified by the need to combat tax abuse. In addition, the Court held that the fulfilment of the subjective condition of the tax abuse test only provides a presumption of evidence that tax abuse is present. This is also – according to the Court – confirmed in the Danish BO cases. More information on this judgment can be found here.


On 20 November 2019, the Spanish Central Administrative Tribunal (“CAT”, an administrative body) issued a ruling in which the CAT applied the Danish BO cases. The facts of the case are as follows: a Spanish corporation paid interests to a Dutch BV and claimed the WHT exemption under Spanish tax legislation. The tax inspector denied the exemption by arguing that a company in Andorra (i.e. an ultimate parent company) is the BO of the interest payments and thus not the Dutch BV (i.e. the direct interest recipient). The CAT agreed with the tax inspector’s view.

More specifically, under the Spanish non-resident Income Tax Act, the WHT exemption on interest payments to EU lenders is granted regardless of whether the recipient is the BO of these payments. However, the CAT now holds the view that the WHT exemption on interest payments to EU lenders may be denied if the recipient does not qualify as the BO.

In that regard, it has brought forward the following arguments:

  • the BO requirement of the IRD serves as a material requirement for the Directive to apply. For this reason, this requirement should be met even if it has not been implemented in the Spanish law (“EU conform-interpretation”), and
  • the prohibition of the abuse of rights is a general principle of EU law and thus applies automatically irrespective of the Spanish GAAR. This argument would be relevant in those cases in which the structure is artificial due to the lack of economic/commercial activity at the level of the EU lender, as it was the case in the ruling at hand. The CAT identified evidence to support the abusive character of intermediate companies in particular, their bank accounts and slips did not indicate any commercial activity, there was no reference to clients and providers and no charges in relation to payroll, supplies or services.


In the Italian tax authorities’ resolution n.88/E, dated 18 October 2019, on the application of the IRD, it was stated that the Danish BO cases must also be considered for the purposes of the exemption regime. The resolution refers to the Danish BO cases by stating that “the exemption of interest payments from any taxes that is provided for by it is restricted solely to the BOs of such interest, that is to say, the entities which actually benefit from that interest economically and accordingly have the power freely to determine the use to which it is put”. In addition, the resolution lists all the indicators for the assessment of an abusive arrangement as outlined by the CJEU in the Danish BO case on the application of the IRD.

Contact us

Knowledge Centre

Rotterdam, PwC Netherlands

Tel: +31 (0)88 792 43 51

Vassilis Dafnomilis

Vassilis Dafnomilis

Senior Manager Tax, PwC Netherlands

Tel: +31 (0)61 399 87 29

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