New BO factsheet: Impact of the Danish beneficial ownership cases within the EU


The EU Beneficial Ownership network has prepared a new version of the Beneficial Ownership factsheet (the “BO factsheet”). This network seeks to enable colleagues in the EU Direct Tax Group and across the PwC European network to deliver high quality advice based on the latest insights on the beneficial ownership concept. By bundling knowledge from the different countries, we can clearly see how the concept of beneficial ownership and abuse are developing internationally.

The latest version of the BO factsheet is available here.

New BO factsheet: Impact of the Danish beneficial ownership cases within the EU

There are many different provisions across Europe (and more widely) that rely on the concept of Beneficial Ownership. The significance of the concept is further heightened by the introduction of the Multilateral Instrument (MLI) and specifically the principal purpose test (PPT). Within the EU, the concept has been the subject of increased attention since the Court of Justice of the European Union (CJEU) issued its decision in the so-called “Danish beneficial ownership cases” in February 2019. In these judgments, the CJEU ruled that Member States must deny a benefit from the Interest and Royalty Directive and the Parent-Subsidiary Directive 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 requirement for the Parent-Subsidiary Directive to apply. In addition, it ruled that for the interpretation of the beneficial ownership requirement in the Interest and Royalty Directive the OECD commentaries are of importance.

What does this mean for you?

The Danish cases precipitated changes in certain EU Member States’ tax legislation but also heralded a change in approach by national tax authorities who have paid increasing attention to the question of beneficial ownership. As tax authorities look to raise revenue to compensate for the expense of emergency COVID-19 pandemic measures, this may be one area they focus on. Please make sure that you monitor the developments around beneficial ownership and abuse in Europe and worldwide.

Legislative information around beneficial ownership

In the below infographic we have visualized legislative information regarding beneficial ownership in the EU Member States, the United Kingdom, Gibraltar and Switzerland.

Legislative information around beneficial ownership

Case law developments in relation to Danish BO cases

Several national courts of EU Member States have referred to the Danish cases in cases related to possible tax abuse. The previous issue of the BO factsheet (12 March 2020) highlighted the cases of Italy, the Netherlands and Spain. 

Since this publication, more countries have referred to the Danish cases. The countries include France and Switzerland, while Spain and Italy have further updated their national legislation as well.  We refer to the BO factsheet for more information about these developments. 

Tax authorities’ focus on beneficial ownership

  • Four countries report a high degree of focus on beneficial ownership (Belgium, Denmark, Italy and Spain). 
  • Belgium has seen a significant increase in tax audits focused on passive income flows (dividends/interest/royalties) where the tax authorities allege abuse through the involvement of intermediary entities. 
  • In Spain, the tax authorities are increasingly asking taxpayers questions targeting beneficial ownership and tax substance issues.

While at the moment only a few countries have reported a high degree of focus on beneficial ownership, several countries indicate that they expect this will change soon.

Other observations

  • So far, in none of the countries, any standalone guidance on the interpretation of the PPT has been published. 
  • Only a few countries have provided some guidance for specific areas, but these do not relate to EU law and the Danish cases. 
  • On the application of the beneficial ownership rules, various countries indicate that it is either difficult or not even possible to obtain certainty in advance. In some countries the relevant competent authorities are reluctant because they do not have an overview of all the facts in order to decide on the beneficial ownership status. In other countries, authorities do not comment on the beneficial ownership status in principle and/or assume that the recipient is the beneficial owner. As a consequence, the BO status still can be challenged by the relevant competent authorities. 

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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