India Denmark Double Taxation Avoidance Agreement

The India-​​Denmark Double Tax­a­tion Avoid­ance Agree­ment Explained

The India-​​Denmark Double Tax­a­tion Avoid­ance Agree­ment, also known as the DTAA, is a legal agree­ment between the Gov­ern­ments of India and Den­mark. This agree­ment aims to pre­vent double tax­a­tion of income and gains that occur in either of the two countries.

Double tax­a­tion occurs when a person or com­pany is taxed twice on the same income or gain by both the country of origin and the country of res­i­dence. The pur­pose of this agree­ment is to pro­mote trade and invest­ment between India and Den­mark and to avoid double tax­a­tion, which can act as a sig­nif­i­cant imped­i­ment to trade and investment.

The DTAA between India and Den­mark was signed on 26th October 1994 and came into force on 10th May 1995. It has been amended sev­eral times since then, with the most recent amend­ment being signed on 31st October 2019.

The agree­ment applies to indi­vid­uals, com­pa­nies, firms, and other enti­ties that are res­i­dents of either India or Den­mark. The tax cov­ered under this agree­ment includes income tax, surtax, and any other sim­ilar taxes imposed by either country.

Under the DTAA, tax rates are fixed for spe­cific cat­e­gories of income and gains, and these rates cannot exceed the max­imum rates spec­i­fied in the agree­ment. For example, the max­imum rate of with­holding tax on div­i­dends is 15% for both countries.

The agree­ment also pro­vides for the exchange of infor­ma­tion between the two coun­tries‘ tax author­i­ties to pre­vent tax eva­sion and money laun­dering. This exchange of infor­ma­tion is done in strict con­fi­dence and is sub­ject to the respec­tive coun­tries‘ laws and regulations.

In addi­tion, the DTAA pro­vides for the res­o­lu­tion of dis­putes regarding the agreement‘s inter­pre­ta­tion and appli­ca­tion through mutual con­sul­ta­tions between the two coun­tries‘ tax authorities.

The India-​​Denmark Double Tax­a­tion Avoid­ance Agree­ment has been vital in pro­moting trade and invest­ment between the two coun­tries and increasing the flow of cap­ital and tech­nology. It has pro­vided clarity and cer­tainty in the tax regime, reducing the com­pli­ance costs for tax­payers and pro­moting cross-​​border investment.

In con­clu­sion, the India-​​Denmark Double Tax­a­tion Avoid­ance Agree­ment is an essen­tial legal frame­work for com­pa­nies and indi­vid­uals investing or doing busi­ness in India and Den­mark. It pro­vides tax cer­tainty, avoids double tax­a­tion and dis­putes, and helps pro­mote eco­nomic growth and invest­ment between the two countries.