Danish Supreme Court denies refund of dividend withholding tax to non-resident investment funds

On 24 June 2021, the Danish Supreme Court judgement was published in the Fidelity Funds case and the Danish Supreme Court ruled in favor of the Danish Government.

The judgement states that Fidelity Funds has not been discriminated against and thus is not entitled to a refund of dividend tax, cf. TFEU art. 63 on the free movement of capital, regardless of the fact that non-resident investment funds must pay 15% tax on Danish sourced dividends, while Danish sourced dividends are tax-free for Danish investment funds with minimum taxation, jf. the Danish Assessment Act (in Danish: "Ligningslovens") section 16 C.

The Danish Supreme Court opined that the Court of Justice of the European Union in the Fidelity Funds cases (C-480/16) had ruled that only the Danish domicile criterion is a breach of EU law, whereby a foreign UCITS must have tax status as an investment fund with minimum taxation for the relevant income years in question in order to be entitled to a refund of the Danish WHT. Hence, the Danish Supreme Court denied the Fidelity Funds’ WHT reclaim based on the fact that none of the investment funds had elected the status as investment fund with minimum taxation.

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