New double tax treaty between Denmark and france

In December 2023, France has signed a new double tax treaty with Denmark, which comes into force from January 1st 2024.

New double tax treaty between Denmark and France

The new double tax treaty will address the taxation of pensions and strengthen the economic relations between the two countries. The agreement comes after years of negotiations and will replace the previous agreement, which Denmark terminated in 2008 due to issues with the taxation of Danish pensions in France.

The new tax treaty ensures that Denmark has the right to tax payments from pension schemes where Denmark has provided a tax deduction for contributions as the tax treaty also includes an “inverted credit” principle, meaning Denmark will grant relief for the tax paid in France against the tax payable in Denmark. Besides the “inverted credit” principle, the double tax treaty is generally following the principles of the OECD Model Tax Convention.

Great news for Danish companies operating in France

The new agreement will provide clarity on the taxation of pensions and help to reduce compliance costs.

Here are five good reasons why Danish companies should consider the content of the double taxation agreement when sending employees to work in France.

  • Compliance: The new agreement will provide clear guidance on the taxation of pensions for Danish employees working in France. By following the agreement, companies can ensure they are compliant with both Danish and French tax laws, reducing the risk of penalties and fines.
  • Correct payroll treatment: The agreement will help companies ensure the correct payroll treatment of Danish employees working in France, minimizing the risk of errors and disputes with tax authorities.
  • Improved cash flow: The agreement will provide relief for the tax paid in France against the tax payable in Denmark. This will improve the cash flow of Danish companies and reduce the risk of double taxation.
  • Attract and retain talent: By providing clarity on the taxation, the new agreement will help Danish companies attract and retain talent in France, reducing turnover and recruitment costs.
  • Strengthened business relationships: The new agreement will strengthen the economic relations between Denmark and France, making it easier for Danish companies to do business in France and vice versa.

Now is the time to consider the employment structures for employees working in France and for projects involving France. Crossbord offers The Crossbord Solution which can help with management of tax liabilities of Denmark and France.

Reach out to Crossbord to discuss how The Crossbord Solution can support your business

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