Danish Tax Agency explains taxation of shareholder loans as dividend income

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August 25, 2021 5:00 AM

On August 20, the Danish Customs and Tax Administration posted on the Internet the National Tax Court Decision No. SKM2021.427.LSR clarifying the taxation of shareholder loans as dividend income. The Danish company provided loans to its sole shareholder, the taxpayer. The IRS treated loans as dividends and taxed them as income from shares because: 1) the loans were not made in the normal course of business; 2) the payments were not recognized as reasonable remuneration for the employee; and 3) the company did not report or withhold taxes on the loans. The taxpayer argued that taxation of dividend income was double taxation and a violation …

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