Skatteforvaltningen v Solo Capital Partners LLP & Ors

Skatteforvaltningen v Solo Capital Partners LLP & Ors

A valid application for a refund of Danish withholding tax under s.69B(1) of the Danish Withholding Tax Act required the applicant to have been a shareholder for tax purposes at the close of the market on the dividend declaration date, with tax withheld by the company, and to be entitled to relief under an applicable DTT. A contract to sell shares, where the seller had no shares or right to transfer them, did not make the buyer a shareholder for tax purposes. Danish tax law does not recognise excess shareholdings beyond the issued share capital. Market or administrative practice cannot alter these statutory requirements.

Parties
Claimant: SKATTEFORVALTNINGEN (the Danish Customs and Tax Administration); Defendants: Solo Capital Partners LLP (in special administration) and others
Jurisdiction
England and Wales
Judgment Date
24 March 2023
Procedural Posture
Civil (commercial Court, Consolidated Claims) / Preliminary Issues Trial (validity Trial)
Outcome
Declaratory judgment on preliminary issues (no final disposition of claims)
Legal Topics
Dividend Tax Refunds, Double Taxation Treaties, Withholding Tax, Share Ownership, Stock Lending, Short Selling, Market Practice, Administrative Law
Tax Law Company Law Conflict of Laws Dividend Tax Refunds Double Taxation Treaties Withholding Tax Share Ownership Stock Lending +3 more

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Parties

SKATTEFORVALTNINGEN (the Danish Customs and Tax Administration)

Claimant

Solo Capital Partners LLP (in special administration) and others

Defendants

Procedural Posture

Civil (commercial Court, Consolidated Claims) / Preliminary Issues Trial (validity Trial)

Legal Issues

  1. 1 What are the requirements of a valid application for a refund of Danish withholding tax under s.69B(1) of the Danish Withholding Tax Act?
  2. 2 Who is liable to Danish dividend tax under Danish law in the context of share sales, stock lending, and short selling?
  3. 3 Does a contract to sell shares, without the seller holding shares, make the buyer a shareholder for tax purposes?

Ratio Decidendi

A valid application for a refund of Danish withholding tax under s.69B(1) of the Danish Withholding Tax Act required the applicant to have been a shareholder for tax purposes at the close of the market on the dividend declaration date, with tax withheld by the company, and to be entitled to relief under an applicable DTT. A contract to sell shares, where the seller had no shares or right to transfer them, did not make the buyer a shareholder for tax purposes. Danish tax law does not recognise excess shareholdings beyond the issued share capital. Market or administrative practice cannot alter these statutory requirements.

Court Disposition

Declaratory judgment on preliminary issues (no final disposition of claims)

Orders

  • Findings on requirements for valid Danish dividend tax refund claims under s.69B(1) Withholding Tax Act as set out in the judgment and appendix.
  • Directions for parties to consider implications for main trial; further case management to follow.