9 February 2026
The Hidden Impact of Intra-company Loans
In its judgment, the Danish Tax Appeals Tribunal held that interest income from intra-group loans constituted a financial incidental transaction. The Tribunal found that the granting of the loans did not have a sufficiently direct and permanent link to the company’s taxable supplies and involved only a very limited use of taxable goods or services as in accordance with the criteria set forth in the CJEU case C-306/94 Régie Dauphinoise. Accordingly, the interest income was not to be included in the VAT pro rata calculation and did not reduce the company’s right to deduct input VAT on general overheads.
At the same time, the Tribunal confirmed that the lending activity was a taxable transaction subject to the exemption on financial services. As a consequence, the company was considered liable under the special Danish payroll tax regime.
Key takeaway / recommendation
The ruling highlights a risk that we often identify during due diligence processes which many companies have not been aware of: intra-company financing can create special payroll tax exposure. Companies should assess whether their intercompany loans qualify as incidental transactions and monitor whether the DKK80,000 threshold for special payroll tax registration is exceeded. Companies already registered must ensure that relevant salary costs are correctly included in their special payroll tax filings.
