The Double Taxation Avoidance Agreement (DTAA) between India and Denmark helps Indian companies making payments to Danish entities, and Danish companies earning income from India, avoid being taxed twice on the same income. Under this treaty, the withholding tax rate for Royalties and Fees for Technical Services (FTS) is 20% under the India-Denmark DTAA. To claim DTAA benefits, the foreign company must furnish a Tax Residency Certificate (TRC), Form 10F, a No PE Declaration, and hold a valid PAN card and Income Tax login in India.

• DTAA withholding rate for Royalty/FTS: 20% (India-Denmark DTAA)
• Section 115A TDS rate: 20% + Surcharge + Cess
• Mandatory documents: TRC, Form 10F, No PE Declaration, PAN, IT Login, DSC of foreign signatory

What is the DTAA Between India and Denmark?

The Double Taxation Avoidance Agreement (DTAA) between India and Denmark is a bilateral tax treaty that prevents the same income from being taxed in both countries. As of 2026, this agreement governs how cross-border income, such as dividends, interest, royalties, and fees for technical services (FTS), is taxed when money flows between Indian and Danish entities. The treaty provides certainty for businesses, reduces the overall tax burden, and encourages bilateral investment and trade.

When an Indian company pays a Danish entity for services like software licensing, technical consultancy, or royalties, the payer is required to deduct Tax Deducted at Source (TDS). Without DTAA benefits, this deduction falls under Section 115A at 20% + Surcharge + Cess. With DTAA benefits properly claimed, the rate applicable under the India-Denmark treaty is 20%, plus applicable surcharge and cess.

Tax Rates Under India-Denmark DTAA

Understanding the applicable rates is critical before making or receiving cross-border payments. The table below summarises key withholding tax rates under the India-Denmark DTAA compared to domestic Section 115A rates.

Income Type	Section 115A Rate (Domestic)	India-Denmark DTAA Rate
Royalties	20% + Surcharge + Cess	20% (+ Surcharge + Cess)
Fees for Technical Services (FTS)	20% + Surcharge + Cess	20% (+ Surcharge + Cess)
Dividends	As per IT Act	As per DTAA provisions
Interest	As per IT Act	As per DTAA provisions

Important Note: For Royalty and FTS payments, a Danish company may opt to pay tax at 20% under Section 115A and is not required to file an Income Tax Return (ITR) in India in that case. However, if the Danish company chooses to claim DTAA benefits, they are obligated to file an ITR in India.

Who Needs India-Denmark DTAA Compliance?

DTAA compliance is required whenever there is a taxable cross-border transaction between India and Denmark. The following scenarios typically trigger DTAA compliance requirements:

• Indian companies paying royalties or licensing fees to Danish software or IP companies
• Danish companies providing technical, managerial, or consultancy services to Indian clients
• Danish entities earning dividends or interest from Indian investments
• Danish companies with a Permanent Establishment (PE) in India
• Indian businesses engaged in joint ventures or technology tie-ups with Danish partners

Mandatory Requirements to Claim DTAA Benefits

To successfully claim benefits under the India-Denmark DTAA, the Danish company (foreign entity) must fulfil a specific set of compliance requirements. Missing even one document can result in denial of treaty benefits and higher TDS deductions. Here is a comprehensive checklist:

1. Tax Residency Certificate (TRC)

A TRC is a certificate issued by the tax authority of Denmark (SKAT - the Danish Tax Agency) confirming that the company is a tax resident of Denmark. This is the foundational document to invoke DTAA provisions. Without a valid TRC, no DTAA benefits can be claimed.

2. Form 10F

Form 10F is a self-declaration form filed by the foreign company on the Indian Income Tax portal. It provides the details required under Section 90(5) of the Income Tax Act, including the company's tax residency status, address, and PAN. As of 2026, Form 10F must be filed electronically on the Income Tax portal using the foreign entity's Indian login credentials.

3. No Permanent Establishment (No PE) Declaration

The Danish company must provide a No PE Declaration confirming it does not have a Permanent Establishment in India. A PE in India would make the income taxable in India as business income, rather than under the DTAA withholding provisions. This declaration must be on the company's letterhead and signed by an authorised signatory.

4. PAN Card for the Foreign Company

The Danish company must obtain a Permanent Account Number (PAN) in India. This is required to create an Income Tax login and to file ITR if DTAA benefits are being claimed. The PAN application for a foreign company requires specific documents including the Certificate of Incorporation, address proof, and details of the authorised signatory.

5. Income Tax Login for the Foreign Company

A dedicated Income Tax e-filing account must be created for the Danish company on the Indian Income Tax portal. This is used to file Form 10F electronically, to file ITR (if applicable), and to manage all digital compliance. The login is created using the PAN obtained for the foreign company.

6. Digital Signature Certificate (DSC) of the Foreign Signatory

This is one of the most critical, and often overlooked, requirements. The DSC must be of an authorised signatory of the Danish company. A regular DSC of an Indian director or partner will not work for this purpose. The process to obtain a DSC for a foreign individual involves:

• Email and phone OTP verification of the foreign individual
• Video verification of the foreign individual
• Valid address proof (such as a Driving Licence)
• Photograph of the individual
• Copy of valid passport

This DSC is used to digitally sign the ITR and other filings submitted on the Indian Income Tax portal on behalf of the Danish company.

When Must a Danish Company File ITR in India?

Whether a Danish company must file an Income Tax Return (ITR) in India depends on how it chooses to handle its Indian tax liability:

Scenario	ITR Filing Required?	Rate Applicable
Paying tax under Section 115A on Royalty/FTS (no DTAA benefit claimed)	No	20% + Surcharge + Cess
Claiming DTAA benefit on any income	Yes, ITR must be filed in India	20% (DTAA rate) + Surcharge + Cess
Danish company has a PE in India	Yes, mandatory	Normal business income rates

Step-by-Step DTAA Compliance Process (2026)

Here is the complete step-by-step process for a Danish company to become compliant under the India-Denmark DTAA and claim treaty benefits on payments received from India:

1. Obtain TRC from Danish Tax Authority (SKAT): Apply for and secure the Tax Residency Certificate confirming Danish tax residency for the relevant financial year.
2. Apply for PAN in India: Submit Form 49AA along with the company's incorporation certificate, address proof, and authorised signatory documents to obtain a PAN.
3. Create Income Tax Login: Register on the Indian Income Tax e-filing portal using the PAN to create the company's digital tax identity in India.
4. Obtain DSC of Foreign Signatory: Arrange the Digital Signature Certificate for the authorised signatory of the Danish company through a licensed Certifying Authority in India. This requires video verification and document submission.
5. Register DSC on IT Portal: Link and register the DSC with the Income Tax e-filing account.
6. File Form 10F Online: Log in to the IT portal and file Form 10F electronically, providing the required residential status and treaty details.
7. Prepare No PE Declaration: Draft and sign the No PE Declaration on company letterhead.
8. Provide Documents to Indian Payer: Share the TRC, Form 10F acknowledgement, and No PE Declaration with the Indian company making the payment, so they can apply the correct DTAA withholding rate.
9. File ITR in India (if DTAA benefit claimed): At the end of the financial year, file the Indian ITR using the DSC and IT login credentials.

TDS Under Section 115A vs. DTAA Rate: What Applies?

The Indian payer (whether an individual or a company) must deduct TDS before remitting payments to a Danish company. The applicable rate depends on whether the Danish company has provided valid DTAA documentation. Below is a quick reference for TDS rates:

Payer Category	Without DTAA Documents (Sec 115A)	With Valid DTAA Documents
Individual / HUF (not subject to tax audit)	20% + Surcharge + Cess	20% (DTAA) + Surcharge + Cess
Company / LLP / Firm (subject to tax audit)	20% + Surcharge + Cess	20% (DTAA) + Surcharge + Cess

Note: For Royalty and FTS, the India-Denmark DTAA rate and the Section 115A rate are both 20%. The primary benefit of DTAA compliance in this case is the ability to claim credit for taxes withheld in India against Danish tax liability, avoiding double taxation at the entity level.

Common Mistakes in DTAA Compliance

Based on experience handling hundreds of cross-border tax matters, these are the most frequent errors companies make when dealing with the India-Denmark DTAA:

• Using a regular director's DSC instead of the foreign signatory's DSC: The IT portal requires the DSC of the actual authorised signatory of the foreign company. A common mistake is using the DSC of the Indian company's director, which is not accepted.
• Not renewing TRC each year: A TRC is typically valid for one financial year. Many companies forget to renew it annually, leading to denial of DTAA benefits.
• Filing Form 10F manually instead of online: As of 2023, Form 10F must be filed electronically. Manual paper submissions are no longer accepted.
• Assuming No PE Declaration is optional: Without a valid No PE Declaration, tax authorities may treat the Danish company as having a PE in India, leading to higher tax liability and potential penalties.
• Not obtaining PAN before claiming DTAA: DTAA benefits cannot be claimed without a valid Indian PAN for the foreign company.

Why Choose Taxocity for India-Denmark DTAA Compliance?

Taxocity has been providing expert tax and compliance services for over three decades. With a 4.8/5 rating from 5,000+ clients, we offer end-to-end DTAA compliance support, from PAN application and Income Tax login creation to DSC procurement for foreign signatories and ITR filing in India.

• 100% compliance guarantee: We ensure all documentation is accurate and filed on time.
• Real human experts: Our team of chartered accountants and tax professionals guides you through every step of the process, including video verification for foreign DSC.
• End-to-end support: We handle TRC liaison guidance, PAN application, Form 10F filing, No PE Declaration drafting, and ITR filing under one roof.
• Cross-border expertise: We regularly handle DTAA compliance for companies across Denmark, UAE, Sweden, Russia, South Korea, China, Switzerland, and Italy.

Also explore our related compliance guides: TDS on SaaS Payments to Foreign Companies, DTAA Compliance Checklist for Indian Companies, and PAN Card for Foreign Company in India.

Key Takeaways

1. The India-Denmark DTAA withholding rate for Royalty and FTS is 20% + Surcharge + Cess.
2. A Danish company that pays tax at 20% under Section 115A on Royalty/FTS does not need to file an ITR in India. But if it claims DTAA benefits, ITR filing becomes mandatory.
3. To claim DTAA benefits, the Danish company must provide: TRC, Form 10F (online), No PE Declaration, PAN, IT Login, and DSC of the foreign authorised signatory.
4. The DSC must be of the foreign company's authorised signatory, not any Indian director or partner.
5. Form 10F must be filed electronically on the Indian Income Tax portal; manual filing is not accepted.
6. TRC must be renewed every year to continue availing DTAA benefits.

Disclaimer

This article is intended for general informational purposes only and does not constitute tax advice. The information provided is based on applicable Indian tax laws and the India-Denmark DTAA as understood in 2026. Tax laws are subject to change, and individual circumstances may vary significantly. We strongly recommend consulting a qualified tax advisor or chartered accountant before making any decisions related to DTAA compliance, TDS deductions, or cross-border tax planning. Contact Taxocity for personalised guidance from our expert team.