COPENHAGEN: Cash rich Danish companies in an era of negative interest rates may be paying more tax than they owe to take advantage of the better rates paid by the taxman on overpayments.

Danish companies paid 21.6 billion Danish crowns ($3.2bn) in corporate taxes in March, approximately double of average for the same month over the last ten years, a report from the Danish Ministry of Taxation showed.

“The rise in companies tax payment might be due to negative interest rates on deposits in banks but we also think companies expect higher profits,” Rasmus Igum from the Danish Ministry of Taxation said.

None of the 40 biggest companies in Denmark have said they expect to double profits in 2015 which could justify the jump in tax payments.

Companies can receive up to 1.3 per cent interest on tax overpayments, while Denmark’s biggest financial institution, Dansk Bank and other major banks introduced negative interest rates for some corporate clients earlier this year after the central bank cut its deposit rate to -0.75pc.

The banks have passed on some of that bill to clients with excess capital.

Published in Dawn, July 4th, 2015

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