The Danish Tax Agency has found that Orsted is liable for tax payments totalling Dkr6.6bn (€886m) in connection with two UK offshore wind projects.
The developer said it received an administrative decision today from the agency in relation to the Walney extension and Hornsea 1 projects covering the years 2015 and 2016.
Orsted said the decision means it will be taxed to the tune of Dkr5.1bn, with an additional Dkr1.5bn in interest, in Denmark on the full future value of the projects even though both are owned by UK subsidiaries and are taxed in the UK.
The decision also entails that the date of taxation is brought forward, as Orsted, according to the Danish Tax Agency, should be taxed on the future value long before the offshore wind farms were built, it said.
Orsted has appealed the decision to the Danish Tax Appeals Agency as it “disagrees” with the ruling and has asked for a deferral of payment pending the outcome of its case.
Furthermore, the developer said it will take steps to ensure that the Danish and UK tax authorities initiate negotiations to avoid the developer being subjected to double taxation, if necessary, by referring the case to an independent arbitration panel.
At this stage, it has not been clarified whether the Danish Tax Agency will seek to resume the tax assessment of other Orsted offshore wind farms.
Chief financial officer Marianne Wiinholt said: “The Danish Tax Agency’s decision is clearly based on a misconception of the risks and value creation in Orsted’s business model for developing, constructing, and operating offshore wind farms.
“As early as 2015, we asked the Danish and UK tax authorities to clarify the taxing rights between the two countries, so that the offshore wind farms would not be taxed twice. However, the Danish tax authorities broke off negotiations, and haven’t since wanted to reopen them.”