Denmark Tax Agency Explains Taxation of Payments by Irrevocable U.S. Family Trusts to Danish Beneficiaries

The Danish Customs and Tax Administration Feb. 27 posted online two tax board binding answers on the taxation of future payments to the Danish beneficiaries of two U.S. family trusts. The irrevocable trusts were created by the U.S. resident grandmother of the beneficiaries, and were considered independent taxpayers under U.S. law. However, the tax board found that the trusts weren’t considered independent taxpayers under Danish law because: 1) the children of the grantor acted as trustees; 2) one of the trustees was allowed to borrow from the trust; and 3) there was no independent and separate management of the trusts. ...