Ørsted has secured a favourable ruling in a long-running tax dispute over two major UK offshore wind farms, with an international advisory commission concluding the projects should primarily be taxed in Britain.
The Danish energy giant said the ruling relates to Walney Extension and Hornsea 1 and follows a dispute dating back more than a decade over whether Denmark or the UK had taxation rights over the developments.
An advisory commission established under the EU Arbitration Convention concluded that the two wind farms have a genuine legal and economic purpose and should therefore primarily be taxed in the country where they are located.
That means the projects will principally be taxed in the UK over their lifetimes as they generate electricity and revenue.
Ørsted said: “Ørsted is satisfied with the outcome, as it is consistent with our understanding of international tax regulations and their application to the offshore wind industry.”
The case dates back to 2015, when Ørsted approached the Danish Tax Agency and HM Revenue & Customs seeking clarity over taxation rights to ensure its offshore wind farms were not subjected to double taxation.
The two authorities failed to reach agreement and the dispute was referred to the advisory commission in 2023.
Ørsted said the decision would result in a minor upward adjustment to its tax position in Denmark, together with associated interest, but this was already covered by provisions made for uncertain tax positions.
The additional Danish tax charge is expected to be largely offset over time by lower tax payments in the UK.
Ørsted will now enter talks with the Danish Tax Agency over other offshore wind projects subject to similar tax decisions or draft assessments, with the company expecting the same legal principles to apply.
It will also hold discussions with HMRC over the implementation of the ruling in the UK.
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