Ørsted Satisfied With Walney Extension and Hornsea 1 Tax Ruling

Offshore wind developer Ørsted says it is satisfied with a final opinion from tax authorities in the UK and Denmark regarding a long-running taxation dispute. An advisory commission established under the EU Arbitration Convention issued the opinion on the Walney Extension and Hornsea 1 offshore windfarms. The ruling found the projects are primarily taxable in the country where they are located, consistent with Ørsted's understanding of international tax regulations and their application to the offshore wind industry.

 

Details of the Ruling

 

Ørsted has welcomed a tax ruling. It concerns a long-running dispute. Tax authorities in the UK and Denmark were involved. An advisory commission issued the opinion. This was established under the EU Arbitration Convention.

The ruling covers two specific projects. These are the Walney Extension windfarm. Hornsea 1 is the other project. Both are offshore windfarms. The opinion addressed their taxation rights.

 

The Substance of the Opinion

 

The opinion followed established tax principles. These are the principles Ørsted has applied. It found the projects have a genuine purpose. This is a legal and economic purpose. This underpinned the ruling.

The ruling clarified where tax applies. The projects are primarily taxable locally. This means in the country where located. In this case, that is the UK. Tax applies over the projects' lifetime.

 

The Background to the Case

 

The dispute has a long history. It dates back to 2015. Ørsted sought clarity on taxation rights. This aimed to avoid double taxation. The two countries were involved.

The case required external resolution. The two authorities failed to agree. The case was referred to the commission. This occurred in 2023. The commission then issued its opinion.

 

Read More: https://oceaneconomist.com/articles/vos-errv-east-anglia-windfarms

 

The Financial Impact

 

The ruling has a modest financial effect. It entails a minor upwards adjustment. This affects Ørsted's Danish tax position. Related interest is also involved. This is contained within existing provisions.

The impact largely balances out over time. The Danish tax charge is offset. UK tax reductions provide this offset. This occurs over the projects' lifetime. The overall effect is therefore limited.

 

Significance and Next Steps

 

Ørsted expressed satisfaction with the outcome. It is consistent with its understanding. This covers international tax regulations. It also covers their industry application. The ruling validated its approach.

The company will now address related matters. It will engage with the Danish authority. This concerns other similar projects. It expects the same principles to apply. It will also engage with the UK authority.