Ørsted Gets Favorable Tax Opinion on Two UK Offshore Wind Farms

Danish wind energy company Ørsted has received a favorable ruling on the taxation of two major UK offshore wind farms, potentially setting a precedent for resolving similar disputes. An EU arbitration commission determined that the Walney Extension and Hornsea 1 projects have legitimate legal and economic purposes, and thus should be taxed primarily in the UK where the plants operate.

This outcome validates Ørsted's tax approach and resolves the risk of double taxation between Denmark and the UK. The issue had been ongoing for over a decade, with Ørsted seeking clarification from both the Danish Tax Agency and Britain's HM Revenue & Customs in 2015. The commission's decision will result in a minor increase to Ørsted's Danish tax liability, but is expected to be offset over time by reduced taxes in the UK.

The ruling is significant for Ørsted's UK offshore wind portfolio, as it clarifies the tax obligations for 11 GW of existing capacity and 7.2 GW under construction. The company will now apply the principles to other projects facing similar Danish tax assessments and negotiate with the Danish Tax Agency and HMRC to implement the ruling.