Ørsted Wins Final Opinion in Tax Dispute Over Two UK Offshore Wind Farms

en.Wedoany.com Reported - On September 10, Ørsted received notice from the Danish Tax Agency and HM Revenue & Customs that the advisory commission established under the EU Arbitration Convention has issued its final opinion on the cross-border taxing rights dispute concerning the Walney Extension and Hornsea 1 offshore wind farms in the UK. The commission determined that both projects have genuine legal and economic purpose, that the relevant projects should primarily be taxed in the UK where they are located, and that tax liabilities should be recognized gradually over the project operating period as power generation and revenue are produced.

The dispute dates back to 2015, when Ørsted asked the Danish Tax Agency and HM Revenue & Customs to clarify the two countries' taxing rights over the relevant offshore wind projects to avoid double taxation of the same projects. In 2020, the Danish Tax Agency demanded that Ørsted pay an additional DKK 5.1 billion in tax for the 2015 and 2016 tax years, plus DKK 1.5 billion in interest, totaling DKK 6.6 billion. Ørsted subsequently filed an appeal and pushed for the Danish and UK tax authorities to initiate a mutual agreement procedure.

The Danish Tax Agency's approach at the time required taxation in Denmark based on the full future value of the two wind farms. Ørsted objected, stating that both Walney Extension and Hornsea 1 were developed, owned, and operated by the group's UK subsidiaries and had already been taxed in the UK. After the two sides failed to resolve the dispute through prior negotiations, the case entered arbitration proceedings under the EU Arbitration Convention in 2023. The advisory commission held its first meeting in 2025 and formed its final opinion in 2026.

Walney Extension is located in the Irish Sea in the UK, with a total installed capacity of 659 MW, consisting of 87 offshore turbines, and entered operation in 2018. Hornsea 1 is located approximately 120 kilometers off the coast of Yorkshire, UK, with a total installed capacity of 1.2 GW, equipped with 174 7 MW turbines, and was fully commissioned in 2019. The two projects have a combined installed capacity of approximately 1.86 GW.

According to the advisory commission's final opinion, the primary taxing rights over the value of the two wind farm projects and related revenue belong to the UK. Ørsted stated that the opinion is consistent with the company's previous understanding of international tax rules and how they apply to the offshore wind industry. In the next phase, the company will continue to work with the Danish Tax Agency and HM Revenue & Customs on the specific implementation of the final opinion for the relevant tax years.