Ref: KOR-DEN-2024-001
Verified: July 22, 2026
Financial Strategic Directive: Leveraging South Korea's Bond Market Liberalization and Denmark's EBITDA Safe Harbor for Cross-Border Investment
Executive Liquidity Summary
"The directive outlines a strategic approach for multinationals to capitalize on South Korea's bond market liberalization while navigating Denmark's interest limitation rules. By adhering to the EBITDA safe harbor, utilizing carryforward provisions, and documenting arm's length financing, firms can achieve tax-efficient cross-border debt structures. Compliance with BEPS and ATAD, combined with treaty benefits, minimizes risks and enhances returns."
South Korea's recent easing of restrictions on foreign investment in won-denominated bonds presents a significant opportunity for multinational corporations to diversify funding sources and optimize capital structures. Concurrently, Denmark's adoption of the EBITDA-based interest limitation safe harbor (DKK 22.3 million and DKK 21.3 million thresholds) provides a clear framework for debt financing. However, excessive financial expenses exceeding the safe harbor are non-deductible but can be carried forward indefinitely. To mitigate thin capitalization risks, companies can demonstrate that third-party financing terms are comparable. The BEPS Multilateral Instrument (MLI) and EU Anti-Tax Avoidance Directive (ATAD) Article 6 create a global compliance framework. Firms must maintain robust transfer pricing documentation to avoid penalties (DKK 250,000 annually and 10% income adjustment). Leveraging the six-year statute of limitations can manage tax risks, while the Korea-Denmark tax treaty eliminates double taxation and reduces cross-border costs.