Tax commission backs Ørsted in dispute over two British offshore wind farms

Commission assigns primary taxing rights

An advisory commission has concluded that profits associated with two Ørsted offshore wind farms should be taxed primarily in Britain, supporting the Danish energy company's position in a long-running dispute between British and Danish tax authorities. Reuters reported the decision on September 11. The process was intended to prevent the same income from being taxed twice across the two jurisdictions.

The dispute began in 2015 and was referred in 2023 under the European Union's Arbitration Convention, according to the company account reported by Reuters. Denmark's tax authority had issued a claim in 2020 worth 6.6 billion Danish kroner, including interest. The commission's conclusion is advisory, but Ørsted said it expected the relevant tax administrations to implement the agreed principles.

Large wind assets at the centre

The projects are Walney Extension and Hornsea 1, two major components of Britain's offshore wind fleet. Walney Extension has 660 megawatts of capacity and is described as capable of supplying close to 600,000 homes. Hornsea 1 has 1.2 gigawatts of capacity and can provide electricity equivalent to the needs of more than one million homes, illustrating the scale of the assets behind the tax dispute.

Ørsted said the ruling would produce a minor upward adjustment to Danish tax while reductions in British tax would largely offset the change over time. The company also expects the same principles to guide other comparable cases. The report did not describe the determination as a cash award, a new subsidy or a change to Britain's renewable-energy policy; it concerns the allocation of taxing rights.

Why the decision matters

Cross-border tax certainty matters for offshore wind because projects require large initial investments, operate for decades and may involve development teams, financing and ownership structures spread across several countries. Disputes over where profit is generated can tie up substantial sums and complicate forecasts. A shared application of the commission's principles could therefore reduce uncertainty beyond these two wind farms, although each additional case will retain its own facts.

The British government is separately consulting on the tax treatment of offshore-wind predevelopment expenditure after a 2026 Supreme Court judgment involving an Ørsted project. That proceeding is distinct from the Denmark-Britain arbitration and does not independently confirm its result. Together, however, the cases show how tax treatment has become an important part of the investment environment as Britain seeks extensive private capital for energy infrastructure.