Advertisement

Shares in Denmark's Orsted drop after $1.1 billion tax claim on UK wind farms

FILE PHOTO: General view of the Walney Extension offshore wind farm operated by Orsted off the coast of Blackpool

COPENHAGEN (Reuters) - Shares in energy group Orsted fell more than 4% on Wednesday after the Danish authorities claimed 6.6 billion Danish crowns ($1.07 billion) in taxes relating to the development of two British wind farms.

The claim relates to British offshore wind farms Walney Extension and Hornsea 1 in the tax years 2015 and 2016 could set a "dangerous precedent", analysts said.

Orsted said late on Tuesday the Danish Tax Authority had claimed of 5.1 billion crowns plus interest totalling 1.5 billion crowns to account for the full future value of the two wind farms even though they were developed, owned, and operated by British subsidiaries and are already taxed in the UK.

Orsted, the world's biggest developer of offshore wind farms, said it would appeal the decision.

"The Danish Tax Agency's decision is clearly based on a misconception of the risks and value creation in Orsted's business model for developing, constructing, and operating offshore wind farms," Chief Financial Officer Marianne Wiinholt said in a statement late Tuesday.

Shares fell as much as 4.6% on Wednesday and were trading 2.6% lower at 0835 GMT.

"If the Danish Tax Agency were to finally go ahead with this taxation and be upheld on appeal, it sets a dangerous precedent as the same treatment could apply to most of the UK and German farms," Bernstein analysts said in a note.

Analysts at Jefferies said the claim was "highly unusual" but Orsted should be able to resolve it through litigation or arbitration.

(Reporting by Jacob Gronholt-Pedersen; Editing by Edmund Blair and David Evans)