• An advisory commission found Ørsted’s UK wind projects are primarily taxable in Britain, backing the company in a long-running cross border dispute.
• Danish authorities had sought about $1.03 billion in taxes and interest linked to Hornsea 1 and Walney Extension.
• Ørsted expects only a minor adjustment to its Danish tax position and plans to apply the ruling’s legal principles to similar cases.

Ørsted has secured a favorable ruling in a decade-long tax dispute over two major British offshore wind farms, strengthening its position against a roughly $1.03 billion Danish tax claim.

An advisory commission determined that Hornsea 1 and Walney Extension should be taxed primarily in the UK. Both projects are located in British waters and generate revenue there.

The decision addresses a cross-border tax issue that has followed the Danish renewable energy group since 2015. It could also shape the treatment of other Ørsted projects facing similar questions.

Commission backs UK taxation

The dispute began when Ørsted approached Danish and British tax authorities in 2015 to establish how the projects should be taxed without creating double taxation.

The two authorities failed to reach an agreement. The case was eventually referred in 2023 to an advisory commission under the EU Arbitration Convention.

The commission found that the projects had a “genuine legal and economic purpose” and were therefore “primarily taxable” where they are located and earn revenue, according to Ørsted.

That finding supports the company’s position that its British subsidiaries were responsible for developing, owning and operating the wind farms. Ørsted has also argued that the projects had already paid tax in the UK.

Danish authorities took a different view. In 2020, they sought approximately $1.03 billion in taxes and interest connected with the two developments.

Ørsted challenged the claim.

Major offshore wind assets at centre of dispute

The projects involved are among the UK’s largest offshore wind developments.

Hornsea 1 is a 1.2-gigawatt wind farm in the North Sea, off England’s east coast. It can generate enough electricity to supply more than one million British homes.

Walney Extension has 660 megawatts of capacity and is located in the Irish Sea. It can produce enough electricity for nearly 600,000 homes.

Their scale adds weight to the tax dispute. Offshore wind projects frequently involve developers, subsidiaries, financing structures and physical assets spread across several jurisdictions.

Determining where economic activity takes place is therefore increasingly important for both governments and multinational energy companies.

RELATED ARTICLE: Ørsted’s Heavy-Lift Drones Transform Offshore Wind Operations

Limited impact expected on Ørsted’s tax position

Ørsted said the decision would result in a “minor upwards adjustment” to its Danish tax position. However, the company added that “the tax charge in Denmark will, over time, largely be offset by tax reductions in the UK”.

That outcome reduces the likelihood that the dispute will translate into a comparable additional tax burden across the group.

For investors, the decision also provides greater clarity around a liability that has remained unresolved for several years.

Tax certainty has become increasingly important for renewable energy developers as offshore wind projects grow larger and more capital intensive. Cross-border structures can create exposure to competing interpretations of where profits should be taxed.

Ruling could extend beyond two projects

Ørsted now plans to discuss the ruling with both Danish and British tax authorities. The company wants to determine how the commission’s findings should apply to other projects facing comparable tax questions.

It expects those cases to be resolved using the same legal principles.

The broader implications therefore extend beyond Hornsea 1 and Walney Extension.

For governments, the case highlights the challenge of allocating taxing rights when renewable infrastructure is developed through multinational corporate structures. For developers, it reinforces the importance of aligning ownership, operating activity and tax arrangements with the economic substance of each project.

The ruling also arrives as European governments seek to expand offshore wind while keeping projects financially viable. Tax treatment is one part of that equation.

Clearer rules around where renewable infrastructure profits are taxed could reduce uncertainty for developers and investors. As offshore wind expands across national boundaries, those questions will become increasingly relevant to project economics, government revenues and the financing of Europe’s energy transition.