How have Greenland and Denmark resolved accounting disputes over mineral revenue under the Self‑Government Act?
Executive summary
The 2009 Greenland Self‑Government Act transferred authority over mineral resources to Greenland and set a legal framework for how mineral revenues accrue and interact with the Danish annual subsidy, while requiring Denmark and Greenland to negotiate any alternative revenue‑sharing arrangements [1] [2]. The law also creates a specific accounting rule — a DKK75 million threshold and a formula that reduces Denmark’s subsidy by half of any excess — and channels disputes into negotiated agreements rather than judicial arbitration, leaving political negotiation as the primary dispute‑resolution tool [3] [4] [1].
1. The legal handover: who controls minerals and receipts
The Self‑Government Act explicitly grants Greenland authority over mineral resource activities and states that revenue from exploitation in Greenland’s subsoil “shall accrue to the Greenland Self‑Government authorities,” marking a formal transfer of licensing and revenue rights from Denmark to Greenland as of 1 January 2010 [2] [1] [5]. The Act frames this transfer as part of a broader devolution of competencies while reserving certain Kingdom responsibilities such as defence and foreign affairs [6] [7].
2. The accounting rule: the DKK75 million threshold and the subsidy offset
The Act attaches a concrete fiscal mechanism to that transfer: annual mineral revenues up to a benchmark (set in the Act as DKK75 million, adjusted for inflation) accrue to Greenland, but if revenues exceed that amount the Danish grant to Greenland is reduced — typically by half of the excess above the threshold — thereby formalizing an offset between mineral income and the Kingdom subsidy [3] [8] [4]. Explanatory notes and implementing mineral‑resources provisions make clear the reduction in the Danish subsidy is calculated with reference to the Self‑Government revenue definition and can be adjusted according to wage and price indices [9] [4].
3. The institutional pathway for resolving accounting disputes
Rather than setting a judicial enforcement mechanism, the Self‑Government Act embeds dispute resolution in political negotiation: the parties are required to negotiate distribution of mineral revenues and related financial arrangements, and may conclude specific agreements that depart from the default rule in section 7 [1] [10]. UN notifications and the Act’s explanatory materials underscore that if the parties do not agree, the statutory default is that revenue accrues to Greenland, while the subsidy offset rule remains the mechanical backstop — in short, the law privileges negotiated settlements over unilateral reinterpretation [11] [4].
4. How this plays out in practice: accounting tensions without a cash crunch
To date Greenland has not generated sustained mineral revenues large enough to trigger the substantial subsidy reductions envisaged by the threshold mechanism — reports note the DKK75 million trigger has not been surpassed in practice, and Denmark’s grant (DKK4.14 billion in 2023) remains the main fiscal lifeline for Nuuk [8] [3]. That practical reality means most accounting friction has been political and preparatory — drafting mineral law, licensing transitions, and establishing Greenlandic administrative capacity — rather than high‑stakes revenue sharing in the immediate term [9] [12].
5. Political stakes, geopolitics and the incentive to negotiate
The accounting formula is not just bookkeeping: it creates clear incentives and potential flashpoints tied to Greenland’s independence trajectory and to global demand for Arctic minerals. Because the Act couples resource revenues with the subsidy formula, any future large‑scale mining boom would force explicit renegotiation of economic relations and could accelerate independence talks; that dynamic makes negotiation both the technical fix and the political battleground [6] [8] [7]. External geopolitical interest in Greenland’s minerals further raises the stakes for how Denmark and Greenland agree to account for and distribute future receipts [8].
6. Bottom line: law favors Greenlandal receipts but channels disagreements into negotiation
Constitutionally and procedurally, the Self‑Government Act assigns mineral revenues to Greenland and prescribes an offsetting reduction in the Danish subsidy if revenues exceed a statutory threshold, but it avoids hard legal adjudication by insisting Denmark and Greenland negotiate any alternative distribution; the current practical reality—limited large‑scale mineral income—has kept the mechanism untested as a fiscal shock absorber, leaving political negotiation as the decisive instrument for resolving accounting disputes [1] [3] [4] [8].