Contents

This section describes how those liable to taxation under Section 1(1) of PAL should determine the basis of taxation for yields from unlisted shares in limited companies, unlisted shares in private limited companies and unlisted shares in limited partnership companies in separate custody accounts.

 

The section covers

• Definition of unlisted shares in limited companies and unlisted shares in private limited companies
• Definition of shares in limited partnership companies
• Rule
• Determining the basis of taxation
• Determining the equity value
• Information about the equity value

Definition of unlisted shares in limited companies and unlisted shares in private limited companies

According to Danish law Unlisted shares in limited companies or unlisted shares in private limited companies are shares in limited companies or shares in private limited companies which are not listed on a regulated market or a multilateral trading facility, i.e. shares in limited companies and shares in private limited companies not traded on an organised market.

 

Definition of shares in limited partnership companies

Under Section 173(7) (ASL), a limited partnership company is a limited partnership engaged in business in which

• a limited company is limited partner with all its capital or
• where the limited partners of the company have invested a specific sum which is distributed on shares.

A share in a limited partnership company is the limited partner's ownership share in the company.

A separate assessment is made of the extent to which a foreign company is a limited partnership company. The principles set out in the Danish rules are applied in connection with this assessment.

 

Rule

The basis of taxation for unlisted shares in limited companies, unlisted shares in private limited companies and shares in limited partnership companies in separate custody accounts is determined in the same way as for other shares in limited companies, shares in private limited companies and shares in limited partnership companies. See also section C.2.3.3.5, Shares in limited companies, shares in private limited companies and share certificates.

 

Gains and losses must be determined according to the inventory principle, i.e. both realised and unrealised gains and losses are included. See Section 15(7) of PAL, cf. Section 15(3) of PAL. See also section C.2.2, Determining the basis of taxation according to the inventory principle.

 

The rules also apply to shares in limited partnership companies. See also section C.2.4, Investments in limited partnerships.

 

Determining the basis of taxation

For unlisted shares in limited companies or unlisted shares in private limited companies, the person liable to taxation must for the purpose of inventory taxation at the beginning and end of the year of taxation use the highest of

• the acquisition sum or
• the company's book value per share according to the most recently prepared financial statements as of 15 November in the year of taxation.

If different rights attach to the shares in the company, this must be taken into account when determining the company's book value per share if the different rights impact the value of the share.

 

Determining the equity value

The value of unlisted shares in limited companies and unlisted shares in private limited companies is fixed at the market value. If the market value of the unlisted shares is unknown, e.g. because the shares have not been traded or because the circumstances are not deemed to be appropriate as basis for the market value estimate, the assessment can be made based on the below rule, which is only intended as a guide.

 

Guide rule

As a starting point, the value of the shares is calculated as the sum of the value of each individual asset item in the company minus the respective liabilities in the company. Goodwill is added to the value determined. A substance principle.

 

See section S.F. 2.3.3, Shares in Assessment Guide.

 

The determination is based on the book value of the company according to the most recently prepared financial statements. The following items are thus adjusted:

 

a)     Real property

b)     Associated companies

c)     Deferred tax

d)     Other circumstances

 

Re a) Real property 

The item for properties is replaced by the most recently known real property rating assessment value. Any rebuilding costs are, however, added thereto provided that such costs are not included in the real property rating assessment value. Foreign properties are included at book value according to the most recently prepared financial statements.

 

Re b) Associated companies 

Portfolios of unlisted shares in limited companies/shares in private limited companies and in affiliated companies are determined in accordance with the guide rule when the market value is otherwise unknown. See Assessment Guide, S.G.2.4.6.2. The concepts of associated and affiliated companies are defined in accordance with the Danish Financial Statements Act (Årsregnskabsloven) (Danish Consolidation Act no. 196 of 23 March 2004).

 

Re c) Deferred tax 

Calculated deferred (net) tax is included and adjusted with due consideration to the above adjustments. Negative deferred tax can be included, however only at a value below par.

 

Re d) Other circumstances

Any book value of own shares is not included in the calculation of equity value. When calculating the price, the nominal share capital is reduced with the share represented by treasury shares.

 

Information about equity value (Section 15(7), Item 3 of PAL)

The person liable to taxation must provide the bank with information on the values no later than on 1 December in the year of taxation.

 

If the person liable to taxation fails to provide the bank with information on the values in due time, the bank must use the acquisition sum to determine the inventory taxation.

 

If the person liable to taxation does not inform the bank of the equity value by 1 December at the latest, the bank must notify the Danish Central Customs and Tax Administration thereof no later than in connection with the submission of the statement under Section 22 of PAL. See section D.1.2, Pension plans liable to taxation taken out with banks etc.