Contents

►The section describes what pension providers mentioned in Section 1(2), Items 3-6 and 9 of PAL must include in the basis of taxation. ◄

 

►The section covers◄

    ►
  • Main rule
  • Exception for ATP
    • ◄

Main rule

►All types of asset yields must be included in the basis of taxation for the following pension providers:◄

    ►
  • The Social Pension Fund (Section 1(2), Item 3 of PAL)
  • ATP (Section 1(2), Item 4 of PAL)
  • LD (Section 1(2), Item 5 of PAL)
  • Assistance and support funds (Section 1(2), Item 6 of PAL)
  • Discontinuation pension funds (Section 1(2), Item 9 of PAL)
    • ◄

►Sections 4, 5, 7 and 8 of the Danish Gains on Securities and Foreign Currency Act (Kursgevinstloven (KGL)) must be used when determining the basis of taxation. ◄

Section 4 of KGL

►Section 4 of KGL concerns losses on claims in consolidated companies. According to the rule, losses on claims in consolidated companies should not be included in the basis of taxation. The non-deductible losses must be determined based on the exchange rates.   See Assessment Guide (Ligningsvejledning) 2008, Companies and shareholders, section S.C.1.2.2.3.1. ◄

Section 5 of KGL

►Section 5 of KGL concerns losses on claims covered by a double taxation treaty. This means that losses on a claim cannot be deducted if the interest income from the claim or gains on the claim - covered by KGL as a consequence of a double taxation treaty - should not be included when determining the income liable to taxation under PAL.   See Assessment Guide 2008, Companies and shareholders, section S.C.1.2.2.3.2. ◄

Section 7 of KGL

►Section 7 of KGL concerns losses on index-linked loans. According to the rule, losses incurred in connection with the indexation of the principal amount or the debt outstanding of loans cannot be deducted. ◄

►However, this only applies if: ◄

    ►
  • the debt is denominated in Danish kroner and 
  • if the nominal interest is equal to or exceeds the minimum interest rate under Section 38 of KGL, cf. Section 14 of KGL.
  •  
    • ◄

►See Assessment Guide 2008, Companies and shareholders, section S.C.1.2.2.4.1. ◄

►Section 7(2) of KGL concerns redemption at a premium. According to the rule, losses on debt are not deductible if the debt is to be redeemed at a premium agreed on in advance compared to the value at the original date of issue. ◄

►However, this only applies if:◄

    ►
  • the debt is denominated in Danish kroner and
  • if the nominal interest is equal to or exceeds the minimum interest rate under Section 38 of KGL, cf. Section 14 of KGL.
    •  

►Section 7(3) and (4) of KGL concerning loans and bonds or securities are exceptions to the premium rule. See Assessment Guide 2008, Companies and shareholders, section S.C.1.2.2.4.2.1 and section S.C.1.2.2.4.2.2.◄

Section 8 of KGL

►Section 8 of KGL concerns gains on intercompany debt. See Assessment Guide 2008, Companies and shareholders, section S.C.1.2.2.4.3. ◄

Asset management costs

►ATP, the Employees' Capital Pension Fund (Lønmodtagernes Dyrtidsfond (LD)), assistance and support funds and discontinuation pension funds covered by Section 1(2), Item 9 of PAL are entitled to deduct asset management costs. See Section 9(2) of PAL and section B.6.3 Deductions for costs. ◄

See also

►The basis of taxation must be determined under Sections 13-16 of PAL, cf. Section 12 of PAL. See section C.2 Determining the basis of taxation for plans with banks and credit institutions as well as pension providers liable to taxation and section C.3 Special provisions for determining the basis of taxation.◄

 

Exception for ATP

►ATP should only include the part of the asset yield which is attributable to pension plans covered by Section 2 of PBL, with the exception of the Labour Market Supplementary Pension Scheme for Recipients of Anticipatory Pension (SAP). ◄ 

►This means that yields from the following pension plans should not be included in the basis of taxation: ◄

    ►
  • SP schemes
  • SAP schemes.
    • ◄

►This is due to the fact that these schemes are taxed under Section 5 of PAL. ◄

Note

►As SAP funds managed by ATP are transferred to the ATP scheme when the account holder reaches the age of 65 and are converted into a life-long pension, SAP is, however, subject to tax under Section 6 of PAL in the disbursement period.◄