The section covers

• Main rule
• Exception: Default interest
• Exception: Interest on taxes, duties and excise

Main rule

When determining the basis of taxation, those liable to taxation can deduct interest expenses incurred in the year of taxation. See Section 9(1) of PAL.

As a general rule, the provision also comprises interest on tax amounts under Sections 23 and 27(5) of PAL. Interest on tax amounts, however, cannot be deducted until the year of payment.

Interest expenses in connection with overdue payment (default interest) are not deductible. See Section 28 of PAL. See also section D.3, Default interest.

Interest expenses which are non-deductible when determining taxable income under Section 17A of the Danish Tax Assessment Act (Ligningsloven (LL)) are also non-deductible when determining the basis of taxation under PAL. The interest concerns interest on taxes, duties and excise. See Assessment Guide (Ligningsvejledningen (LV)), General part A.E.1.5.3 for information on interest covered by Section 17A of LL.

Interest paid in connection with the purchase and sale of bonds, convertible bonds, mortgages etc. (interest on deferred payments) must be treated under Section 15 of PAL. See section C.2.3, Determining different types of yields.