Declaration of value of portfolio shares

Date 21 dec. 2010

 

As part of the tax package 2.0, portfolio shares are for legal persons taxed in the income year 2010 and onwards.

The basis for the taxation of portfolio shares is that they are done according to the shares in stock method. However, it is possible to choose taxation according to the realization of shares method. It is not entirely clear how this choice has to be made, but there does not appear to be specific requirements for how the tax authorities should be informed about the choice.

The value of portfolio shares at the beginning of the income year 2010 and net losses on portfolio shares must be declared and form part of the tax assessment for the income year 2010.

In connection with the above, the Danish tax authorities have issued form 05.032 for the tax assessment of portfolio shares.


At the beginning of the income year 2010, the total value of portfolio shares must be stated in field 182 on the income tax form. Form 05.032 is to be filled out only if the tax authorities ask for it.


The form contains a detailed statement of the value of portfolio shares, including the original acquisition cost at the beginning of 2010, acquisition date, tax-exempted dividends in the years 2007 - 2009, the number of shares at the beginning of 2010, nominal value at the beginning of 2010, quotation at the beginning of 2010 and a possible net capital loss. If a net capital loss is indicated, original acquisition cost, sale price and tax-exempted dividends in the years 2007 – 2009 must be declared on the form.


The value of portfolio shares is assessed at market value at the beginning of the income year 2010.

If a company's income year 2010 was not commenced by 25 May 2009, and the company did not own portfolio shares at that time, the acquisition costs in terms of tax are used for the assessment of the portfolio shares.

 

If a company has a net capital loss at the beginning of the income year 2010, calculated according to the net balance method, this net capital loss must be declared. Net capital loss is stated in field 100 on the income tax form or on form 05.032, if required. A net capital loss can be deducted in the income year 2010 or later.

In determining the net capital loss according to the net balance method, the market value is used instead of the original acquisition cost for shares acquired before May 2009. To ensure that possible unrealized losses are not lost when the market value is used instead of the original acquisition cost, a transition rule applies. Under this transition rule, this net capital loss can be deducted in the tax year 2010 or later, if the total acquisition cost at the beginning of the tax year 2010 exceeds the total market value.


 

If you have any questions regarding the above or require additional information about tax assessment or the income tax form, please contact Jakob Bundgaard, Partner, jbu@mwblaw.dk or Kim David Lexner, Junior Associate, kdl@mwblaw.dk.

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.