Companies which solely have shares in a stockbroker company should not be considered investment companies

Date 16 mar. 2011


The Danish Tax Board confirmed in a binding response that a company, which has no other financial assets than stocks in a subsidiary company operating approved stockbroker business, should not be considered an investment company.


The facts

The company F A/S had applied for a license to run stockbroker business and planned to use the license through a 100 pct. owned subsidiary company. F A/S only had stocks in the subsidiary company and had no other financial assets. F A/S would therefore be considered an investment company according to the rules under the Danish Capital Gains Tax Act.


The legal basis

According to the Danish Capital Gains Tax Act, the profits and losses on shares and investment trust certificates issued by an investment company are included when calculating the taxable income. 


Companies whose capital primarily is invested through subsidiary companies in other securities than stocks are not included under the term investment company, in accordance with the Danish Capital Gains Tax Act.


The Tax Board’s decision

The Tax Board stated that approved stockbroker companies are investment companies, but that the business is primarily investment on behalf of others. It was the opinion of the Tax Board that the operation of approved stockbroker businesses is more than just investment in securities, because the stockbroker business consists of an investment service.

Consequently, the stockbroker business consisted primarily of other things than investment in securities. The assets in the stockbroker company were therefore not to be included in the calculation of securities in F A/S, for which reason F was not an investment company according to the Danish Capital Gains Tax Act.

Therefore, F A/S did not fall under the rules on investment companies under the Danish Capital Gains Tax Act as a consequence of the ownership of the stockbroker company.

Consequences of the decision

The Tax Board’s decision implies that approved stockbroker companies that run investment business on behalf of others are not considered investment companies.



If you have any questions or require additional information on the above, please contact Partner, Adjunct Professor Jakob Bundgaard ( or Junior Associate Kim David Lexner ( 


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