Contents

This section describes different types of shares in limited companies, shares in private limited companies, share certificates etc. and which types of yields should be included in the basis of taxation. The section also describes how yields from surplus assets on winding up limited companies etc. should be included.

 

The section covers

• Definition of share in limited company
• Definition of share in private limited company
• Definition of share certificate
• Definition of subscription right
• Rule
• Yields from surplus assets on winding-up

Definition of share in limited company

A share can be defined as an ownership share in a limited company with certain rights attached to it. For more details, see the Assessment Guide 2008-2, Companies and shareholders, Section S.G.

 

Definition of share in private limited company

A share in a private limited company can be defined as an ownership share in a private limited company with certain rights attached to it. As a general rule, shares in private limited companies may be freely transferred and pledged, but cannot be traded on the stock exchange. For more details, see the Assessment Guide 2008-2, Companies and shareholders, section S.G.

 

Definition of a share certificate

A share certificate can be defined as an ownership share certificate in a cooperative society. As the name implies, the company is often in the form of a cooperative. For more details, see the Assessment Guide 2008-2, Companies and shareholders, section S.G.

 

Definition of subscription right

A subscription right is the right given to the shareholders of a company to subscribe for new shares in connection with an increase of a company's share capital. When determining whether a given option should be classified as a right to purchase or to subscribe, the decisive factor is, following new practice under the Danish Gains on Securities and Foreign Currency Act, who has the possibility of deciding how the agreement should be performed. If the owner of the option can request satisfaction in the form of newly issued shares, the right in question is a subscription right.

 

See the Assessment Guide, Companies and shareholders, section S.G.2.1.2 Definitions.

 

Warrant

The concept of warrant is used in several meanings and may pertain to assets such as

• shares,
• bonds, or
• foreign currency.

A warrant may be both a right to purchase (or sell) shares already issued or to subscribe for new shares. 

This means that the difference between a subscription right and a warrant is that a subscription right is a right to subscribe for new shares only.

Rule

Yields from shares in limited companies, shares in private limited companies and share certificates must be included in the basis of taxation under Sections 3, 6 and 7 of PAL, including dividend, gains or losses on shares in limited companies, shares in private limited companies or share certificate.

 

Dividend generally includes everything that is distributed to shareholders. Dividend is taxed in the year in which the right to dividend is acquired. A right to dividend is acquired when declared at the general meeting.

 

Gains and losses are included in the basis of taxation according to the inventory principle, i.e. both realised and unrealised gains and losses. See Section 15(3) of PAL. Gains and losses on subscription rights and other rights in respect of shares are also covered. See also section C.2.2, Determining the basis of taxation according to the inventory principle.

 

Commission may be included when determining gains and losses so that commission can be added to the purchase price and be deducted from the sales price.

 

Cancelled treasury shares should not be included when the company determines gains and losses according to the inventory principle, see Section 15(5) of PAL. See also section C.2.3.5, Cancellation of own shares.

 

Yields from surplus assets on winding-up 

Gains or losses from the distribution of yields from surplus assets on winding up limited companies, private limited companies, cooperative societies and investment funds etc. must be included in the basis of taxation. See Sections 3, 6 and 7 of PAL.

 

Yields from surplus assets on winding-up distributed

• prior to the calendar year for the final winding-up of the company are treated as dividend.
• in the calendar year for the final winding-up of the company are considered as sales sum.

See Section 15(3), Item 6 of PAL.