Contents

The section covers

• Rule
• Background
• Administration costs

Rule

The person liable to taxation can deduct costs incurred in the year of taxation in connection with the administration of the taxable assets from the basis of taxation. The person liable to taxation must determine the costs in accordance with the general rules on taxable income set out in Danish tax legislation.

 

The rules on depreciation and amortisation for tax purposes, however, can only be applied in connection with the depreciation of equipment. See Section 9(2) of PAL.

 

Background

The provision is a continuation of Section 5a of the Danish Pension Investment Return Act, which was inserted as a result of Act no. 1294 of 20 December 2000.

 

It appears, among other things, from the comments on this Act

• that asset management costs are not deductible if the asset yield is not liable to taxation under PAL and
• that, in case of doubt, asset management costs must be distributed according to an estimate.

See the comments on bill L 71 of 1 November 2000.

 

Administration costs

Administration costs comprise the actual costs defrayed by the person liable to taxation for administration and portfolio management of the pension assets, including administration fees in relation to pooling plans.

 

The fee for pension consultancy is also comprised to the extent that this affects the individual pension account. See LV General part, Section A.C.1.1.4, Fees.

Not covered

Internet, computer, newspaper, postage and telephone etc. expenses of the person liable to taxation fall outside the scope of the deduction right set out in Section 9(2) of PAL. See the comments on bill L 71 of 1 November 2000 and TfS1999.862SKM.

 

The expenses which can be deducted under Section 9(2) of PAL and the expenses which can be withdrawn from a pension account with a bank before the agreed time of disbursement without the disbursement being subject to 60 per cent tax under PBL will often coincide.

It follows from the above that there are certain circumstances in which asset management costs can be deducted from the PAL basis of taxation. However, this requires a specific evaluation of the individual costs and the connection between these in order to determine whether this precise type of cost is deductible.

 

Note

Trading costs in the form of commission etc. in connection with the purchase and sale of taxable securities, real property or other commercial undertaking is treated under Section 15 of PAL. See section C.2.3, Determining different types of yields.