Contents
The section covers
Main rule (Section 25(1) of PAL)
Upon
- termination of pension plans mentioned in Section 1(1) of PAL or
- cessation of the tax liability for one of the companies liable to taxation mentioned in Section 1(2) of PAL,
an amount corresponding to the negative PAL tax at the end of the year can be refunded to the pension plan or the pension provider.
This only applies if the negative PAL tax, cf. Section 17 of PAL,
- cannot be deducted from the PAL tax payable in respect of subsequent years of taxation and
- cannot be disbursed under Section 17(2)-(5) of PAL.
The amount can as a maximum constitute the PAL tax and the tax under the Danish Act on Tax on Yield of Pension Plan Assets (Realrenteafgiftsloven) paid for the 5 years of taxation immediately preceding the first of the years in which unutilised negative PAL tax has been realised.
Example
The following PAL tax is payable in respect of a savings plan:
|
|
PAL tax |
Balance |
Tax paid |
|
2002 |
5 |
|
5 |
|
2003 |
10 |
|
10 |
|
2004 |
15 |
|
15 |
|
2005 |
5 |
|
5 |
|
2006 |
10 |
|
10 |
|
2007 |
-35 |
-35 |
0 |
|
2008 |
10 |
-25 |
0 |
Termination takes place in 2008.
At the end of the year, the unutilised negative PAL tax is -25 which cannot be offset pursuant to the rules set out in Section 17 of PAL.
The first of the years in which unutilised negative PAL tax occurs is 2007. In the 5 years of taxation immediately preceding 2007, PAL tax of 5 + 10 + 15 + 5 + 10 = 45 has been paid. This constitutes the maximum disbursement under Section 25 of PAL.
In the example, the entire unutilised negative PAL tax of 25 can therefore be disbursed to the plan.
Exception (Section 25(2) and (3) of PAL)
Negative PAL tax cannot be disbursed upon the termination of one of the savings plans mentioned in Section 1(1) of PAL in connection with a transfer under Section 41 of PBL.
Instead, the negative PAL tax can be deducted from the PAL tax payable in respect of subsequent years in
- the newly established plan or
the existing plan to which the original plan has been transferred.
See Section 25(2) of PAL.
Negative PAL tax can, however, be disbursed to the pension plan or the pension provider under Section 25(1) of PAL in connection with transfers between
- a pension provider and a bank and
- two pension providers if the pension provider from which the transfer is made does a final calculation under Section 23(1) of PAL.
See Section 25(3) of PAL.
See also
See also section D.1.3, Declaration and settlement by banks and pension providers on the termination of pension plans.