This section describes the plans covered by Part 1 of PBL, but which are exempted from taxation under Section 1(1), Item 1 of PAL.

The following plans covered by Part 1 of PBL are exempted from taxation under Section 1(1), Item 1 of PAL:

1. plans under the Labour Market Supplementary Pension Fund (ATP) covered by Section 2 of PBL with the exception of the Labour Market Supplementary Pension Scheme for Recipients of Anticipatory Pension (Den Supplerende Arbejdsmarkedspension for Førtidspensionister),
2. plans under the Employees' Capital Pension Fund (LD),
3. plans disbursed by the authorities following previous employment in municipalities covered by Section 2 of PBL (municipal officials),
4. annuities without bonus entitlement taken out before 1 May 1982,
5. plans approved pursuant to Section 15 D of PBL, and
6. plans with pension funds covered by Section 1(2), Item 9 of PAL.

Yields from plans mentioned under a, b and f

The yields from the plans mentioned under a, b and f are liable to taxation at provider level under Section 1(2) of PAL. See section A.2. Pension providers liable to taxation.

Yields from plans mentioned under c, d and e are not liable to taxation.

This item concerns investment yields which are attributable to insurance and pension agreements with municipalities concerning their pension obligations vis-à-vis municipal officials. It is a continuation of the tax exemption provision set out in Section 15(3) of the Danish Pension Investment Return Act (Consolidation Act no. 1075 of 15 November 2006). This appears from the comments on L. 10 of 28 November 2007.

Annuities without bonus entitlement taken out before 1 May 1982 are exempted from taxation of yields from pension plan assets. It is a continuation of the tax exemption for these pension plans set out in the Danish Pension Investment Return Act and the Danish Act on Tax on Yield of Pension Plan Assets (Realrenteafgiftsloven). Annuities taken out after this date are liable to taxation under PAL.

Insurance plans concerning annuities without bonus entitlement could be taken out until 30 April 1982 on which date the Danish Financial Supervisory Authority discontinued the use of the so-called U74 basis, which was the common basis of the insurance companies for taking out this type of insurance plan.

For these insurance plans, the bonus entitlement was replaced by a high basic interest rate based on the market interest rate. The insurance companies undertook to pay an annual insurance benefit of a certain size. This benefit was fixed on conclusion of the contract and was calculated based on a basic interest rate, cf. U74, which during the period with high interest rates was around 16 to 18 per cent. The basic interest rate could, however, be higher or lower. 

The payment of benefits could either begin immediately or be postponed for a maximum of ten years.

According to the concession applicable at that time, the insurance company and the policyholder could, at the start date for the payment of the benefit, agree to postpone the payment for up to a year at a time. A high basic interest rate could also be agreed for this postponement period.

As mentioned above, the taking-out of these insurance plans ceased at the end of April 1982. Even though the payment of benefits is postponed for ten years - and the start date for payment of benefits is postponed - it must be assumed that most of these insurance benefits are now being disbursed.

Migrant workers whose foreign pension plan has been approved under Section 15 D of PBL are exempted from taxation of yields from pension plan assets. A migrant worker is a person from another country who takes up residence in Denmark in order to work or run his own business. The approval is valid for 60 months. At the end of the 60-month period, the plan is immediately covered by Section 53 A of PBL and will be taxed under the Danish Personal Tax Act (Personskatteloven) as capital income. See Section 4 of the Danish Personal Tax Act.