This section describes how the basis of taxation for the ongoing operation and disposal of business activities other than insurance and pension fund activities should be determined.

The section covers

• Rule
• Background
• Specifically for gains and losses from disposals

The general tax rules must be applied when determining the basis of taxation for the profit and loss from the operation and disposal of business activities other than insurance and pension fund activities. The rules on depreciation and amortisation for tax purposes in respect of buildings are not applied. See Section 15(2), Item 2 of PAL.

The limitation set out in PAL of other business activities has been designed as an exclusion rule according to which all business activities other than insurance and pension fund activities are classified as other business activities. See Section 15(2), Item 1 of PAL.

Originally, other business activities were exempted from tax on yields from pension plan assets on the grounds that insurance companies and pension funds under the Danish Insurance Business Act (Lov om forsikringsvirksomhed) and the Danish Supervision of Company Pension Funds Act (Lov om tilsyn med firmapensionskasser) are not allowed to engage in business activities other than insurance and pension fund activities.

Sometimes insurance companies and pension funds temporarily take over the operation of a company to protect their interests as creditors.

With the introduction of the taxation of yields from pension plan assets, business activities other than insurance and pension fund activities were made liable to taxation under Section 2(1), Item 13 of the Danish Pension Investment Return Act.

The reason for extending the tax liability to include other business activities is that gains and losses on claims are liable to taxation. It is therefore natural to include the profit or loss from business activities and the gains or losses from the disposal of business activities taken over to protect the interests of creditors.

When disposing of other business activities, the gains and losses are determined according to the general tax rules. This means that the general tax rules on disposal, time of disposal etc. are applied.

If the business activities include assets covered by Section 15(3) of PAL, these rules are applied. See Section 15(2), Item 3 of PAL. See also section C.2.3.3, Yields from different assets.

Section 15(2) and (3) of PAL is a continuation of Section 13(2) and (3) of the Danish Pension Investment Return Act. It appears from the comments on Section 13(2) and (3) of L51 of 11 October 2000 that if the business activities include both real property, operating equipment, goodwill and other intangible assets, the basis of taxation is determined as follows:

• Ongoing determination of gains or losses on the real property in question according to the provisions set out in Section 15(3) of PAL (the inventory principle).
• Gains or losses on operating equipment, goodwill and other intangible assets are not taxed until they are disposed of.

See also two published binding advance notices of 15 August 2000, TfS 2000, 751 LR and TfS 2000, 752 LR. The real property in question was the most important asset of the business, and the basis of taxation was thus determined with reference to the rules that apply to gains and losses on real property.