Contents

This section describes the basis of taxation for plans with banks and credit institutions, pension accounts covered by Section 42 of PBL and contributory pension accounts covered by Section 51 of PBL, respectively. See section A.1.2, Pension plans covered by Part 1 of PBL, and section A.1.3, Other pension plans liable to taxation.

The section covers

• Main rule
• Exception: Losses on certain foreign claims
• Exception: Cash accounts in pooling plans  See also

See also section B.6, Joint provisions on deductions from the basis of taxation under Sections 3, 6 and 7 of PAL, and section B.7, Reduction of the basis of taxation for plans taken out before the end of 1982.

All types of asset yields from plans covered by Part 1 of PBL with banks and credit institutions must be included in the basis of taxation. See Section 3(1) of PAL.

As opposed to Section 2 of the Danish Pension Investment Return Tax Act (Lov om beskatning af visse pensionskapitaler), examples are not provided of all types of asset yields.

However, it appears from the comments on the bill to amend PAL (L 10) of 28 November 2007 that, in addition to the tax liability in respect of index-linked bonds and real properties, no other amendments are intended. The determination of yields from index-linked bonds and real property is described in further detail in section C.2.3, Determining different types of yields.

See also section A.1.2.1, Which plans are covered, and section C.1, Year of taxation.

Losses on foreign claims cannot be deducted from the basis of taxation if the country of source is entitled to tax interest income or gains on the claim under a double taxation treaty. See Section 3(2) of PAL.

This means that, if the interest income or the gain on the claim is exempt from taxation under a double taxation treaty, a loss on the claim is not to be deducted when determining the basis of taxation. 

When determining the taxable interest on cash accounts, the entire annual net yield must be included. It is a condition that the interest is accrued as yields on securities which are separated from the other securities of the bank or credit institution (pooling plan). If there is a gain or loss in respect of the account balance when the account is closed, the difference must be included in the basis of taxation. See Section 3(3) of PAL.

The annual net yield is determined as the interest after deduction of the bank's payment of foreign tax on the relevant securities.

The provision is a consequence of the discontinuation of the special relief provision in relation to pooling plan participants in banks under Section 19(5) of the Danish Pension Investment Return Tax Act (Danish Consolidation Act no. 1075 of 5 November 2006). See Section 20 of PAL.

No relief can therefore be granted for indirect taxes imposed on the bank in respect of its securities, but the cost of these taxes is deducted from the interest accrued. See the comments on L 10 of 28 November 2007.

If a pooling plan has been taken out with a foreign bank, and if relief is granted under the provisions set out in Section 20 of PAL regarding any tax at source levied in the bank's home country, the tax cannot simultaneously be deducted when determining the taxable interest under PAL.