Investment fund certificates are securities that represent ownership in an investment fund. The taxation of investment fund certificates depends on whether the fund is an equity fund or a bond fund, and whether it is Danish or foreign.
Frequently Asked Questions About Investment Fund Certificates
What are investment fund certificates?
Investment fund certificates are securities that give you a share in an investment fund. The fund invests in shares, bonds, or other assets and distributes the return to the investors. Investment fund certificates are popular investment objects for both private individuals and companies.
How are investment fund certificates taxed in Denmark?
The taxation of investment fund certificates depends on the type of fund and whether it is Danish or foreign.
- Equity funds are typically taxed according to the share rules, where gains and losses are taxed as share income.
- Bond funds are taxed according to the bond rules, where gains and losses are taxed as capital income.
- Mixed funds are taxed proportionally according to the fund’s distribution between shares and bonds.
It is important to distinguish between accumulating (taxed on unrealized gains) funds and distributing (taxed on realized gains) funds.
Accumulating (taxed on unrealized gains) funds
For accumulating funds, you are taxed on the increase in value each year, even if you have not sold the certificates. This is called the unrealized gains principle. The gain is calculated as the difference between the value at the beginning and end of the year.
Distributing funds (taxed on realized gains)
For distributing funds, you are only taxed when you sell the certificates or when the fund pays out dividends. This is called the realized gains principle. Here, you are taxed on the profit you make when selling or on the amount paid out.
How are foreign investment fund certificates taxed?
Foreign investment fund certificates may be subject to special rules. In some cases, foreign funds are taxed according to the unrealized gains principle, which means that you are taxed on the annual increase in value, even if you have not sold the certificates.
It is important to check whether the fund is approved as a distributing fund in Denmark, as this determines the taxation.
What happens if I have a loss on investment fund certificates?
If you have a loss on investment fund certificates, you can in some cases deduct the loss from your other income, depending on the type of fund and whether it is Danish or foreign. There are special rules for the deduction of losses, and it is important to document all transactions.
What should you be particularly aware of with foreign investments?
Foreign investment fund certificates can be complicated to handle for tax purposes. You must be aware of:
- Whether the fund is accumulating or distributing
- Whether the fund is approved in Denmark
- The rules for reporting and documentation
- Exchange rates and calculation of gains/losses
It is important to keep documentation of all purchases, sales, and distributions.
How can SkatteInform help you?
SkatteInform can help you calculate tax on investment fund certificates, report purchases, sales, and income correctly, and advise on Danish and foreign funds.
Disclaimer
As the above is for guidance purposes only, we accept no liability for decisions that may be made based on the above without prior individual advice. We accept no liability for errors and omissions.