The Ministry of Tax has presented a bill concerning introduction of a share savings account. The purpose of the bill is to strengthen Danish investment culture thereby indirectly improving the commercial conditions of Danish businesses. For most investors, investments via a share savings account will mean lower capital gains tax. The bill is proposed to take effect on 1 January 2019.


Persons fully liable to pay tax in Denmark under the provisions of the Withholding Tax Act will be able to establish a share savings account with a financial institution from January 2019. The share savings account will be administered by the investor’s financial institution, and it is the financial institution’s responsibility to calculate the gain and pay any tax from the account to the tax authorities. Consequently, the investor will not be subject to an additional declaration obligation.

The share savings account will be a separate account through which the investor can invest in listed shares and share-based investment certificates, and the account is therefore to be kept separate from the investor’s other investment activities.
The bill proposes that gains on the account are subject to 17 % tax. Tax is calculated based on the market-value principle. Application of the market-value principle implies that any increase in the value will be taxed each year instead of when the shares are sold.

It appears from the agreement concerning commercial and entrepreneurial initiatives that the share savings account may be introduced gradually by a ceiling of DKK 50,000 per person in 2019 which will increase to DKK 100,000 in 2020, DKK 150,000 in 2021 and DKK 200,000 in 2022 and onwards. The above will be based on an analysis of the scheme’s application. It further appears from the agreement that the contracting parties will decide each year whether there is any basis for proceeding with the account's increased ceiling, the first time in 2019.

The investor is free to have more money deposited on the account than the maximum amount if the excess amount is due to gain and profit.


According to the bill, the basis of taxation will be calculated as the difference between the value of the share savings account at the end of the income year and the value at the beginning of the income year minus the deposits and plus the dividends in this period.

As described above, the market-value principle will advance the time of taxation. This specifically means that if the investor has deposited DKK 50,000 on the share savings account, and the value has increased by 10 % at the end of the year so that the deposit is DKK 55,000, the investor will have to pay 17 % tax on the increase in value of DKK 5,000. On the other hand, if the value has decreased by 10 % so that the deposit is DKK 45,000, the investor may advance the loss and set off the loss against future gains on the share savings account. The investor may also deposit an additional DKK 5,000 on the share savings account to settle the loss.

Taxation according to the market-value principle is in contrast to what applies to investments with available funds. Investments with available funds are taxed according to the realisation principle by 27 % up to a limit of DKK 54,000 (2019 level) after which the excess gain is taxed by 42 % (double limit applies to cohabiting spouses).

As opposed to the market-value principle, the realisation principle implies that the tax is postponed until the actual realisation.


According to the bill, the investors may place their funds in listed shares and share-based investment certificates so that it is also possible to invest in share-based ETFs (Exchange Traded Funds).

In the original bill, ETFs were exempted from the investment products covered by the bill. But the Ministry of Tax proposed an amendment to the Act on 26 November 2018. It appears from this amendment that the group of proposed providers of share savings accounts is expanded to cover also investment funds. The amendment implies that investment funds must also meet a number of registration and information requirements which may result in foreign investment funds, including providers of ETFs, refraining from marketing themselves in Denmark.


Taxation based on the market-value principle may involve a liquidity risk for the investors which may be forced to pay 17 % tax on money which is not yet at their disposal as taxation takes place on a current basis and not upon realisation. In other words, the advantages of investments via a share savings account for small investors typically paying 27 % tax upon realisation are limited. The situation is different for investors typically exceeding the progressive limit of DKK 52,900 (2018 level) and paying 42 % tax on the excess gain. In this situation, it will be more attractive to invest as much as possible via the share savings account.

What is especially attractive for small investors is the possibility of investing through investment funds. The transaction costs involved when trading in few shares are often high for investors with limited funds, and these investors therefore often use various investment funds. In addition, losses and gains on ETFs are taxed as capital income based on the market-value principle - i.e. 42 %. The proposed amendment to invest via share-based ETFs is therefore especially attractive to small investors.
Finally, the initiative is growth-promoting for Danish trade and industry, and the Ministry of Tax assesses that the bill will result in a small revenue of DKK 110 million based on reversal and conduct.


Henrik Stig Lauritsen


Frans Rossen

Partner (L)

Vibe Kongsager Carlsson