New bill to introduce favourable tax regime for share-based remuneration

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Date:
12 May 2016

a favourable tax regime for share-based remuneration was repealed in november 2011. under the regime, shares, share options and warrants could be awarded without being taxable until the shares acquired were sold, and the shares acquired were taxable as capital gains and not as personal income. now, a consultation has been launched on a draft bill which will essentially re-introduce the favourable regime.

By:
Torben Mølgaard Hededal

A favourable tax regime for share-based remuneration was repealed in November 2011. Under the regime, shares, share options and warrants could be awarded without being taxable until the shares acquired were sold, and the shares acquired were taxable as capital gains and not as personal income. Now, a consultation has been launched on a draft bill which will essentially re-introduce the favourable regime.

The Danish Minister for Taxation recently introduced a bill proposing to revive the favourable tax ‎regime for share-based remuneration under the former section 7H of the Danish Tax Assessment Act ‎which was repealed in November 2011. The new regime is expected to enter into force on 1 July 2016.‎

In February 2016, a consultation was launched on a draft bill which proposes to introduce a favourable ‎tax regime for shares and certain other share-based instruments awarded to employees in the course of ‎their employment. ‎

The favourable tax regime – which essentially corresponds to the regime provided by section 7H of the ‎Danish Tax Assessment Act which was repealed in November 2011 – will provide a framework for ‎awarding shares, options and warrants which will not be taxable for the employee until the shares are ‎sold, and then as capital gains and not as personal income.‎

Click here to read our earlier commentary on the draft bill.‎

The Ministry of Taxation has now introduced the bill in its final form, which is based on the draft bill.‎

The new regime is expected to enter into force on 1 July 2016, but will only apply to agreements ‎concerning award of share-based remuneration which are concluded on 1 July 2016 or later.‎

Norrbom Vinding will follow the Bill on its passage through the Danish Parliament and report on any ‎developments.‎