Bill to introduce favourable tax regime for share-based remuneration adopted

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Date:
19 May 2016

the danish parliament has now passed a bill which will, in principle, 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tax regime for share-based remuneration under the former section 7h of the danish tax assessment act which was repealed in november 2011.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 will enter into force on 1 july 2016.

By:
Torben Mølgaard Hededal

The Danish Parliament has now passed a bill which will, in principle, 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tax regime for share-based remuneration under the former section 7H of the Danish Tax Assessment Act which was repealed in November 2011.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 will enter into force on 1 July 2016.

In March 2016, the Danish Minister for Taxation tabled a bill to introduce a favourable tax regime for ‎shares as well as options and warrants awarded to employees in the course of their employment. ‎

This bill was adopted by the Danish Parliament on 12 May 2016. During the committee stage, a few ‎linguistic amendments were made, but the contents of the new Act are the same as those of the Bill.‎

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

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– which essentially corresponds to the regime provided by section 7H of the Danish ‎Tax Assessment Act which was repealed in November 2011 – will provide a framework for awarding ‎shares, options and warrants which will not be taxable for the employee until the shares are sold,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

In order to qualify for the new regime, a number of conditions must be met, including that the employer ‎and the employee must agree in writing that the share-based remuneration awarded will be subject to ‎the new regime. The new regime will only apply to agreements concerning award of share-based ‎remuneration which are concluded on 1 July 2016 or later.‎