Tax on employee shares

The Tax Agency has created the calculation system ‘Aktier og investeringsbeviser’ (Shares and investment certificates), which can help you calculate gains and losses on your shares. You find it by logging on to E-tax > ’Ret Årsopgørelsen’ (Change your tax assessment notice) > The calculator next to box 66 or open ‘Værdipapirer og tab tilfremførsel’ (Securities and loss carryforwards). Please note that the system is in Danish.

In box 66, you enter gains or losses on shares admitted for trading on a regulated market.

In box 67, you enter gains or losses on shares not admitted for trading on a regulated market.

If the shares have previously been admitted for trading on a regulated market during your ownership, you must enter gains in box 67 and losses in box 66.

How you are taxed

• Gains below DKK 58,900 (DKK 117,800 for married couples) in 2023 are taxed at 27% (in 2022 it was DKK 57,200 and DKK 114,400 for married couples).
• Gains above DKK 58,900 (DKK 117,800 for married couples) in 2023 are taxed at 42% (in 2022 it was DKK 57,200 and DKK 114,400 for married couples). 

If your employee shares are held in a custody account

If your employee shares are held in a custody account, you must state the date on which they will be released. You can read how in the guide ‘Sådan giver du oplysninger om medarbejderaktier’ (How to provide information about employee shares), which you can find in E-tax > ’Ret Årsopgørelsen’ (Change your tax assessment notice) > ’Aktier og investeringsbeviser’ (Shares and investment certificates) - under ’Teknisk hjælp’ (Technical assistance). 

You must pay tax when you acquire the right to the share, the purchase option or the subscription right, unless your employee shares are covered by one of the special schemes, which you can read about in the items below:

• Individual share-based remuneration (section 7 P of the Tax Assessment Act)
• Rules on tax on purchase options and subscription rights at the time of exercise (section 28 of the Tax Assessment Act)
• Payment to employee investment companies (section 7 N of the Tax Assessment Act)
• General employee share schemes (section 7 A of the Tax Assessment Act)
• Individual share-based remuneration (section 7 H of the Tax Assessment Act)

These rules apply to employee shares, on which you and the business may enter into agreement as from 1 July 2016.

Special rules on individual share-based remuneration:

• You are taxed when you sell your employee shares.
• The tax is levied as capital gain and not as salary, which normally means lower taxation.
• The company does not have a right to deduct the expense.
• The employer reports the acquisition of your employee shares to the Tax Agency.
• All allocations of share-based remuneration can be seen in the calculation system ‘Aktier og investeringsbeviser’ (Shares and investment certificates) in E-tax if the share has been admitted for trading on a regulated market.

Conditions:

• The scheme applies both to shares that you acquire directly and to purchase options and subscription rights that entitle you to buy or subscribe for shares.
• The employer company must enter into an individual agreement with each employee. The company itself decides which of its employees will be allocated shares etc.
• Board members cannot use the rules.
• The shares etc. must be allocated by your employer company or a company in the same group as your employer company.
• The employee shares must not constitute a special class of shares.
• The allocated purchase options and subscription rights must not be assigned to others. 
• The allocation of share-based remuneration for the shares, purchase option or subscription right must not exceed 10% of the annual salary.

Shares acquired under a purchase option or a subscription right are regarded as having been acquired at the exercise price plus any payment for the purchase option or subscription right. The acquisition cost for pure share allocations is DKK 0.

Special rules on tax on purchase options and subscription rights at the time of exercise:

• You are taxed at the time at which the purchase option or subscription right is exercised to buy or subscribe for shares. Sale of the purchase option or subscription right as well as difference settlement also trigger taxation.
• The taxation is levied as tax on wages and salaries inclusive of labour market contributions. If you exercise the purchase option or subscription right to purchase or subscribe for shares, the taxation is levied on the difference between the price at which the shares are purchased or subscribed for and the market price of the shares in question. If you sell your purchase option or subscription right, the taxation is levied on the sales price. The same applies to any difference settlement. If you have paid an amount to your employer for acquisition of the purchase option or subscription right, the amount paid is deducted from the calculation of the taxable amount. 
• The company has a right of deduction for allocated purchase options and subscription rights.

Conditions:

• The rules apply to purchase options and subscription rights that entitle you to purchase or subscribe for shares.
• Employees, board members and people who have performed work may all use the rules. The company itself decides which employees are entitled to these allocations.
• The purchase option and subscription right must have been allocated by your employer company or by a company in the same group.
• There is no threshold to how much you can be allocated each year.
• The company must report the information to the tax authorities.
• The shares are regarded as having been acquired at the exercise price plus the taxed amount and with the addition of any own payment for the purchase option or subscription right.

Remember to actively declare your taxable income if you are an employee with limited tax liability and you exercise or sell your right to employee shares (section 28 of the Tax Assessment Act)

• Your taxable income will not automatically appear in your tax assessment notice/tax return. You must declare it yourself in the year in which you exercise or sell your purchase options and subscription rights.
• Declare it in box 15/field 207.
• You must only declare taxable income for work you perform in Denmark during the vesting period:
  • If you have only performed work in Denmark during the vesting period, you must declare the full income.
  • If you have performed work both in and outside Denmark during the vesting period, you must only declare the work you have performed in Denmark.
  • If you have only performed work outside Denmark during the vesting period, you do not need to do anything. The amount is not taxable.
• If you reside in Sweden and are taxed under the Øresund Agreement, special rules apply when part of the work is not performed in Denmark. If you want to know more about the Øresund Agreement, you are welcome to call the Tax Agency directly on (+45) 72 22 28 93.

Remember to actively declare your taxable income if you have a share-based remuneration agreement and your tax liability to Denmark ceases (according to the rules of section 28 of the Tax Assessment Act)

• Your taxable income will not automatically appear in your tax assessment notice/tax return. You must declare it yourself in the income year in which your tax liability ceases if you have a share-based remuneration agreement.
• At the time at which your tax liability to Denmark ceases, you will be taxed on the value of your purchase option or subscription right.
• You can postpone the tax (be granted deferral). Read about being granted deferral.

If you are a board member with limited tax liability and you exercise or sell employee shares (section 28 of the Tax Assessment Act)

• You yourself must actively declare your taxable income during the year of taxation. It will not automatically appear in your tax assessment notice/tax return.
• Declare it in box 15/field 207.
• You must declare your full taxable income. If you are a board member with limited tax liability, the remuneration may be disbursed in any form. There is no requirement for affiliation to Denmark other than that your taxable income can be attributed to Denmark.

Employees are not taxed on that part of their salary which is paid to an employee investment company. 7.5% of the employees’ annual salary may be paid to an employee investment company less labour market contributions; however, maximum DKK 30,000 per year.

When employees subsequently receive dividend or other distributions from the employee investment company or consideration for shares in the investment company, these amounts are taxed as personal income.

The following rules apply to employee shares:

• Where the allocation was made no later than on 31 December 2011.
• Where the allocation was made no later than on 31 December 2012, and you and the company entered into agreement on this before 21 November 2011.

Special rules for general employee share schemes:

• You are taxed when the shares are sold.
• For free shares, the market value when you were allocated the right to the shares is used as the acquisition cost.
• For shares acquired through the exercise of purchase options or subscription rights, the acquisition cost is the amount you have paid for the shares.
• The shares are taxed as income from shares.
• The company has a right of deduction for allocated shares and purchase options and subscription rights.
• A transitional rule applies to employee shares held in custody accounts on 19 May 1993. 

Conditions:

• Had to cover all employees. However, there could be requirements for a certain period of employment, working hours or seniority.
• Applicable to shares that were allocated to you directly and to purchase options and subscription rights entitling you to purchase or subscribe for shares.
• The rules were not applicable to board members.
• The value of the purchase options and subscription rights allocated for the year could not exceed 10% of your annual salary. The shares you purchased based on your purchase option and subscription right had to be held in a custody account with a bank for minimum five years.
• The value of the shares allocated for the year could not exceed DKK 22,800 (in 2011) annually. The shares were popularly called free shares. The shares had to be held in a custody account for minimum seven years.
• The company must report the information, which must be certified by the company’s accountant or lawyer, to the tax authorities. 

These rules apply to employee shares on which you and the business entered into agreement before 21 November 2011.

Special rules on individual share-based remuneration:

• You are taxed when you sell your employee shares.
• The tax is levied as capital gain and not as salary, which normally means lower taxation.
• The company does not have a right to deduct the expense.

Conditions:

• The scheme applied to both shares that were allocated to you directly and to purchase options and subscription rights entitling you to purchase or subscribe for shares.
• The employer company had to enter into an individual agreement with each employee. The company itself decided which of its employees would be allocated shares etc.
• The rules were not applicable to board members.
• The agreement had to be certified by the company’s accountant or lawyer. The accountant or lawyer certified that the conditions had been met.
• The shares etc. had to be allocated by your employer company or a company in the same group as your employer company.
• The employee shares must not constitute a special class of shares.
• The allocated purchase options and subscription rights must not be assigned to others. 
• Shares acquired under a purchase option or a subscription right are regarded as having been acquired at the exercise price plus any payment for the purchase option or subscription right. The acquisition cost for pure share allocations is DKK 0.