No loss relief for unregistered convertible bond, Højesteret rules

A loss of around DKK 10 million on an instrument its holder called a convertible bond was not deductible under the share gains tax rulesDomsdatabasen, because the instrument was never a company-law valid convertible bondDomsdatabasen. Højesteret gave judgment on 23 September 2026 in case BS-54852/2025-HJR and affirmed the High Court's decision to deny the deduction.

The arrangement began at an extraordinary general meeting of Virksomhed ApS 1 in March 2012, when the company decided, as part of a loan arrangement with the appellant, to issue a convertible debt instrument of DKK 10 million to him. The company was a wholly owned subsidiary of Virksomhed ApS 2, in which the appellant was the sole shareholder. Neither the decision to issue the convertible debt instrument nor the accompanying amendments to the articles of association was registered with Erhvervsstyrelsen. In December 2012 the appellant transferred his claim against Virksomhed ApS 1 to Virksomhed ApS 2 for DKK 1,000, realising a loss of approximately DKK 10 million. He claimed the loss as deductible under section 1(3) of the aktieavancebeskatningsloven.

That provision extends the tax treatment of gains and losses on disposals of shares to convertible bonds. Højesteret stated that section 1(3) and its preparatory works require a concrete assessment of the circumstances of each case to decide whether a convertible bond in the provision's sense exists, and that the assessment starts from the company-law requirements for convertible bonds. Where no company-law valid convertible bond exists, the instrument is for that reason alone outside the scope of the aktieavancebeskatningsloven.

The decisive company-law point was registration. Decisions to issue convertible debt instruments and the accompanying articles amendments must reach Erhvervsstyrelsen no later than two weeks after the decision is taken, under section 173(2) of the selskabslovenRetsinformation. In this case no registration of the issuance decision and the articles amendment had taken place within that two-week period. Højesteret therefore concluded that at the time of the disposal in December 2012 there was in any event no company-law valid convertible debt instrument. The court noted that the preparatory works to section 173(2) treat prompt registration as being of very great importance for assessing the company's affairs and the value of existing shares, because it matters whether a capital company is working with convertible debt instruments.

On that basis Højesteret agreed that no convertible bond in the sense of the aktieavancebeskatningsloven existed at the disposal dateDomsdatabasen, so the loss was not deductible under that actDomsdatabasen. The practical consequence is that parties structuring loans as convertible bonds must complete the company-law steps, including registration of the issuance decision and articles amendments within the two-week deadline, or the instrument will be taxed outside the share gains regime and a loss on disposal will not qualify for relief under it.

Legal basis: aktieavancebeskatningslovens § 1, stk. 3 and selskabslovens § 173, stk. 2, as applied in Højesteret judgment BS-54852/2025-HJR of 23 September 2026.