Skat.dk: foreign listed partnership interests are not shares

New guidance on skat.dk addresses investors in foreign listed limited partnerships such as the German KGaA (Kommanditgesellschaft auf Aktien) and the French SCA (Société en commandite par actions). Although these interests are treated as shares in their home countries and held in custody like shares, they are not shares under Danish rulesSkat: a kommanditselskab is not an independent tax subject, so the interests cannot be held in an aktiesparekonto and are not taxed as sharesSkat.

Taxation follows the transparency principleSkat: the partnership's income is taxed at the participant, not the entitySkat, and each holder computes their share from their ownership interest. How the income is taxed depends on the partnership's activities. Business income is computed under the rules for self-employed persons, including tax depreciation, but where there are more than ten owners and the holder does not participate significantly in operations, the anparter rules apply instead: the income is capital income and neither the virksomhedsordning nor the kapitalafkastordning can be used. A loss cannot be set against other income; it can only be carried forward against future profits from the same business. Where the business runs through subsidiaries, dividends, gains and losses on the subsidiaries' shares are taxed as share income.

Nothing is reported by the bank, even from a Danish custody accountSkat, so holders compute the income themselves under Danish rules in Danish kronerSkat: accounting depreciation is added back, tax depreciation follows afskrivningsloven, and part-year holders include only their ownership period. In the guidance's example Anne owns 1/1000 of a German partnership and reports 220,000 kr in box 430 with her 30,000 kr share of foreign corporation tax paid in box 495K; wealth goes in box 490. In TastSelv the entries sit under Udenlandsk indkomst, Udenlandske aktier og investeringsbeviser, with the country in box 401.

Distributions need care. Payouts from operating profits are not dividends under Danish rules: they are not reported as dividends, do not enter the income computation, and no relief is available for foreign dividend tax on them. By contrast, equity dividends the partnership passes on from shares it owns are taxed as share income. On a sale of an interest in a business-operating partnership, the proceeds are allocated across the assets sold and gains and losses computed under the business-sale rules, including recaptured depreciation.

Banks may previously have reported these interests as sharesSkat, so gains and losses can have been taxed as share incomeSkat. Holders can apply for reopening of earlier assessments under skatteforvaltningslovens § 26, stk. 2Skat: the application must arrive no later than 1 MaySkat in the fourth year after the calendar year concernedSkat, set out the recomputed income with documentation, and go through TastSelv or by post to Skattestyrelsen in Sakskøbing, with digital filers required to use TastSelv. The same fourth-year 1 May deadline applies to reporting a loss year to preserve the carryforwardSkat, which has no dedicated box and is filed via TastSelv Borger under Kontakt, Skriv til, Indsend til os, Andre blanketter/bilag.

For advisers, the file to open first is any client holding KGaA or SCA units that a bank reported as shares: the positions need reclassification to transparent partnership interestsSkat, prior years checked for misreported share income, and loss years reported in time to preserve carryforwards.

Legal basis: skatteforvaltningslovens § 26, stk. 2Skat with skattekontrolloven on digital disclosure, afskrivningsloven on tax depreciation, and the anparter, virksomhedsordning and business-sale rules as referenced in the guidance.