Danish Tax on Shares Held in Foreign Custody Accounts

If you hold shares through a foreign brokerage — whether it’s Interactive Brokers, DEGIRO, or any other non-Danish platform — the tax rules are different from what you’d face with a Danish broker. SKAT does not automatically receive information from foreign custody accounts, which means the full reporting burden falls on you.

This guide walks through every obligation step by step.

Why Foreign Custody Accounts Are Different

With a Danish broker, the broker reports your transactions and dividends to SKAT automatically. The Securities System (Værdipapirsystemet) handles much of the calculation for you. That safety net disappears with foreign accounts. You must track, calculate, and report everything yourself.

If you fail to report, you risk penalties and losing the ability to claim deductions on future losses.

Reporting Purchases

Every share purchase made through a foreign custody account must be reported to SKAT via E-tax (TastSelv) by 1 July of the year following the purchase.

For each purchase, include:

• Share identity — company name, ticker symbol, and ISIN if available
• Number of shares purchased
• Date of purchase
• Purchase price in DKK, including all associated costs (brokerage fees, currency conversion charges)

Converting to DKK at the exchange rate on the date of purchase is your responsibility. Keep all receipts and transaction confirmations.

Common mistake: Forgetting to report purchases means you cannot prove your cost basis later. If you then sell those shares, SKAT may treat the entire sale proceeds as a gain because you have no documented purchase price on file.

Reporting Sales and Calculating Gains or Losses

When you sell shares from a foreign custody account, you must calculate the gain or loss yourself. There is no automatic pre-filling.

• Danish listed shares (shares admitted to trading on a Danish regulated market): report in box 66 on your tax return.
• Foreign shares: report in box 454 on your tax return.

If you also hold Danish listed shares through a Danish broker, you can use the Securities System for those. But shares held in a foreign account must be reported manually regardless of whether they are Danish or foreign.

The gain or loss is calculated as:

Sale proceeds (in DKK) minus purchase price including costs (in DKK) equals gain or loss.

Use the FIFO (First In, First Out) method if you have made multiple purchases of the same share at different times.

Declaring Dividends

Dividends from shares in a foreign custody account must also be declared:

• Danish shares: report in box 62 (qualifying dividends subject to lower rate) or box 68 (non-qualifying dividends).
• Foreign shares: report in box 452.

Any foreign withholding tax you paid on those dividends can be declared in box 496 for potential credit against your Danish tax liability. The credit is limited to the Danish tax rate on that income — you cannot claim more than you would have paid in Denmark.

Foreign Tax Credit

Denmark allows you to deduct foreign tax paid on investment income, but only up to the Danish tax rate applicable to that income. This prevents you from reducing your overall Danish tax bill by investing in high-withholding-tax countries.

Example: If you paid 25% withholding tax on a US dividend and the Danish tax rate on that income is 27%, you can credit the full 25%. But if the foreign rate were 30%, you could only credit 27%.

You must document the foreign tax paid. Keep withholding tax certificates or brokerage statements showing the tax deducted.

Market Value Declaration (Year-End)

Each year, you must declare the market value in DKK of all securities held in your foreign custody account as of 31 December.

This is reported on your annual tax return. SKAT uses this figure to track your total wealth for certain tax calculations, including potential wealth tax assessments.

Common mistake: Many investors forget this step entirely. Even if you had no gains, no sales, and no dividends, you still must report the market value at year-end.

Double Taxation Agreements

Denmark has double taxation agreements (DTAs) with a large number of countries. These agreements typically:

• Reduce withholding tax rates on dividends and interest paid from one country to a Danish tax resident.
• Prevent double taxation by allowing credit for foreign tax paid.

For example, under the Denmark-US DTA, US withholding tax on dividends is generally reduced from 30% to 15% (or 25% for certain pension funds). Similar reductions apply under agreements with the UK, Germany, Sweden, Norway, and many other countries.

Always check the specific DTA that applies to the country where your shares are domiciled or where the paying company is resident.

Common Mistakes to Avoid

Practical Tips

• Keep all purchase receipts and transaction confirmations. Store them digitally with dates and amounts.
• Use a spreadsheet to track your holdings. Record every purchase, sale, dividend, and currency conversion. Include the DKK value at the time of each transaction.
• Report promptly. Don’t wait until the deadline. File your E-tax return as soon as you have the information.
• Check your broker’s year-end reports. Most foreign brokers provide annual statements summarising your activity — use these as a starting point, but verify the figures yourself.
• Consult a tax advisor if your holdings are complex. Multiple countries, multiple currencies, and options or derivatives add layers of complexity that may warrant professional help.

Summary

Holding shares in a foreign custody account gives you access to a wider range of investments, but it comes with significant reporting obligations. You must report purchases, calculate gains and losses manually, declare dividends, claim foreign tax credits carefully, and report the year-end market value every year. Missing any of these steps can result in penalties or lost deductions. Stay organised, keep thorough records, and report everything to SKAT on time.