Equity‑Based Remuneration Schemes and related matters
Equity‑Based Remuneration Schemes and related matters
Both Danish and foreign enterprises employ various forms of equity‑based remuneration schemes for senior personnel as part of their overall compensation structure. Such schemes may comprise shares, warrants, stock options, subscription rights and comparable instruments. The tax treatment of these incentive arrangements is frequently a decisive factor in determining the appropriate structuring of the scheme. Individuals who participate in a foreign equity‑based remuneration programme who are seconded to Denmark by a non‑resident employer must pay particular attention to the Danish tax consequences arising upon the acquisition or exercise of rights under such instruments.
Researchers and high‑income employees relocating to Denmark — for instance in connection with an intra‑group secondment — may apply for taxation under the Danish expatriate tax regime (the “researcher taxation scheme”). This regime provides access to a reduced flat‑rate gross taxation, subject to the fulfilment of a number of statutory conditions.
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Taxpayers holding a preferential interest in a private equity or venture capital fund fall within the scope of the Danish carried interest rules, pursuant to which excess returns generated through the fund are subject to taxation as employment income. Private equity and venture capital funds are defined as investment vehicles that invest in shares with the purpose of wholly or partly acquiring one or more companies with a view to participating in their management and operations. Individuals relocating to Denmark who hold such preferential interests should carefully consider the Danish tax treatment of excess returns during their period of Danish tax residence.
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Bachmann/Partners advises senior executives and high‑income employees on the tax treatment of equity‑based remuneration schemes and related matters.”
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