Foreign depository refers to an account with a foreign bank or financial institution in which a person or company keeps securities, such as stocks and bonds. Possession of a foreign repository may entail special tax reporting requirements and tax considerations.
Frequently asked questions about foreign deposit
Do you have to report your foreign deposit to the Danish Tax Agency?
Are you considering whether you have to report your foreign deposit to the Danish Tax Agency?
If you have securities, shares or cash held abroad, you as a starting point have a duty to inform the Danish Tax Agency. This applies regardless of the size of the deposit – and missing reporting can cost both fines and lost deduction opportunities.
In our FAQ you get answers to:
What is a foreign deposit?
A foreign deposit is an account with a foreign bank or deposit institution, where you can hold securities such as shares, bonds or investment funds. It differs from a Danish deposit in that it is registered in another country and therefore typically follows both foreign rules and tax conditions.
Important: If you are fully tax liable, you have a duty to report the foreign deposits to the Danish Tax Agency. If the deposits contain securities, you must typically state both the value of the deposit and any taxable income.
What is the difference between a Danish deposit and a foreign deposit?
Danish deposit: A deposit that is established with a Danish bank or a Danish broker. It is subject to Danish legislation, and the bank automatically reports relevant information to the Danish Tax Agency.
Foreign deposit: A deposit that is established with a foreign bank or a foreign broker. Here, the rules in the relevant country apply, and the deposit may be subject to local tax rules. For Danish taxpayers, this means that you yourself have a duty to report the deposit’s contents and transactions to the Danish Tax Agency.
How are investments in a foreign deposit taxed in Denmark?
Investments in a foreign deposit are taxed in Denmark according to the same basic principles that apply for investments in a Danish deposit. Everyone with full tax liability to Denmark is tax-wise responsible for reporting all returns to the Danish Tax Agency, regardless of where the deposit is located. This means that both gain on sale, dividends and interest must be stated to the Danish tax authorities.
How do you report a foreign deposit?
Reporting: You must yourself report all relevant information about foreign deposits in your annual tax assessment, as foreign deposit providers often do not automatically report to the Danish Tax Agency.
What special tax challenges can foreign deposits entail?
Foreign deposits can entail special tax challenges that one should be aware of. The most common are:
Do private individuals have to report a deposit abroad?
If you as a private individual have a deposit abroad, you must normally report it to the Danish Tax Agency. This applies both if the deposit contains securities, bonds, shares or cash.
The purpose is that SKAT can be able to control any tax on returns, dividends and gain/loss. Failure to report a foreign deposit can lead to fines, tax consequences, forfeiture of the right to loss deduction or a requirement for back payment of tax.
Disclaimer
As the above is for guidance purposes only, we accept no liability for dispositions that may be made on the basis of the above without prior individual advice. We accept no liability for errors and omissions.