Benefits of an employee share scheme
Employee shares are a valuable form of bonus that give employees a stake in the company they work for. Through Section 7 P of the Danish Tax Assessment Act, companies can offer shares or stock options to their employees, often at a favourable price. They can be a powerful motivator and help create a strong company culture, in which employees feel they are a part of the company’s success.
An employee share scheme can be of great benefit to both the company and its employees. For the company, it can increase employee loyalty and motivation, while giving employees the opportunity to invest in the business and potentially gain financially.
Understanding Section 7 P of the Danish Tax Assessment Act
To understand the full value of employee share schemes, it is important to be familiar with Section 7 P of the Danish Tax Assessment Act. This section forms the foundation for the taxation of employee shares in Denmark, and is crucial for how stock options and purchase options are treated for tax purposes.
In short, Section 7 P allows employees to be taxed on the gain only when their shares are sold, not when options are granted or exercised. To obtain these tax benefits, certain criteria must be met, including a general scheme for employees.
Employee shares may also have been granted under older schemes under Sections 16 and 28.
Reporting to eKapital can be a complex task
When implementing an employee share scheme, it is important that you set up a process for timely and correct reporting to eKapital – the Danish Tax Agency’s electronic system for reporting employee shares, contributions to unemployment insurance funds and trade unions, etc.
In addition to administrative burdens and financial penalties, inadequate reporting can result in your employees being taxed incorrectly, which can lead to frustration and distrust of the employee share scheme.
Many companies find it a major and challenging task to navigate the complex rules for reporting employee shares to eKapital. It requires an understanding of tax laws and accurate data management to ensure everything is reported correctly.
All employee shares must be reported in eKapital no later than 20 January.
Let Azets take care of reporting to eKapital
If you don’t have the time or expertise to file reports, our experienced tax advisors can do it for you. We know every aspect of tax legislation and have extensive experience in reporting to eKapital.
Reporting employee shares to eKapital can be a complex and time-consuming affair, but with Azets as your advisor, you can rest assured that your reports will be filed professionally and efficiently.
Contact us today to learn more about how we can help you optimise your employee share scheme and ensure error-free reporting.
Prices
Annual reporting to eKapital per employee: DKK 495
Annual start-up fee:
- For ≥ 10 fully taxable employees:
DKK 6,000 - For < 10 fully taxable employees:
Time spent - For employees with limited tax liability:
Time spent
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