Denmark Tax Agency Clarifies Limited Tax Liability on Capital Gains From Zero-Coupon Loan Notes

The Danish Customs and Tax Administration March 9 posted online Tax Council Binding Answer No. SKM2026.129.SR, clarifying taxation of capital gains from zero-coupon loan (ZCLN) notes. The taxpayer, an individual, managed seven tax-transparent limited partnerships that directly or indirectly loaned funds through ZCLN notes to a Danish company. The taxpayer sought clarification whether the limited partnerships’ foreign investors would be subject to limited tax liability in Denmark on capital gains arising from the Danish company redeeming the notes. Upon review, the Tax Council found that: 1) the foreign investors weren’t in the group subject to limited tax liability under the ...