Tax rules

Intermediaries

Holding companies, along with mutual funds, are usually classified as intermediaries. The principles of legislation in this area are:

• that neutrality between direct and indirect ownership requires that the intermediary shall not be subject to taxation,
• that indirect ownership shall not be more advantageous than direct ownership, and
• that taxation shall enable reinvestment of the intermediary’s shareholding.

Tax rules

The main principles concerning taxation of holding companies are:

• that interest income is taxable, while interest expenses and management costs are tax deductible,
• that dividends received are taxable, while dividends rendered are tax deductible, and
• that capital gains on sales of stocks are tax exempt, but in return, a standard-calculated level of income, which amounts to 1.5% of the market value of the equities portfolio at the start of the fiscal year, is taxed. The basis for calculating the standard level of income does not include business-related shares, by which is meant unlisted shares as well as listed shares in which the holding corresponds to at least 10% of the number of votes. In order for listed business-related shares to be excluded from the standard income calculation, they must have been held for at least one year.

Tax deficits

Tax-loss carryforwards are deductible and can be accumulated in order to be deducted from future taxable surpluses.

Condensed tax computation for the Parent Company