Major asset manager demands new Danish tax rules

British asset manager Schroders is well and truly weary of foreign mutual funds being taxed according to the mark-to-market principle in Denmark, news media Finans reports.

Photo: Colourbox

British asset manager Schroders, one of Europe's largest money managers, now urges Denmark to alter tax rules for mutual funds.

More specifically, the asset manager advocates that new rules ought to be implemented for how foreign funds are taxed in Denmark, Danish news service Finans reports.

"We want a level playing field. We are part of the EU, where rules are harmonized, but in this exact field, the rules have not been harmonized. Why not follow the example of e.g. Sweden, where there is no difference between taxation of domestic and foreign funds?" says Ketil Petersen, managing director of Schroder's Nordic unit, to Finans.

When Danish private investors buy foreign investment certificates, any potential profit is taxed according to the mark-to-market principle. This means that private investors must pay tax on a potential tax every year, even if the investor has not redeemed their profits. Conversely, investors do not pay tax on increases in value in Danish funds until profits are redeemed.

In practice, this means that investors with money in Danish funds gain extra on returns from the deferred tax. However, Finans writes that there is no research-related evidence that one form of taxation is better than the other. But according to Finans, the more complicated tax practice of the mark-to-market principle is the reason that foreign funds have not gained a proper footing in Denmark.

English Edit: Marie Honoré

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