NORTHM - Northmedia

[Hielko]

Assuming that's correct, holding a stock portfolio inside a corporate entity is a bit of a bone-headed decision in Denmark right, even as a majority shareholder?

 

If you hold the stocks directly you pay 42% capital gains, but only when you realize them.

 

If you hold them indirectly you pay 24.5% corporate taxes on your gains (and on unrealized gains!) and then when you pay out the gains as a dividend you pay another 42% dividend tax.

 

In way that should be good news, because that would imply that there is a big incentive for management to change this. At the same time, you have to question a management team that sets up something like this in the first place...

 

 

[writser]

Assuming that's correct, holding a stock portfolio inside a corporate entity is a bit of a bone-headed decision in Denmark right, even as a majority shareholder?

 

Which makes me think it is not correct. I'm sure Bunck hired somebody to think about taxes / estate planning given that he owns a private holding worth 9 digits and rants in shareholder letters about the government competing with his private company. Maybe the holding is owned by an off-shore holding or something like that?

 

Though it could be correct, of course.

[Cigarbutt]

...

If you hold them indirectly you pay 24.5% corporate taxes on your gains (and on unrealized gains!) and then when you pay out the gains as a dividend you pay another 42% dividend tax.

...

If taxation is an issue and the corporate portfolio seen as a potential catalyst, it would be surprising that the ultimate owner is not compensated somehow from double taxation.

Many countries set up complex rules for holding and intermediate companies that somehow allow to compensate for this.

 

The private holding company has an account (as a reduction to equity in comprehensive income in Canada) which corresponds to investment income tax paid at the corporate level and which is reversed (35-40% rate) at the corporate level when a dividend is paid to the ultimate private personal entity (which can be a trust).

 

One would need to look into the corporate integration principle in Denmark and into the actual setup established by the owner.

[DW1234]

https://www.kfst.dk/pressemeddelelser/kfst/2020/20200630-fk-distribution-har-misbrugt-sin-dominerende-stilling/

 

So they've abused their dominant position. Does anybody know what the ramifications of this could be?

[John Hjorth]

Thank you for sharing, DW1234,

 

The Danish Competition Act. [As far as I can see, unfortunately not available in English.]

 

Please try to read especially paragraph 23 b [about so called "administrative fines"]. The Danish Competition and Consumer Authority is going for more than just an administrative fine. The final ruling will likely be from the Danish court system, with the State Prosecutor for Serious Economic and International Crime [who likely already has turned down an administrative fine] as plaintiff. This will likely take years.

 

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In short, more hair on the company as an investment. The case is mentioned in the 2019 Annual Report.

[John Hjorth]

writser,

 

Ref. the ownership of Baunegaard ApS, I can confirm, that Baunegaard ApS is 100% owned directly by Mr. Bunck.

[kab60]

Assuming that's correct, holding a stock portfolio inside a corporate entity is a bit of a bone-headed decision in Denmark right, even as a majority shareholder?

 

If you hold the stocks directly you pay 42% capital gains, but only when you realize them.

 

If you hold them indirectly you pay 24.5% corporate taxes on your gains (and on unrealized gains!) and then when you pay out the gains as a dividend you pay another 42% dividend tax.

 

In way that should be good news, because that would imply that there is a big incentive for management to change this. At the same time, you have to question a management team that sets up something like this in the first place...

I think that's the wrong way to think about this. NM OpCo is generating a ton of cash. For it to hit his personal account (and establish a personal stock portfolio), he'd have to dividend it up to Baunegaard (tax free) and afterwards his personal account (taking a 42 pct. hit immediately). Afterwards he'd be taxed 42 pct. on realized stocks in his personal portfolio...

 

By keeping the stock portfolio inside NM, he might be taxed on unrealized gains, but the tax rate is lower AND he won't take a 42 pct. hit immediately but only when he needs it in his personal account - thus possibly deferring a lot of taxes for a long time.

 

Depending on how active one trades, paying 24 taxes on unrealized gains (I didn't check if that's actually how it works for corporations in Denmark) might be better than being able to defer takes until one realizes gains, which would be at 42 pct.

[John Hjorth]

From a strictly technical point of view the tax discussion related to North Media A/S and it's superstructure [baunegaard ApS & Mr. Bunck] certainly has merit, but for practical purposes and in casu, I think it misses the point.

 

To me, it's like discussing how will Mr. Buffett get his ideal & theoretical part of the war chest in the belly of Berkshire into his personal account the most tax efficient way [, which aren't the discussions constantly going on here on CoBF about Berkshire, right? [ ; - ) ]]

 

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I'll elaborate later ... - too busy with IRL stuff today again! [Damn]

 

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Edit :

 

I'm sorry for starting singing some song from the warm countries in the above, perhaps leaving the interested fellow CoBF members behind a bit puzzled - Please listen to Mr. Wigh here.

[John Hjorth]

On another note about North Media A/S and the "freckles" attached to it :

 

Please study the ruling Articles of Association, with focus on paragraph 4, section 4.1, subsection A, ref. also subsection C.

 

To me, it's just bad form for existing investors. It's a "Danish phenomen", which you find in many listed Danish companies.

 

[urgh!]

[John Hjorth]

She is in mental control by now of more than 200 SKUs in our household. She doesn't have to check inventory on anything when we're ordering - being it stuff for the fridge, freezer or something else. Pretty amazing to me.

 

[..]

 

So, tomorrow I'll tell her, that I've created an account at "NejTak+", and she'll likely be very happy with that.

 

What I won't tell her tomorrow, is that on "NejTak+" I've opted for all leaflets.

 

What happens on a more technical level here, is that registration on the "NejTak+" triggers an automated registration on the "NejTak" feature, creating a stop of all leaflets in our physical mailbox for 3 - 4 weeks, after which all the crap starts dumping in here again.

 

Haha, great post. Thanks for the laugh :)

 

writser,

 

You seem to me to be the only person active in this topic who has "catched the hint" in my post quoted above, saturated with a good deal of humour! [ : - D ][i'm sorry, I can't help it, naughty boy, as I am [and pretty much always has been!]].

 

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Status update as of now:

 

Subscribing to "NoAdds+" some time ago has now stopped all the crap dumping in here. [The Lady of the House is now in some kind of state of bliss related to that ... I'm not totally sure that's really good - at least for my part ...]

 

1. At least I [already] know she isn't violent in any way, but who knows? [Who really knows, if one is pushing things too far?]

1.a. If I end up with a black eye for being jerky and too much of a prank, I'll take that, too [whining, naturally!]

1.b. The real down-side here is that if she finds something really CHEAP & HEAVY to hit me with, when all the crap starts dumping in here again ....

 

-On the other side :

 

2. She actually can't divorse me ... - because I'm not married to her! ...

 

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-More to come!

[John Hjorth]

Attached are the latest available financials for the subsidiaries, ref. the group chart in the financials for North Media A/S [only available in Danish]:

 

North Media Ejendomme ApS [the real estate subsidiary] &

Forbruger-Kontakt A/S [in the financials for North Media A/S called FK Distribution].

 

 

offentliggorelse_-_2020-06-29T220033.557_-_North_Media_Ejendomme_ApS_-_Annual_Report_2018_-_20200629.pdf

offentliggorelse_-_2020-06-29T215728.638_-_Forbruger-Kontakt_AS_-_Annual_Report_2018_-_20200629.pdf