[Danish/Swedish] Da:Aktiesparekonto Sw:ISK Investeringssparkonto

[John Hjorth]

I looks like we will - finally - get a certain type of Stock Savings Account, with low taxation here in Denmark, like the similar Swedish model for such an account type.

 

The Danish law proposal is scheduled to Wednesday next week.

 

In Danish, it will likely be called "Aktiesparekonto" [translates to English as "Stock Savings Account", with a taxation of 1.25% of the value of the account, and no taxes on capital gains and dividends [and no deduction for losses], and credit in the tax for withheld foreign dividend taxes.

 

The inspiration comes from Sweden, where Swedish citizens can get an ISK - abbreviation for "Investeringssparkonto" [in Swedish], translated to "Investment Savings Account" in English.

 

The news talks about a deposit limit of tDKK 500, but some political parties are whining and want to discuss the deposit limit [to lower it].

 

I have tried to find some stuff to read about the Swedish ISK, and I found this on the homepage of Skatteverket.

 

Question to my fellow Swedish board members: Is there a deposit limit on the Swedish ISK?

 

Thank you in advance for any help.

[ukvalueinvestment]

You mean the maximum amount in the account is 500,000, or approx USD 85k?  Here in the Uk we are allowed to save $26k per year, tax free with no charges.

[John Hjorth]

ukvalueinvestment,

 

Yes, I understand that as such: Total deposits can be max. tDKK 500 over time, however the size of the account can grow above tDKK 500. However, I'm not sure of that - anything is possible, when the talk is about the Danish Parlament.

 

Primary source so far : The government : The gorvernment will introduce a Stock Savings Account. Video unfortunately only in Danish, and I'm not sure the fact sheet translates to English while using translate feature in Chrome [picture/graphic?]

 

If it's a graphic, I'll mention here it translates to "Ceiling of tDKK 500." [bullet #5].

[dontdodebt]

The answer is no, there is no limit what so ever concerning amount of deposits to ISK here in Sweden.

 

In 2017 the "schablonskatteränta" is 0.375% which means about 375 SEK tax on an ISK account worth in average 100k SEK during a full year (if we assume no deposits/withdrawals)

[John Hjorth]

Thank you, dontdodebt,

 

It's much appreciated.

 

- - - o 0 o - - -

 

I like your board handle, by the way. [ : - ) ]

 

Edit:

 

Now again, I get an urge to move - this time to Malmö... - she could grow her shopping in Copenhagen, on the other side of Øresund ... for the tax savings [if any].

 

wachtwoord, where are you, to wake me up?

[alwaysinvert]

No deposit limit.

 

The only limits that exist are on what exactly you can own in an ISK and how much of it. You can't own OTC traded stocks and in practice there are some restrictions on what countries you can own stock in. I don't know by heart the exact rules there and as always with these "edge" cases there is no absolutely clear policy. Brokers make different judgements on what they will allow on their platform. It is a bit odd as what is allowed and not is supposed to be decided by precedent in the courts according to the intents of the lawmakers, but there are no incentives whatsoever to take these relatively minor rules to court, so there will always be a large gray area.

 

There are also special tax considerations on foreign stock ownership related to the withholding tax that depends on how much personal debt you have and how large the dividends are as a share of your account, but I don't think I need to go into this in great detail here.

[John Hjorth]

Thank you, alwaysinvert,

 

Your post is much appreciated.

 

Attached is a cronicle from boersen.dk by professor Jesper Rangvid, Copenhagen Business School, from April 28 2017.

 

My concern is also, that the rules for this type of account here in Denmark will provide limits for capital allocation. [in tax deferred accounts, I can't go above 20 per cent position on any stock, when buying.]

 

Talk to me about being brain washed with EMT and a paternalistic and authoritarian attitude. Highly educated idiot, plain and simple.

Jesper_Rangvid_-_Kronik__I_Sverige_kan_man_investere_i_aktier_til_en_skat_på_038_pct_20170826.pdf

[NewbieD]

Congratulations John and Denmark. In general I would say this type of account is a godsend to small investors that are able to consistently beat the stock market.

0.4% tax or 1.2% tax doesn't matter too much. If you are able to generate 20%/year you would tax away 7% with the old type of account here in Sweden for a net of 13%. Now you get to keep 19,6%. I assume it's something similar for you.

 

On top of that you have the simplified declaration. Stock dividends that are OTC holdings still need to be declared when sold, but that's about it.

 

 

[John Hjorth]

Thank you, NewbieD,

 

Yes, it will be a material tax releif going forward, down to 1,25% of value, from 42% on gains and dividends, the first DKK 51,700 taxed with 27%. A lot of deferred taxes get wiped out going forward.

 

We just have to see the details for the roll out of the new system/account.

 

I made some calculations in the weekend on it, if you asume a 20 year investment horizon of tDKK 500, [buy and hold] the break even for the new system is at 4.115% return pre tax per year. Higher return than that, the new type of account will be "cheapest"  - generating the highest return after tax.

 

Edit:

 

Corrected decimal separator [4,115% -> 4.115%]

[Parsad]

You mean the maximum amount in the account is 500,000, or approx USD 85k?  Here in the Uk we are allowed to save $26k per year, tax free with no charges.

 

We have two in Canada...RRSP (up to 18% of your gross income to about $27K max each year) and TFSA ($5,500 a year).  You get a tax credit with the RRSP, but income is taxed when you withdraw the funds.  With the TFSA, no tax credit, but no tax upon withdrawals.  Cheers!

[John Hjorth]

Naturally the proposal was subject to political negotiations, and it seems we have an outcome today this Sunday.

 

Boersen.dk: The Aktiesparekonto starts at DKK 50,000 and lands on DKK 200,000.

 

Well, it came up relatively early after the last post in this topic, that there was political resistance against a maximum of DKK 500,000 in one shot, so this is at least something.

 

Worse is, as I read things, there will be no tax releif on realized capital gains for stocks, nor on dividend tax, going forward, compared to the existing Danish tax regime.

 

Needless to say, that I'm disappointed. Still long way till I have conditions just a bit similar to my Swedish fellow board members. Basicly - in my view - the proposal failed.

[John Hjorth]

I found this article on Finans.dk: The Danes get a "discount version" of the Aktiesparekonto - with 17 percent tax.

 

I'm speechless - it's beoynd recognition, compared to the original proposal.