Tax on Limited Partnership Investments

Over the past 15 years, SKAT has had a strong focus on investors in limited partnership investment projects. If you want to sell your limited partnership shares, or if your limited partnership wants to sell its assets, you should seek advice on the most tax-efficient way of proceeding.

We have seen a number of cases concerning the calculation of the basis for depreciation in which the main issue has been whether a finder's fee could be added to the basis for depreciation for a specific asset in a limited partnership, for example an investment property or a wind turbine. In several judgments, the Danish Supreme Court has ruled that it is not possible to add a finder's fee to the basis for depreciation.

Subsequently, we have seen a number of cases concerning the calculation of capital gain on the sale of either limited partnership shares or the assets of a limited partnership. In this context, we won a test case at the Western High Court in which the Western High Court ruled that the finder's fee could be partially deducted from the selling price in connection with calculation of the capital gain. This meant that some of the capital gain was tax-free for the investors.

In recent years, SKAT has focused on checking the tax deduction accounts of limited partners in connection with limited partnership investments. Limited partnership investors must keep a tax deduction account, and their tax deduction can never exceed their actual liability in the limited partnership project.

SKAT also focuses on the tax implications of cases in which limited partnership investors have been granted a remission of debt in connection with their withdrawal from a limited partnership project.

If you have any questions about the calculation of your tax deduction account, or if you are about to be granted a remission of debt in connection with your withdrawal from a limited partnership project, we can help you achieve the best possible tax position.