What are business loss deductions?

Aske Buemann

CEO & Co-founder

Deduction for business losses

The deduction for business losses is relevant for those who have started or owned shares in a company (not listed on a stock exchange). And there can be a lot of money to be made here. For example, a citizen was able to claim a deduction of DKK 1,750,000 for his losses.

Deductions cover losses you may experience if, for example, like many people, you have started an IVS or ApS, which you later had to close. Then there may be a deduction for this. We will guide you through how it works in this article.

In this article we will go through:

  • What deductions for business losses are
  • Other conditions to be aware of
  • Whether you can get deductions yourself

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What are business loss deductions?

There are basically two different scenarios for when you can claim the deduction. The first is if you have started a business by yourself or with others and then had to close it down later. For example, in the last couple of years there has been a wave of people starting their own business, partly because of the low cost of starting an IVS. But now that IVSs are no longer allowed, people have had to either close it down or convert to an ApS. For all those who have closed down the company, there is good news - it entitles you to a deduction.

The second scenario is if you bought into a company and later sold your shares at a lower price than you bought them for. In this case, you have incurred a loss on your shares and you can claim a tax deduction for this. It is important to note that this does not apply to listed companies, as such losses are typically reported automatically by the stock exchange.

The deduction itself is the money you have lost. In other words, if you start a company by investing DKK 40,000 and it goes bankrupt, this is roughly speaking your deduction. However, you must be very aware of the conditions that apply to the deduction as described below.

What else should you be aware of?

There are several key elements to be aware of with this deduction:

  • The loss must be final. For example, in the case of bankruptcy, the company must have been declared bankrupt and deregistered with the Danish Business Authority
  • You must be 'fully taxable' in Denmark. In other words: you must not have paid tax in any other country than Denmark during your ownership period
  • You must take into account any additional capital injections you may have made into the company
  • The shares/units must not have been traded on a regulated market such as a stock exchange during your ownership
  • You must have proof of the loss, i.e. of your purchases/sales and closure of the business

See if you can get a tax refund in just 15 minutes.

In TaxHelper, we help you find the deductions you're entitled to. You answer a few simple questions that take just 15 minutes to complete.

Then we report the deductions, and you get an extra DKK 2,704 back in tax. At the same time, you only pay if you get a tax saving.

Start here

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