Expertise
Employee shares and warrants
For employees receiving, and companies granting, shares, options, RSUs or warrants as part of pay. We cover the three sets of rules and what decides which one applies.
The tax treatment of share-based pay depends on the agreement, the applicable scheme and the timing.
We advise employers designing schemes and employees receiving awards, including exercise, sale and moves during the vesting period.
How we can help
- Choice of tax regime
- Review of award agreements
- Tax on exercise and sale
- Allocation between countries during vesting
- Exit tax and deferral
What is the difference between sections 7 P, 28 and 16?
Income under sections 28 and 16 is B-income, so no tax is withheld automatically. You must make voluntary payments or update your preliminary income assessment to avoid a tax bill at year end.
- Section 7 P of ligningsloven (the Tax Assessment Act): there is no tax on grant or exercise. The gain is taxed as share income when the shares are sold.
- Section 28: purchase and subscription rights, meaning options and warrants, are taxed as salary when exercised. Any later increase in value is taxed as share income on sale.
- Section 16: shares and conditional shares, such as RSUs, are taxed as salary when you acquire an unconditional right to them.
What conditions apply under section 7 P?
You and your employer must have agreed that section 7 P applies to the shares, purchase rights or subscription rights granted. As a rule, the value may not exceed 10% of your annual salary, or 20% if the same type of employee shares is offered to at least 80% of the company's employees.
For agreements made after 1 July 2026, small and medium-sized companies can grant equity under section 7 P without the previous percentage cap. Instead, there is a base salary requirement for the employee and a set of conditions for the company, which must be met when the agreement is made.
If the value exceeds the limit, the excess is taxed as salary under the ordinary rules. The company gets no deduction for the part covered by section 7 P.
What should you watch out for as an employee?
Under section 7 P, your employer must report the grant. If your employer has not done so, you must report the acquisition to the Danish Tax Agency yourself by 1 July in the following year, or you may lose the right to deduct losses on listed shares.
If the shares are held in a foreign account, for example with a plan administrator in the United States, you must report dividends, gains and losses yourself. Gains and losses are calculated using the average cost method across your entire holding of the same share.
What happens if you move country while your equity vests?
Equity pay often vests over several years, and if you move during that period, two countries may claim the right to tax it. The split usually depends on where the work was performed during the vesting period and on the double tax treaty. Without coordination, you risk both countries taxing the full amount.
If you leave Denmark holding vested but unexercised options or warrants under section 28, their value at the time of departure can be taxed in Denmark. Shares you own may also be covered by exit tax. Plan exercise, sale and the move together.
Frequently asked questions
How are employee shares taxed under section 7 P?
You are only taxed when you sell the shares, and the gain is share income taxed at 27%, and 42% above the progression threshold. This requires an agreement with your employer that section 7 P applies and that the value stays within the limits. No labour market contribution is payable on share income.
When are warrants and options taxed in Denmark?
Without a section 7 P agreement, purchase and subscription rights are taxed as salary under section 28 when exercised. The taxable value is the difference between the share price at exercise and what you pay. Any later increase is taxed as share income when the shares are sold.
How are RSUs taxed in Denmark?
Conditional shares such as RSUs are generally taxed as salary under section 16 when you acquire an unconditional right to them, typically at vesting. The amount is B-income, so you must make sure the tax is paid during the year. If they are granted under section 7 P, taxation is deferred until sale.
What are the new rules for equity pay from 1 July 2026?
For agreements made after 1 July 2026, small and medium-sized companies can grant equity under section 7 P without the previous cap on how large a share of salary it may represent. Instead, there is a base salary requirement for the employee and a set of conditions for the company. For other companies, the 10% and 20% limits still apply.
What happens to my stock options if I leave Denmark?
Vested, unexercised options and warrants under section 28 can be taxed in Denmark based on their value at the time you leave. Which country can tax a later gain also depends on where the work during the vesting period was performed. Plan exercise and the move together.
What does this mean for you?
This page is general. Your own situation may be different, so talk to us before you act on it.