Board Members Can Deduct Damages

The principal question of the case

Two board members had incurred liability for damages in connection with the bankruptcy of a company.

The principal question was whether the board members could deduct the damages from other current and future income, or whether such deduction was limited to income earned as board members.

Background of the case

In 2020, the Danish National Tax Board confirmed in two binding rulings that the damages paid by the board members were deductible, as the damages were considered a normal operational risk associated with their directorships. However, it was stated that the deduction should be calculated according to a net principle. Therefore, the damages could only be deducted against income earned as board members. The Danish National Tax Board