Guide to Sustainable ETFs in Denmark: Automate Investments While Minimizing Taxes and Fees
ETFs investments are growing in popularity in Denmark and across Europe. In Denmark investors are increasingly seeking ETFs options that minimize fees and taxes.
In this blog post, we explore options of sustainable ETFs in Denmark, diving into the definitions of Article 6, Article 8, and Article 9 funds, understanding the SKAT positive list of ETFs, and looking into how Nordnet monthly savings plan (månedsopsparing) can be combined to automate investments while keeping taxes and fees to a minimum.
Table of Contents
Understanding Sustainable ETFs in Denmark
Exchange-Traded Funds (ETFs) have become an important i cornerstone for modern investors due to their diversification, low fees, and ease of access to various markets and indexes. When it comes to sustainable ETFs in Denmark, these funds integrate, to different extent, Environmental, Social, and Governance (ESG) factors into their investment process. Danish investors are increasingly looking for these funds because they not only offer exposure to profitable market segments but also align with ethical and sustainable values. The growing trend in sustainable investing is supported by both regulatory frameworks and investor demand for transparency in how funds are managed.
The Role of Article 6, Article 8, and Article 9 in Sustainable Investing
The European Union’s Sustainable Finance Disclosure Regulation (SFDR) has introduced a classification system for investment funds based on how they integrate sustainability. These classifications—Article 6, Article 8, and Article 9—provide clarity for investors looking for sustainable ETFs in Denmark.
Article 6 Funds
Article 6 funds are those that do not explicitly incorporate sustainability or ESG factors into their investment process. They meet the minimum requirements of the SFDR but are not marketed with any sustainable characteristics. For investors primarily concerned with long-term financial returns and not actively seeking sustainable investments, Article 6 funds might be sufficient. However, if your aim is to contribute to sustainable development while investing, you may want to explore funds that fall under the following categories, Articles 8 and 9.
Article 8 Funds
Often referred to as “light green” funds, Article 8 funds promote environmental or social characteristics but do not have sustainability as their primary investment objective. These funds might invest in companies that exhibit good ESG practices or contribute positively to societal goals, but they balance these characteristics with traditional financial criteria. For many European investors, Article 8 funds represent a middle ground: they offer sustainable exposure without completely sacrificing the breadth of investment opportunities.
Article 9 Funds
Article 9 funds, sometimes called “dark green” funds, are dedicated to achieving sustainable investment objectives. These funds are structured to make a positive impact by investing in projects or companies with clear sustainability goals, such as renewable energy or social impact initiatives. If your priority is to invest in companies that drive change and promote sustainability, Article 9 funds can be an excellent option. They ensure that sustainability is not just an add-on but a core aspect of the investment strategy.
Navigating the SKAT Positive List of ETFs
In Denmark, the tax authority (SKAT) maintains a positive list of ETFs that qualify for favorable tax treatment. The SKAT positive list of ETFs is an essential database for investors because it identifies funds that meet certain regulatory and compliance standards, ensuring that your investments are tax-efficient. Being on SKAT’s positive list typically means that the ETF has been scrutinized for transparency, cost efficiency, and adherence to Danish tax regulations.
ETFs in the SKAT positive list are qualified as stock based (aktiebaseret), falling in the stock-income tax (aktieinkomst) and subject to yearly taxes on unrealized gains (lagerprincippet) between 27% and 42%.
ETFs not on SKAT positive list are subject to capital income (kapitalindkomst) and are accounted together with your other incomes (e.g. salary). Stay away from those, since they start at 37% and go up to 42%.
For investors focusing on sustainable ETFs in Denmark, selecting funds from the SKAT positive list offers two significant benefits:
- Tax Efficiency: by investing in ETFs that are recognized by SKAT, you can potentially minimize capital gains taxes and other fees, thereby maximizing your net returns
- Regulatory Assurance: The positive list provides an additional layer of security, ensuring that the ETFs you choose adhere to both local and international standards
Before investing, it’s recommended to check SKAT’s official website to confirm that the sustainable ETF that you are considering is on the latest version of the positive list. This extra step helps to ensure that your investment strategy is sound..
Leveraging Nordnet Monthly Savings for Sustainable ETFs in Denmark
One of the most efficient ways to invest in sustainable ETFs in Denmark is through Nordnet’s monthly savings plans (månedsopsparing). Nordnet, a leading Nordic online broker, offers a convenient and user-friendly platform that allows investors to automate their contributions on a monthly basis. This strategy, known as dollar-cost averaging (DCA), helps to mitigate market volatility by spreading out your investments over time.
Note: other online brokers and banks, such as SAXO and Nordea, also offer a monthly savings plan. Here we focus on Nordnet as an example.
Advantages of Nordnet Monthly Savings
- Automation: With a Nordnet monthly savings plan, you can set up regular, automated investments into your chosen sustainable ETFs. This reduces the risk of trying to time the market and ensures consistent portfolio growth on a monthly basis
- Cost-Effectiveness: Regular investments help lower the average cost per share over time. Additionally, Nordnet’s competitive fee structure ensures that ETFs bought via the monthly savings plan are not subject to transaction costs
- Convenience: The platform’s user-friendly interface makes it easy to monitor your portfolio and adjust contributions as you go. This is a very interesting feature and allow investor to plan in advance for changes in their contribution.
Combining Nordnet monthly savings with ETFs that appear on SKAT’s positive list can create a robust investment strategy. This method not only promotes sustainability but also leverages automation to achieve long-term financial growth.
Combining Strategies for an Automated, Tax-Efficient Sustainable Portfolio
To build a portfolio that maximizes returns while minimizing taxes and fees, consider the following step-by-step approach:
1. Select your sustainable ETFs
Start by researching ETFs that focus on sustainability. Look for funds that are classified as either Article 8 or Article 9, depending on your investment goals. Article 8 funds provide a balance between traditional investments and ESG criteria, while Article 9 funds are ideal if you want your investments to have a clear, positive impact on the environment and society.
2. Make sure the ETF is listed at Nordnet’s Monthly Savings Plan
Not all of Nordnet’s sustainable ETFs are enabled at the Monthly Savings Plan. Use a filter on their platform when searching for those.
At time of writing, Nordnet had 173 ETFs under the Monthly Savings Plan classified as sustainable ETFs. However, the majority of those, (94) are classified under Article 6, while 75 are under Article 8 and only 4 under Article 9. This limits your options to 79 sustainable ETFs.
3. Confirm ETF eligibility on the SKAT Positive List
Once you have a shortlist of sustainable ETFs, cross-check them with the SKAT positive list. Ensuring that your ETFs qualify under this list means you will benefit from favorable tax treatments, reducing the drag of capital gains taxes and other fees on your investment returns.
SKAT positive list is a long list of more than 4,000 ETFs, including ETFs from well-known issuers such as iShares/Blackrock, JP Morgan, Xtrackers and with a wide range of scopes, regions and themes. Finding and filtering sustainable ETFs on that list which are part of Nordnet’s Monthly Savings Plan is not an easy task.
We have managed to make that an easy task for you. Below we present the 44 sustainable ETFs that are fit the following criteria: i) under Article 8 or Article 9, ii) under Nordnet’s Monthly Savings Plan iii) under SKAT positive list.
| ETF name | TER (%) | 12m performance (%) |
|---|---|---|
| Amundi MSCI Digital Economy and Metaverse ESG Screened UCITS ETF Acc | 0.45 | 38.6 |
| Amundi MSCI Disruptive Technology ESG Screened UCITS ETF – Acc | 0.45 | 29.0 |
| Amundi MSCI Future Mobility ESG Screened UCITS ETF – Acc | 0.45 | 25.2 |
| Amundi MSCI Millennials ESG Screened UCITS ETF – Acc | 0.45 | 25.1 |
| Amundi MSCI New Energy ESG Screened UCITS ETF Dist | 0.60 | 4.0 |
| iShares Ageing Population UCITS ETF USD (Acc) | 0.40 | 26.0 |
| iShares Automation & Robotics UCITS ETF USD (Acc) | 0.40 | 21.2 |
| iShares Digital Security UCITS ETF USD (Acc) | 0.40 | 30.9 |
| iShares Digitalisation UCITS ETF USD (Acc) | 0.40 | 39.3 |
| iShares Electric Vehicles and Driving Technology UCITS ETF USD (Acc) | 0.40 | 8.3 |
| iShares Global Clean Energy UCITS ETF USD (Dist) | 0.65 | -10.7 |
| iShares Global Water UCITS ETF USD (Dist) | 0.65 | 21.3 |
| iShares Healthcare Innovation UCITS ETF USD (Acc) | 0.40 | 16.8 |
| iShares MSCI USA Quality Dividend ESG UCITS ETF USD (Dist) | 0.35 | 28.1 |
| iShares MSCI World SRI UCITS ETF EUR (Acc) | 0.20 | 24.6 |
| JPM Europe Research Enhanced Index Equity (ESG) UCITS ETF – EUR (acc) | 0.25 | 11.4 |
| JPM Global Emerging Markets Research Enhanced Index Equity (ESG) UCITS ETF – USD (acc) | 0.41 | 15.0 |
| JPM Global Research Enhanced Index Equity (ESG) UCITS ETF – USD (acc) | 0.25 | 29.9 |
| JPM US Research Enhanced Index Equity (ESG) UCITS ETF – USD (acc) | 0.20 | 36.0 |
| Rize Cybersecurity and Data Privacy UCITS ETF – USD Acc | 0.45 | 27.4 |
| Rize Environmental Impact 100 UCITS ETF – USD Acc | 0.55 | 14.0 |
| Rize Sustainable Future of Food UCITS ETF – USD Acc | 0.45 | 10.3 |
| WisdomTree Artificial Intelligence UCITS ETF – USD Acc | 0.40 | 22.0 |
| WisdomTree Battery Solutions UCITS ETF – USD Acc | 0.40 | -5.7 |
| WisdomTree Cloud Computing UCITS ETF – USD Acc | 0.40 | 25.2 |
| WisdomTree Cybersecurity UCITS ETF – USD Acc | 0.45 | 29.4 |
| WisdomTree Emerging Markets SmallCap Dividend UCITS ETF | 0.54 | 8.0 |
| WisdomTree Eurozone Quality Dividend Growth UCITS – EUR Acc | 0.29 | 0.9 |
| WisdomTree Global Quality Dividend Growth UCITS ETF – USD Acc | 0.38 | 20.7 |
| WisdomTree US Quality Dividend Growth UCITS ETF – USD Acc | 0.33 | 31.6 |
| Xtrackers Artificial Intelligence & Big Data UCITS ETF 1C | 0.35 | 40.4 |
| Xtrackers Future Mobility UCITS ETF 1C | 0.35 | 22.6 |
| Xtrackers Harvest MSCI China Tech 100 UCITS ETF 1C | 0.44 | 13.6 |
| Xtrackers MSCI AC World ESG Screened UCITS ETF 1C | 0.25 | 29.0 |
| Xtrackers MSCI Emerging Markets ESG UCITS ETF 1C | 0.25 | 17.0 |
| Xtrackers MSCI Europe ESG UCITS ETF 1C | 0.20 | 16.9 |
| Xtrackers MSCI Fintech Innovation UCITS ETF 1C | 0.30 | 48.2 |
| Xtrackers MSCI Genomic Healthcare Innovation UCITS ETF 1C | 0.30 | 12.7 |
| Xtrackers MSCI Innovation UCITS ETF 1C | 0.30 | 34.2 |
| Xtrackers MSCI Japan ESG UCITS ETF 1C | 0.20 | 19.6 |
| Xtrackers MSCI Next Generation Internet Innovation UCITS ETF 1C | 0.30 | 43.9 |
| Xtrackers MSCI USA ESG UCITS ETF 1C | 0.15 | 37.8 |
| Xtrackers MSCI World ESG UCITS ETF 1C | 0.20 | 32.5 |
| Xtrackers Nordic Net Zero Pathway Paris Aligned UCITS ETF 1C | 0.15 | 15.6 |
At the table above we can highlight:
- 2 ETFs under Article 9: Rize Environmental Impact 100 and Rize Sustainable Future
- 3 Xtrackers ETFs with performed above 40% in the last 12 months: Xtracker MSCI Fintech Innovation, Xtracker MSCI Next Generation Internet Innovation and Xtracker Artificial Intelligence & Big Data
- The poor performance of iShares Global Clean Energy
4. Set Up a Nordnet Monthly Savings Plan
After selecting the appropriate sustainable ETFs, set up a monthly savings plan with Nordnet. Automation is key here: decide on a fixed amount to invest each month, and let the system do the work. This strategy will help you accumulate shares over time, taking advantage of market fluctuations through dollar-cost averaging (DCA).
5. Monitor and Rebalance Your Portfolio
Even though automation simplifies the process, it’s essential to review your portfolio from time to time. Monitor the performance of your sustainable ETFs and ensure they continue to meet your financial and ethical goals. Rebalancing your portfolio from time to time can help maintain the desired asset allocation and optimize returns.
5. Minimize Fees and Taxes
By choosing a sustainable ETFs listed on the SKAT positive list and automating your investments through Nordnet’s monthly savings plan, you can effectively reduce both fees and taxes. This integrated strategy allows you to focus on sustainable growth, knowing that your investment vehicle is optimized for long-term efficiency.
The Future of Sustainable ETFs in Denmark and Europe
Regulatory developments, such as the SFDR, continue to shape the market, encouraging transparency and accountability. Currently potential changes to sustainable investments under discussion and the classification of sustainable ETFs might change.
In the meantime, the approach presented in this post works really well for investors looking to minimize taxes and fees when investing in sustainable ETFs in Denmark.
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