What is GAK? A comprehensive guide to average cost basis in Danish taxation
How GAK works, when it applies, and the pitfalls investors need to know
An in-depth explanation of gennemsnitlig anskaffelseskurs (GAK) — the average cost basis method used in Danish taxation — how it is calculated, when it applies, and common mistakes.
What is GAK?
Average cost basis — known in Danish as gennemsnitlig anskaffelseskurs (GAK) — is a tax method used to determine the cost basis of securities when you own multiple units of the same security bought at different times and at different prices.
Instead of tracking exactly which shares were sold, Danish tax rules require that all purchases of the same security are pooled together into a single average price.
When you later sell part of your holding, the taxable gain is calculated using this average acquisition price.
Why does GAK exist?
The purpose of GAK is to make taxation simpler and more neutral.
Without an averaging rule, investors would choose which specific shares to sell first. Some countries use FIFO (first-in, first-out) for this. Denmark has instead chosen a model where all purchases are blended together.
This means:
- you cannot choose which shares are sold first
- all purchases contribute to a single shared cost basis
- partial sales do not change the average price
The basic idea
If you have bought the same security multiple times, the average price is calculated as:
When you sell:
Example: purchases at different prices
Assume the following purchases:
| Purchase | Quantity | Price |
|---|---|---|
| Purchase 1 | 10 | DKK 100 |
| Purchase 2 | 10 | DKK 200 |
Combined:
| Total quantity | 20 |
| Total acquisition cost | DKK 3,000 |
GAK is therefore:
If you sell 5 shares at DKK 220:
| Sale price | 220 |
| GAK | 150 |
Gain per share:
Total gain:
An important Danish rule: GAK is not per account
A key rule in Danish tax law is:
GAK is calculated per person and per security — not per account or bank.
If you own the same share in multiple custodian accounts, all purchases are included in the same GAK calculation.
Example
| Account | Purchase |
|---|---|
| Depot A | 10 shares |
| Depot B | 10 shares |
For tax purposes this is treated as:
| Total quantity | 20 |
| One shared GAK | Yes |
If you sell from Depot B, the shared GAK is still used.
Where is GAK used in Danish taxation?
GAK is primarily used with realisation-based taxation.
This typically applies to:
- listed shares held in taxable accounts
- investment funds taxed on a realisation basis
- certain bonds and other securities
When an investment is only taxed at the point of sale, GAK is necessary to calculate the correct gain.
Where is GAK not used?
There are several situations where GAK plays no role.
Mark-to-market taxation (lagerbeskatning)
Under mark-to-market taxation, gains are taxed each year regardless of whether you have sold or not.
Examples:
- Aktiesparekonto (Danish equity savings account)
- many ETFs
- pension accounts
Here tax is typically calculated as:
The acquisition price is therefore not as central here.
Pension
In pension accounts, returns are taxed under pension tax rules (PAL tax). GAK is generally not used here.
Speculation taxation
In some cases (e.g. certain cryptocurrency situations) other methods such as FIFO are applied.
What is included in the acquisition cost?
The acquisition cost is not just the purchase price itself.
It also includes:
- trading costs
- brokerage commissions
- fees directly related to the purchase
Example:
| Share price | DKK 1,000 |
| Commission | DKK 29 |
Acquisition cost:
Currency: GAK is calculated in Danish kroner
If you trade in a foreign currency, the acquisition cost must be converted to Danish kroner at the exchange rate on the trade date.
Example:
| Purchase | USD 100 |
| USD/DKK | 6 |
Acquisition cost:
If the exchange rate changes later, it does not affect the acquisition cost.
Partial sales do not change GAK
When you sell part of your holding, the GAK for the remaining shares does not change.
Example:
| 10 shares | GAK 100 |
Sale:
| 5 sold | DKK 200 |
GAK for the remaining 5 shares is still DKK 100.
Corporate actions: the hidden pitfalls
The greatest complexity in GAK arises from corporate actions.
These are events where a company changes its share structure.
Stock split
In a split, the number of shares increases without changing the total value.
Example:
| Before | After |
|---|---|
| 10 shares | 20 shares |
GAK is adjusted accordingly:
The total acquisition cost does not change.
Reverse split
The opposite of a split.
Example:
| Before | After |
|---|---|
| 10 shares | 5 shares |
GAK increases proportionally.
Spinoff
In a spinoff, investors receive shares in a new company.
A well-known example was when IBM spun off Kyndryl as an independent company in 2021.
The tax rules state:
The acquisition cost must be allocated between the two companies.
If the original acquisition cost was 100, it might be allocated as follows:
| Share | GAK |
|---|---|
| IBM | 80 |
| Kyndryl | 20 |
The total acquisition cost remains 100.
Mergers and share exchanges
In mergers, shares may be exchanged for shares in another company.
The acquisition cost carries over to the new shares.
Example:
| Before | After |
|---|---|
| 10 shares | 5 shares |
If the value is unchanged, the GAK will typically double.
Custody transfers
If you transfer securities between banks or custodian accounts, the acquisition cost does not change.
For tax purposes it is still the same investment.
Historical purchases before 2006
For older shares, special transitional rules from earlier tax reforms may apply.
In practice this can mean:
- special opening prices
- historical acquisition rules
These situations often require separate documentation.
Common mistakes in GAK calculations
The most frequent errors are:
- GAK calculated separately per account
- brokerage commissions ignored
- exchange rates applied incorrectly
- stock splits not handled correctly
- spinoffs result in new shares with an acquisition cost of zero
All of these mistakes can lead to an incorrect tax return.
Why GAK matters
GAK is a central mechanism in Danish investment taxation because it:
- ensures neutral treatment of purchases over time
- prevents strategic selection of which shares are sold
- makes calculations simpler than FIFO-based systems
At the same time, the rules mean that correct calculation requires a solid understanding of:
- corporate actions
- currency conversion
- Danish tax principles
Summary
GAK (average acquisition price):
- used to calculate gains when selling realisation-taxed securities
- calculated as total acquisition cost divided by total quantity
- applies per person and per security
- affected by purchases, corporate actions, and exchange rates
- not used under mark-to-market taxation or pension taxation
For investors, this means that a correct GAK is essential for calculating the right tax — especially if you trade the same security many times over the years.