Focus on foreign property taxation!
The Danish tax authorities have been focused on foreign property owned by indiviudals, who are taxable (resident) in Denmark.
As a result 6.000 individuals are currently being notified about missing information in their Danish taxes.
If you have foreign property you are likely being notified, if you have not informed the Danish tax authorities already.
Countries in focus
The authorities have initially focused their efforts on specific countries, but we expect that they will provide a complete list of countries in due time. Currently, these countries are in scope:
- Sweden
- Italy
- France
- Spain
- Remaining EU to follow soon
We will be monitoring the development and notifications from the authorities.
Example of taxation
Danish property (reference)
The property value tax is based on the lowest amount of:
- The property value per January 1 2001 with an addition of 5 per cent.
- The property value per January 1 2002.
- The property value minus a precautionary principle of 20%
The property value is assessed by the Danish Evaluation Agency (“Vurderingsstyrelsen”)
Property value tax is calculated as a starting point with 9.2‰ of the current year’s property value. For owner-occupied homes valued at more than DKK 3,040,000, an additional 20.8‰ in property value tax is calculated on the part of the property value that exceeds DKK 3,040,000.
There are no credits for any taxes in the calculation.
Foreign property
The property value tax is based on the lowest amount of:
- The property value per January 1 2001 with an addition of 5 per cent.
- The property value per January 1 2002.
- The property value in the income year (estimated value)
The property value is assessed based on the purchase value of the property re-calculated or assessed to a property value in DKK.
Property value tax is calculated as a starting point with 9.2‰ of the current year’s property value. For owner-occupied homes valued at more than DKK 3,040,000, an additional 20.8‰ in property value tax is calculated on the part of the property value that exceeds DKK 3,040,000.
Often, taxes levied by the tax authorities in the country where the property is placed can be offset against Danish property taxes.
FAQ
We have collected some of the most common questions that arises in regards to foreign property.
Property value tax is calculated as a starting point with 9.2‰ of the current year’s property value. For owner-occupied properties valued at more than DKK 3,040,000, an additional 20.8‰ in property value tax is calculated on the part of the property value that exceeds DKK 3,040,000.
Ordinarily, the Danish tax authorities can re-assess tax statements for the previous three (3) income years. As such, tax assessments for 2019 can be reassessed ordinarily until May 1 2023.
In case of fraudulent assessments, the Danish tax authorities are able to re-assess tax statements for the previous 10 years.
If a tax assessment is re-assessed, resulting in a residual tax payment, the payment will be subject to interest and surcharge based on rates for the specific income year.
Properties which can serve for occupation are in scope. This covers properties such as summer houses, occupational dwellings, apartments, etc.
In case of a joint ownership, the property taxes are also divided between the owners of the property.
The rules of property taxes only apply to properties, which are not sublet. In case a property is sublet, however, the rental income is likely subject to Danish taxation as well.
If you have paid property taxes abroad, in many cases you can get a credit in your Danish property value tax for your foreign property.
However, you cannot get credit for land registration fees and other taxes or charges in connection with the transfer and mortgage of the property.
Here are some examples of property taxes you can deduct:
- Sweden: Property tax (of the part that the owner himself uses for housing)
- Spain: El Impuesto sobre los Bienes Inmuebles (IBI) (of the part the owner himself uses for housing)
- France: Taxe foncière sur les propriétés bâties and Taxe d´habitation (of the part the owner himself uses for housing)
Yes. Registration and calculation of property taxes are done in the online tax brief (“Skattemappen”) and can be assessed by all tax payers themselves.
The property must be registered with the Danish tax authorities as part of your tax return submission
Individuals who are fully liable to pay taxes to Denmark are taxable of their worldwide income.
Examples of types of income could be:
- Rental income
- Shares/dividend
- Employment income from a non-Danish employer
- Pensions or similar from a non-Danish payroll source
- Interests or royalties
- Capital gains from various investment instruments
Meet our Experts
Magnus heads United Tax Network in Denmark and has assisted some of biggest companies in the world for close to 15 years. He holds a double degree in law and business law with specialty in tax as well as an executive MBA in leadership.
Jacob is in charge of delivery and oversees quality and compliance for United Tax Network’s clients. He holds a degree in business law with specialty in taxation. He teaches international taxation at Aalborg University and has total of 12 years of experience.
André is Assistant Manager, who handles projects as main contact and lead subject matter expert. He specializes in complex international tax issues and related subjects. Despite his short term with United Tax Network he has secured himself as a trusted advisor.
If you require someone to evaluate your case, please get in touch through the form below!
