What taxes (if any) are payable by the owner of real estate on a recurring basis and can these be reduced or offset in any way?
Properties are subject to a semi-annual land taxation (Grundskyld) that is calculated as a permille of the land value in the most recent applicable land valuation from the Danish Property Assessment Agency. The Danish property tax system has been revised, and is currently undergoing change, so all property taxes for 2022 and onwards are preliminary, and any adjustment will be claimed backwards once the assessments are final. In 2024–2028, the municipalities set the land tax rate within a cap of 30 permille adopted by the Danish Parliament for each individual municipality. Land tax is deductible against taxable income from properties used for commercial activities.
Properties used for commercial activities (offices, shops, hotels, factories, workshops, or similar) may be subject to an additional tax – coverage tax (Dækningsafgift) – levied by the municipality. The tax is calculated on the public land valuation from the Danish Property Assessment Agency. The object of the additional coverage tax is to contribute to the expenditure for roads, streets, parking spaces, fire service etc, inflicted by commercial properties on the municipality. It is, thus, up to each municipality themselves to determine whether to levy the tax or not.
The coverage tax may as a general rule be levied at a rate of up to 10 permille on public land valuation. The coverage tax for 2026 is initially a preliminary coverage tax calculated on the basis of a preliminary 2025 valuation, as the final valuations are not yet available. The preliminary 2025 valuation is an indexation of the preliminary 2023 valuation. As the public valuations are expected to be higher, a cap on increases in the coverage tax has been adopted. The cap applies retroactively from and including 2022. The cap means that the coverage tax may increase by a maximum of 10% per year of the fully phased-in coverage tax.
Income from the ownership of real estate in Denmark is taxable income. For corporate owners such income is taxed at the corporate tax rate of 22%. For individuals the income is taxable as ordinary income, however, special rules apply to individuals carrying on business activities, who may select a preliminary taxation similar corporation tax, until the income is made available for private spending.