Expertise
Property abroad
For anyone fully tax liable in Denmark who owns, or is thinking of buying, a home abroad. We cover the Danish rules throughout ownership and the points where the interaction with the other country most often causes problems.
A foreign property can create reporting and tax obligations in both the country where it is located and Denmark.
We advise before purchase, throughout ownership and at sale, coordinating the reporting and evidence required for Danish relief.
How we can help
- Tax review before purchase
- Annual Danish reporting
- Assessment of the private-home exemption
- Capital gains and credit relief on sale
- Correction of previous returns
What must you report in Denmark when you buy a home abroad?
Skattestyrelsen (the Danish Tax Agency) receives no automatic information about your home abroad. You must report the purchase, the calculated market value, property tax paid abroad, the property's value, interest expenses and any rental income yourself. This is done in your preliminary and annual assessments in TastSelv, the online self-service system.
The value is based on the purchase price converted into Danish kroner and adjusted by an approved price index. If other documentation gives a more accurate value, it can be used instead. Foreign public valuations generally cannot be used, because the Danish Tax Agency has not approved them as comparable to a Danish valuation.
How do you avoid double taxation while you own the home?
Property taxes in the country where the home is located, such as taxe foncière, IBI or fastighetsavgift, can reduce your Danish property value tax. The reduction is capped at the Danish tax, and transfer and registration duties do not count. If you let the home, the rental income is normally taxed in both countries, and Denmark gives relief for the foreign tax.
If you financed the purchase with a loan in euros or another foreign currency, exchange gains and losses on the loan must be included in Denmark. This only applies when the year's total net gain or loss exceeds DKK 2,000, but then the full amount is taxed or deducted.
Is the gain tax-free when you sell your home abroad?
The Danish main residence and holiday home exemptions can make a gain tax-free in Denmark. Among other things, the property must have served as a home or holiday home for you or your household, and the plot must be under 1,400 m² or not capable of subdivision. If you have let the property extensively, the exemption may not apply.
The country where the home is located can tax the gain under its own rules, regardless of whether it is tax-free in Denmark. If the gain is also taxable in Denmark, relief is given for the foreign tax. Keep the purchase contract, evidence of improvements and the foreign tax assessment.
What if earlier years were reported incorrectly?
Many owners only discover on sale that the home was never reported correctly in Denmark. Property value tax can generally be reopened until 1 May in the fourth year after the income year, whether you paid too little or too much.
If you have not reported the home, it is usually better to put things right yourself before the Danish Tax Agency raises the matter. Remember the interest and foreign property tax that can give deductions and reductions.
Frequently asked questions
Do I pay Danish tax on my holiday home abroad?
If you are fully tax liable in Denmark, you pay Danish property value tax on homes and holiday homes abroad that are available to you. You can get a reduction for property tax paid in the country where the home is located. Land tax, on the other hand, only applies to Danish properties.
How do I find the value of my home abroad?
The value is normally based on the purchase price, converted into kroner and adjusted by a price index approved by the Danish Tax Agency. The agency provides a calculator for this purpose. Extensions and conversions must be added.
Can I deduct interest on a loan from a foreign bank?
Yes, interest on loans for the purchase is generally deductible in Denmark. You must report it yourself, because a foreign bank does not report to the Danish Tax Agency. If the loan is in a foreign currency, exchange gains and losses must also be calculated.
Do I pay tax in Denmark when I sell my home abroad?
It depends on whether the main residence or holiday home exemption applies. If it does, the gain is tax-free in Denmark, but the other country may still tax it. If the gain is taxable in both countries, Denmark gives relief for the foreign tax.
What should I do if I have never reported my home abroad?
Have the property value tax calculated for the years that can still be reopened, and report the home going forward. The ordinary deadline for reopening is 1 May in the fourth year after the income year. Remember interest, rental income and property tax paid abroad as well.
What does this mean for you?
This page is general. Your own situation may be different, so talk to us before you act on it.