Updated Guidelines for the valuation of foreign properties of the 2023 property value tax

The Danish Tax Authority has updated the guidelines for calculating property value tax for foreign properties in 2023. This includes the Swedish index for holiday homes, OECD index figures, a British index approved by the Valuation Authority in the UK, and the Danish Statistics price index for summer houses.

In an update to the property tax system, Denmark has introduced revised guidelines for the valuation of foreign properties owned by Danish residents. The new rules, which will be applied to the property value tax for the year 2023, incorporate updated indices for holiday homes in Sweden, OECD index figures, a British index approved by the Valuation Authority in the UK, and the Danish Statistics price index for summer houses.

In short:

  • The property value tax for foreign properties will be levied at the same rate as Danish properties, with special rules for determining the tax base for foreign properties.
  • For properties valued in even years, the valuation as of January 1, 2020, will be used for the 2023 tax. If revalued on March 1, 2021, this will be the basis instead.
  • Starting from the 2024 income year, a British index approved by the Valuation Authority will be used for properties located in the UK.

Key Changes in Valuation Approach

The Danish Tax Authority’s announcement includes a shift in the valuation approach for foreign properties. The updated guidelines eliminate the need for adjustments based on the distance percentage for the years 2001 and 2002, streamlining the process for property owners.

Inclusion of British Index for 2024

A notable addition is the approval of a British index by the Valuation Authority, which will be used for properties located in the UK starting from the income year 2024. This move aligns the valuation of UK properties with the Danish system, ensuring a consistent approach across borders.

Implications for Property Owners

Danish residents owning properties abroad will need to familiarize themselves with the new guidelines to ensure compliance with the property value tax requirements. The changes reflect Denmark’s efforts to modernize its property tax system and provide clarity for taxpayers with international real estate holdings.

For a comprehensive understanding of the new property tax valuation guidelines, property owners are advised to consult the legal guidance sections H.A.3.1.1 and H.A.13, which detail the valuation terms for residential properties and other real estate, as well as the transitional rule in the property valuation law § 87 a.

Danish employers should support their foreign employees

It is crucial for Danish employers to assist their foreign employees in understanding property value tax rules on foreign properties for several reasons. 

First, it ensures compliance with Danish tax regulations, preventing potential financial penalties and legal issues. Second, it enhances the employees’ financial planning, enabling them to make informed decisions regarding property investments. 

Providing this support gives employers a competitive advantage. It can attract and retain talented employees who feel valued and supported in their personal and professional lives. This leads to increased job satisfaction and loyalty, ultimately improving the company’s reputation and productivity.

Crossbord offers a solution where foreign employees receive assistance with their tax matters through their employer. This service ensures that all tax obligations to Danish tax authorities are correctly met, reducing stress and administrative burdens for both employees and employers.

For more details, you can visit Crossbord Foreign Employee Solution or connect with one of our consultants.

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