Denmark’s Minister of Taxation introduced a bill L 123 to reduce inheritance and gift taxes for family-owned businesses and simplify business transfers on 22 January 2025. The key proposal is a reduction in the inheritance and gift tax from 15% to 10% for businesses passed on to close family members. This will apply only if the business meets tax succession criteria and the transferor has owned it for at least one year.
The bill also introduces a statutory right to a standardised valuation for calculating inheritance and gift tax during generational transfers of businesses. However, this valuation method won’t apply to newly established businesses, as it relies on historical financial data.
For real estate businesses, the bill allows active rental businesses to transfer with tax succession benefits, similar to other businesses. To qualify, the family must own more than 50% of the rental business and actively manage it for at least one year prior to transfer. Starting in 2027, siblings will be considered close family members for gift tax purposes.
These changes will be retroactively effective from 1 October 2024 for tax reductions and 1 January 2025 for real estate business transfers.
