Denmark's Tax Authority partially approved a family group's share exchange on 4 June 2026 but ruled that simplified valuation methods cannot justify automatic tax deferral without proper market assessments of key assets.
Denmark’s tax agency issued a binding ruling on 4 June 2026 addressing the tax treatment of a proposed share exchange by a family-owned business group. In Tax Council Binding Answer No. SKM2026.264.SR, the authority clarified when such restructuring can proceed without triggering tax consequences. Share exchanges of this kind allow companies to reorganise ownership stakes while deferring taxation, provided strict valuation requirements are met.
Valuation gaps block automatic tax deferral
The group intended to execute the exchange in 2026 using valuations derived from 2025 annual reports, building on preliminary calculations submitted for 2024 figures. The Tax Council rejected reliance on the schematic valuation method outlined in section 12a of the Estate Tax Act.
Three specific shortcomings emerged: the schematic approach failed to substantiate the market value of the group’s core operating subsidiary; property values recorded at historical cost minus accumulated depreciation did not demonstrate genuine current market worth; and a 33.3% stake in one subsidiary was valued using book value rather than fair market assessment.
Without resolving these gaps, the exchange risked creating unexpected tax liability for both the participating companies and the personal shareholders involved in the family group’s ownership structure.
Selective approval with updated assessments
The ruling delivered a mixed outcome. The Tax Council allowed partial use of the previously submitted principles, but only for group components where business conditions had not changed significantly between 2024 and the planned 2026 execution. Specifically, portions of the group deemed stable could apply the same valuation approach used in the 2024 assessment to the recalculated 2025 figures.
For remaining segments—particularly those involving the primary operating subsidiary and the disputed property holdings—the group must conduct fresh market assessments reflecting actual conditions at the time of the exchange.
This two-track approach limits the taxpayer’s ability to rely on simplified valuation methods while preserving some certainty for stable portions of the business structure, effectively requiring different valuations depending on asset type and stability.
