Do you live in Denmark and own a real estate in another Nordic country?
This applies to you who live in Denmark and are tax liable in Denmark, but who own real property in another Nordic country.
The information only concerns real estate in another Nordic country.
Real property in another Nordic country
Real property in another country is also taxable in Denmark. In Denmark, both the property value and income must be calculated in accordance with Danish rules, regardless of how the property is taxed abroad.
A property value must always be established for real property owned abroad. The tax assessment authorities may base their assessment on the sales value of the property in the country in which the property is situated. The tax assessment authorities (Skattestyrelsen) must therefore be informed about the type of property (second home, plot etc.), the country in which it is situated, when it was bought (date), the purchase price and the sales value.You can see what information must be disclosed on the form 04.053 EN.
The property value tax is calculated on the basis of the property value. The property value tax usually amounts to 0,1 per cent of the calculated property value. More informations at skat.dk.
If similar tax has been paid in another country, the amount of tax thus paid can be offset against the property value tax. The amount offset cannot exceed the finally calculated property value tax.
Any income from such real property must also be calculated in accordance with Danish rules, i.e. any rental income and operating expenses must be entered in the income tax return in the same way as for properties in Denmark.
If you have paid tax on such income in another country, the amount thus paid can be offset against the tax payable in Denmark (credit allowance). The tax amount deducted cannot exceed the proportional amount of the Danish tax which concerns the income abroad.
Proceeds from sale of rental property
Proceeds from the sale of real property in the Nordic countries are taxable in Denmark in accordance with the Danish tax rules. Losses incurred on the sale of real property in the Nordic countries are deductible if the proceeds would have been taxable.
If you are taxed on proceeds in Denmark, you can deduct any foreign tax paid on such proceeds from the tax payable in Denmark (credit allowance). The amount deducted cannot exceed the proportional amount of the Danish tax which concerns the income abroad.
If you have owned and used (lived in) the property so that you meet the conditions for tax-free sale proceeds, the proceeds are tax-free in Denmark. Consequently, you cannot deduct any tax which you have paid on the proceeds in the Nordic countries. Nor can you deduct any losses.