Aarav lives in Denmark and has an apartment in his home country, India. He had lived in this apartment with his family prior to coming to Denmark for work and he is in doubt, whether he should register the property in Denmark and what tax consequences it will have for him.
Is it mandatory to register one’s property abroad when you live in Denmark?
SKAT is clear in this regard: You have to pay ejendomsværdiskat (property value tax) on your property abroad subtracted your tax payment abroad. If you own property in Denmark, you know that you normally have to pay both ejendomsværdiskat (property value tax) and ejendomsskat (property tax). With regards to the property abroad, you are only liable to pay the first mentioned tax – ejendomsværdiskat.
In order to pay the property value tax, you will need to register your property abroad in your profile on www.skat.dk under “Foreign property” (udenlandsk ejendom).
What amount do you need to pay in property value tax?
In order to calculate property value tax, you will need to use purchase price for the apartment indexed to:
- 2001 plus 5% of this price
- 2002 or
- The market price in the current year
Choose the lowest price of the three above and calculate property value tax as:
➡ 1% of the amount annually if the value of your property is less than 3,040,000 DKK.
➡ If your property is worth more than 3,040,000 DKK, then the property value tax will be 1% of 3,040,000 DKK plus 3% of the amount above 3,040,000 DKK.
If your property is valued at 200,000 EUR, i.e. 1,492,000 DKK, then you will pay annually 14,920 DKK minus the property tax you have paid abroad.
The exact rules in your case depend on the double taxation agreement between Denmark and the country, where you have your property.
DO YOU ALWAYS NEED TO PAY PROPERTY VALUE TAX?
If you rent out your property abroad, then your property value tax will be reduced (if you rent out part of the year) or removed (if you rent out for a period more than 12 months).
Instead, you will be liable to pay taxes in Denmark from your rental income. Typically, you will pay taxes in Denmark subtracted the taxes on rental income you already have paid abroad.
WHAT IF I DON’T REGISTER MY FOREIGN PROPERTY IN DENMARK?
There are two main drawbacks of not registering your foreign property in Denmark:
📌 Danish tax authority receives information about the deposits on your foreign bank account and if you e.g. are getting rental income on your bank account, you will need to explain where you got that money from;
📌 If you have lived in your foreign apartment/house, then the profit from the sale of it will be tax-free in Denmark – that is in case that you have registered your property. If you don’t do that, you can have troubles with transferring the money from the sale of the property to Denmark.
Links to support the material in this article:
Skat’s website about property value tax on your property abroad: https://skat.dk/skat.aspx?oid=2234792
Property value tax when you rent out: https://boligejer.dk/ejendomsvaerdiskat
Taxes on rental income from long-term rent: https://skat.dk/skat.aspx?oId=2234797