By Troels Rovsing Koch, Rovsing Attorneys, Copenhagen (Denmark)
Revision of the Danish gift and inheritance tax regulation
Entering into force on 1 January 2027, the Danish gift and inheritance tax thresholds will be as follows:
- Spouses: 0%
- Vertical: children, grandchildren, parents, grandparents: 15% (incl. stepchildren)
- Horizontal: siblings and their children (nephews, nieces): 15%
- Parents’ siblings and their children (uncles, cousins): 36.25%
- All others: gifts, income tax, inheritance: 36.25%
- Gift threshold 2025: DKK 76,900. (€10,300) for vertical family
- Inheritance threshold 2025: DKK 346,000 (€46,350)
Estate tax – the estate as a tax subject – fideicommissum
Estates in Denmark are legal entities. Their income is taxable if the assets exceed DKK 3 mm (€400,000). In some cases, a will contains clauses on successive beneficiaries (fideicommissum). In these cases, the assets are transferred automatically upon death. The first beneficiary does not have the power to testate the asset upon death and the asset is not a part of the estate after the first beneficiary.
Until now, such assets have been difficult to tax in Denmark, since they are not part of the estate after the first beneficiary and thus not covered by Danish estate tax law. There is no legal basis to tax the second beneficiary. The Danish tax authorities are testing this practice in court cases which will have a significant impact on Danish succession planning. Timeline unknown.
