The Danish government has now presented the long-awaited bill on improved conditions for ownership transfer in a family-owned business. Horten has read the bill and is generally in favor of the content and assesses that it can create value for a large number of our clients.
Improved conditions for family-owned property businesses - the money tank rule
The government has now introduced the long-awaited bill to improve the conditions for ownership transfer in a family-owned business. The bill is said to create the best conditions for family-owned businesses in over 25 years. We have read the bill and are generally positive about the content and believe that it can create value for many of our clients.
The key feature of the bill is that family-owned property businesses should be considered an active business rather than a passive business. This means that they can be transferred through tax succession, provided that the company being transferred does not have the character of a so-called money tank. If the bill is passed, tax succession of family-owned property businesses can be implemented if the following conditions are met:
- The family has an ownership share of more than 50 % of the rental business.
- The conclusion of rental agreements or agreements of financial importance has not been entrusted to an independent third party.
- The property has been owned for at least one year prior to the transfer and has been actively let throughout this period of ownership, or the property is part of an overall business with active letting of real estate that has been owned for at least one year.
In addition to opening tax succession for family-owned property businesses, the bill also contains the following improved measures:
- The estate and gift tax will be reduced to 10 % from the current 15 %. This change will take effect retroactively from 1 October 2024.
- Legal claims on the valuation. The intention is to create more certainty for family-owned businesses about which estate or gift tax will be payable in the event of a future ownership transfer. This change, like the change to the estate and gift tax, will take effect retroactively from 1 October 2024.
- As of 2027, siblings will have the status of "close family" in relation to the estate and gift tax.
In Real Estate, we follow the legislative process continuously.