Inheritance tax and inheritance law in Denmark
Taxation Researcher | July 28, 2021
Denmark levies two taxes on inheritance: (1) estate duty and (2) inheritance tax.
In computing the taxable value of the estate, all liabilities of the deceased are deducted from the estate. The surviving spouse´s inheritance is not liable for any tax and such transfers are deducted from the estate. A basic allowance is also deductible and this allowance is regulated annually. The tax-exempt value of the estate is DKK282,600 (€37,984) for 2017, and DKK289,000 (€38,844) for 2018.
Estate duty is levied at a flat rate of 15% on the net value of the estate. The spouse of the deceased is not liable to this tax.
Inheritance tax is an additional tax on the inheritance of people other than certain close relatives of the deceased. It is levied at a flat rate of 25% on the computed taxable inheritance less the estate duty liability. The spouse and certain close relatives (children/ stepchildren, and their descendants, spouses of children/ stepchildren, parents) are not subject to inheritance tax.
With the additional inheritance tax of 25% to be paid, the total tax on the estate will amount to 36.25%.
Gift tax is levied at a flat rate of 15%. Gift tax is levied on the gift value exceeding the threshold amount, which varies depending on the relationship between the donor and the beneficiary.
Gifts between spouses are generally tax-free.
The tax-exempt amount for gifts to children and close relatives is DKK68,700 (€9,234) for 2021, and DKK69,500 (€9,341) for 2022.
Gifts to stepparents and grandparents are subject to additional tax of 25% if it exceeds DKK60,700 (€8,126) for 2015. The resulting total effective tax will then be 36.25%.
Gifts between siblings and unrelated parties are considered as income for the recipient and will be subject to income tax.