New opportunities for generational change – are you or your customers ready to take advantage of the generational change opportunities that have just been adopted?
On April 8, 2025, the Danish Parliament passed a law that significantly improves the opportunities for transferring businesses to the next generation, including rental companies. You can now start planning your generational change to take advantage of the new rules.
We have previously discussed the original consultation draft and the proposed bill in the following articles:
Overview of the new opportunities for generational change
In accordance with the original bill, the adopted amendment contains a number of significant improvements and new opportunities for generational change.
The main elements of the bill are:
1. Legal right to schematic valuation
In future, there will be a legal requirement to use a schematic valuation method to calculate the value of a business in connection with generational change within the immediate family circle. This makes it possible to ascertain the inheritance or gift tax that must be paid in connection with a generational change.
The valuation will be based on the guidelines we know today from the share and goodwill circulars, but with specific changes in relation to the goodwill calculation.
2. The inheritance and gift tax is reduced from 15% to 10%.
When transferring ownership of businesses within the immediate family circle, the inheritance and gift tax rate will in future be reduced to 10%. However, the lower gift tax rate is subject to a number of conditions being met. Among other things, it is a requirement that the conditions for tax succession are met.
In addition, it is important to note that the recipient of the business must maintain ownership of the business for a period of at least three years after the transfer.
Failure to comply with this will result in the tax being increased to 15%.
3. Siblings are included in the gift tax circle
Going forward, siblings will be included in the circle of close family members covered by the rules on gift tax instead of the rules on income tax. Siblings will therefore be able to give each other gifts below the tax-free threshold without having to pay gift tax or income tax on them. In addition, siblings will have to pay 15% gift tax on the amount exceeding the threshold. Similarly, siblings will only have to pay 15% inheritance tax in the event of inheritance.
Siblings will also be covered by the low inheritance and gift tax of 10% on the transfer of businesses, provided that the conditions for this are met.
4. Active rental companies can now be transferred with tax succession
Until now, it has not been possible to transfer rental businesses with tax succession. However, this has changed with the new law, which extends access to succession so that rental businesses, under certain conditions, have access to generational change with tax succession.
This is based on the assumption that it is an active rental business, which requires that a number of conditions are met.
A key condition in this regard is that the task of concluding agreements with significant economic implications for the operation of the rental business must not be predominantly entrusted to an independent natural or legal person who usually concludes the agreements or usually plays a decisive role in the conclusion of the agreements, e.g. a management company.
Do you have any questions about this article or generational change?
Write to us hereWhen will the new rules come into effect?
The new rules will generally come into force on the day after their publication in the Danish Law Gazette.
The reduced inheritance and gift tax on generational transfers and the legal right to schematic valuation will take effect for gifts made on or after October 1, 2024, and for distributions from estates relating to persons who have died on or after October 1, 2024.
The new rule that rental companies are treated the same as other businesses when it comes to succession options during generational change will apply to transfers starting January 1, 2025.
The addition of siblings to the gift tax circle will take effect on January 1, 2027.
Deadline for requesting reinstatement
As it is possible to apply the reduced inheritance and gift tax and the legal right to schematic valuation retroactively to October 1, 2024, it is now possible to request a reopening of the inheritance and gift tax calculation or valuation for gifts or inheritances that have already been given or distributed.
It is not a requirement that the reopening concerns both the estate or gift tax and the valuation. It is possible to request a reopening of the estate or gift tax calculation only.
Requests for reinstatement must be submitted by September 1, 2025, at the latest.
Write to us here and request reinstatementThe new rules significantly improve the framework conditions for generational change in Denmark.
In particular, the new opportunities for generational change in rental companies represent a historic breakthrough compared to previous legislation, and there may be significant tax savings to be made by implementing generational change under the new rules that have just been introduced.
If your rental business does not already meet the conditions for being covered by the new rules, there is considerable scope for adapting the business to be able to apply the rules.
However, the adjustment must be implemented over a number of years, and therefore planning is essential to achieve a favorable outcome.
At CLEMENS, we have extensive experience in planning, organizing, and implementing generational change, regardless of the type of business. We have the necessary specialist knowledge of the tax and corporate law issues involved, as well as family law aspects, and at the same time we make it a point of honor to familiarize ourselves with your and your company's specific needs. This ensures you a sustainable solution that is tailored to your individual wishes and the necessary future security for your company.
Have you already completed a generational change in the period since October 1, 2024?
We will assist you with advice on the possibility of resuming the gift tax calculation or valuation.
Do you have a question?
You are always welcome to contact our experts in generational change.
Write to us here
