Mark-to-market taxation on real-estate property owned by companies


As part of the funding of a new early-retirement pension scheme (in Denmark also referred to as the "Arne pension scheme"), the Danish government together with the Danish People's Party, the Socialist People's Party and the Red-Green Alliance agreed on 10 October to introduce mark-to-market taxation of property gains as from 2023. Read more about the new agreement and its significance below.

Already when the Danish Government tabled their proposal, they announced that mark-to-market taxation of property gains would become part of the funding, and the procedure has now been clarified in the new agreement. 

According to the wording of the agreement, the mark-to-market taxation regime will apply to all companies covered by the Danish Corporation Tax Act, which will be taxed at the ordinary corporate tax rate of 22 %. Consequently, unincorporated enterprises will not be subject to the new taxation regime.

It also appears from the agreement that "the precise definition of the companies and properties affected by the agreement, the right to relief in case of a drop in value or a sale at a loss, and consequential changes to the mark-to-market taxation regime are to be finally determined in connection with the pre-legislative work."

However, properties used by a company mainly for the purpose of its own operations will be exempt from the mark-to-market taxation. This could for example be properties used by the company or a group company for administration, storage, production or farming. 

Furthermore, minor property portfolios will be exempt from the mark-to-market taxation. The threshold for minor property portfolios has been set at a market value of DKK 100 million calculated at group level.

We will continue to monitor developments and will be available if you need advice or have questions about the new agreement.