We use cookies

Moalem Weitemeyer uses cookies, including cookies from third parties, needed to make the website work and to enhance the user experience. Cookies are also used to detect inexpediencies and to examine your interactions with our website. Read more about how we use cookies and take care of your data here

Necessary/functional

Statistical

Accept

16 January 2023

Depreciation Rate amended for Real Estate acquired after 1 January 2023

The depreciation rate has been amended from 4% to 3% for buildings etc. acquired after 1 January 2023

Just before Christmas last year, the Danish Parliament, Folketinget, passed a resolution amending the depreciation rate for buildings and installations purchased on 1 January 2023 and onwards from an annual 4% to 3%. The amendment means that the costs of the real estate investment must be written off over approx. 34 years instead of approx. 25 years.

The amendment of the annual depriciation rate also applies to extensions and renovations of buildings if the extension or the renovation is taken into use on 1 January 2023 and onwards.

As a result of the amendments, different depreciation rates may apply for the same building in the event that any extensions or renovations are made after 1 January 2023.

When considering the structure of real estate transactions in Denmark as either share or asset deals, it is relevant for the buyer to take the amendment of the annual depreciation rate into consideration.

If the transaction is structured as a share deal rather than an asset deal, the buyer can continue to write off 4% annually on existing buildings and installations in that no tax cession of the property is considered to happen under Danish tax law. Instead, the change of control happens in the property company who is the legal owner of the building.

The amendment to the depreciation rate has an impact only on the buyer’s liquidity as the amendment does not result in any increase in the total tax payable for the buyer (given that the company tax rate is not increased). Consequently, a higher tax is payable the first approx. 25 years, and a lower tax the following approx. nine years.

 

Moalem Weitemeyer is highly experienced in Real Estate M&A. If you have any questions or require further information regarding any of the above, please do not hesitate to contact us.

Jep Becher Jensen

Senior Associate

+45 30 37 96 25

Go to profile

The Latest

See all insights

1 December 2023

Happy Holidays!

30 November 2023

Dan Moalem: Thought Leader in M&A

18 November 2023

EU proposes Changes to Capital Markets: A Focus on SME Growth and Multiple-Vote Share Structures

10 November 2023

The Apple Case: Advocate General Pitruzzella suggests bringing Life to the Commission's EURObn 13 Clawback Claim against Apple

7 November 2023

The Gram Equipment Case: Private Equity Fund FSN Capital will not be compensated for Losses – Procuritas and former Management of Gram acquitted

27 October 2023

The Danish FSA on the new Process for Submission of Prospectuses, a new ESMA Statement on Requirements for Sustainability Information in Prospectuses, and Disclosure of Management Changes as Inside Information

12 October 2023

Introduction to the EU Foreign Subsidies Regulation

2 October 2023

Morten Krogsgaard joins as Partner and Board Member at Moalem Weitemeyer

14 August 2023

New Partners at Moalem Weitemeyer!

25 July 2023

High-end Car Manufacturer found to have engaged in Greenwashing