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Home page // Business succession: New, beneficial rules on the way
New bill that improves the conditions for generational succession of businesses, especially ...
February 18, 2025

Business succession: New beneficial rules on the way 

Are you one of the many business owners facing a generational change? Then there's good news: The Minister of Taxation has proposed a bill that will improve the conditions for generational succession of businesses, especially for family-owned businesses with rental properties. The bill is expected to be adopted at the end of April 2025.

What does the new bill entail?

The bill, which will come into effect in phases, starting in 2024 and lasting until 2027, contains a number of benefits for companies planning a generational change:

  1. Lower gift and estate tax (from October 1, 2024): The tax on succession of an active business will be reduced from 15% to 10%.
  2. Legal requirement for an established valuation model (from October 1, 2024): Owners can demand to use a schematic valuation model based on the last five financial years for greater predictability
  3. Rental properties included (from January 1, 2025): Family-owned businesses with rental properties can now be intergenerational as active rental is considered an operating asset
  4. Siblings get more favorable rules (from 1 January 2027): From 2027, siblings can also receive inheritances and gifts at the low gift/estate tax rate.

Here we go through the most important changes and what they mean in practice 

Lower gift and estate tax
The tax on business transfers will be lowered from 15% to 10%. The lower rate assumes that the business can be transferred with tax succession, where the recipient takes over the previous owner's tax liabilities - although succession is not a requirement. In order for the transfer to take place with succession, the company must not be a so-called "money tank" where 50% or more of the income or assets originate from passive capital investment.
 
Terms and conditions
  • At least 50% of company revenue and assets must come from active operations
  • This is calculated as an average of the last 3 financial years
  • The asset requirement must also be fulfilled at the time of transfer
  • Active business of renting out real estate is now considered to be active operation
  • Ownership of at least 1 year before the transfer
  • Active participation for at least 1 year
  • Ownership must be maintained for at least 3 years after the transfer.
Legal claim to a defined valuation model
Today, a company's value is set at the market value, but in the future, owners can demand to use a schematic valuation model based on the last five financial years. The model creates greater predictability and the Tax Agency can only make corrections within its limits. However, if the model gives a higher value than the market value, the owner can still choose the market value. There are exceptions for start-ups and companies with primarily intangible assets.
 
Family-owned real estate businesses can be passed on from generation to generation

Until now, property rental has been considered a passive investment, but now family-owned real estate businesses are classified as an active business if:

  • The family owns more than 50% of the company
  • The family makes important financial decisions, including setting the rent level in rental contracts, for example
  • The family has owned the property and been actively involved in renting it out for at least a year before the transfer.

Active rental business - what is your role?
It's important to know what is meant by "active rental business". It can affect your tax liability and your ability to transfer the business to the next generation.

You can use a property manager for practical tasks, but to run an 'active rental business' it's crucial that you make the key decisions yourself.

Avoid the pitfalls: 

  • The administrator can help, but you must decide the rent level and other key terms of the rental agreements yourself

  • If someone else negotiates the agreements for you and you simply sign, it may be seen as you not being "active" in the rental

  • To be considered an "active" landlord, you must have real influence over the rental business.

Real estate businesses that meet these conditions can be passed on with tax succession and the reduced gift and estate tax.

Siblings can transfer inheritance and gifts with lower tax
From 2027, siblings can give each other tax-free gifts within the applicable threshold (DKK 76,900 in 2025). Gifts above the threshold will be subject to a 15% gift tax, but transfers of businesses between siblings can be made at the lower rate of 10%. Until 2027, gifts between siblings are taxed as personal income.

What can we help you with?

At inforevision, we have extensive experience with succession and can help with the entire process. We can advise on:

  • Valuation of your business: We ensure a correct valuation according to the new rules so your business can be transferred with tax succession - provided it is not classified as a money tank
  • Tax advice: We help you navigate the complex tax rules and ensure you make the most of the new benefits
  • Planning and execution: We help you plan and execute the succession in an efficient and smooth way.

More information

Are you interested in learning more about how the new rules may affect you and your business? Then contact inforevision's tax department for a non-binding conversation about your succession. You can read more about us here.

Head of the tax department
Flemming Saabye
T 39 53 50 38
fsa@inforevision.dk

Jannik Petersen
Tax consultant
T 39 53 50 47
jpe@inforevision.dk

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