Tax report on family rental

For most, maintaining proper accounting records for the rental activity is necessary. Where the business taxation scheme (virksomhedseordningen) is applied – which as a principal rule is strongly recommended – there is a statutory obligation to prepare financial statements, and such accounts must be based on bookkeeping in compliance with the Danish Bookkeeping Act (Bogføringsloven) and the Executive Order on Minimum Requirements for Financial Reporting (Mindstekravsbekendtgørelsen).

Furthermore, when using the business taxation sceme, taxpayers are required to maintain specific tax accounts relating to contribution account (indskudskonto), intermediate account (mellemregningskonto), capital return basis (kapitalafkastgrundlag), capital return calculation (kapitalafkastberegning), and retained earnings (opsparet overskud), with surplus allocation conducted in accordance with the Danish Business Taxation Act (Virksomhedsskatteloven).

In most cases, these requirements can only be met with the assistance of an auditor or a tax-trained professional.  Professional assistance also ensures that the full benefits of the business taxation scheme are realized. The scheme is frequently highly advantageous in relation to leasing real property, including parent property purchase arrangements.

Our parental property purchase account package covers the complete process of bookkeeping, accounting, and reporting to the Danish Tax Agency (Skattestyrelsen).

The package includes:

1. Bookkeeping in a bookkeeping program compliant with the Danish Bookkeeping Act (cloud-based Microsoft Navision)
2. Tax accounts including income statement, balance sheet, and tax specifications under the business taxation scheme, covering: contribution account, intermediate account, opening and closing capital return basis, capital return calculation, retained earnings account, and surplus allocation in accordance with the Business Taxation Act
3. Reporting to the Danish Tax Agency via the annual tax return
4. If you have any tax or accounting-related questions throughout the year about your parent property purchase apartment, we will be happy to answer those

To prepare the parental property purchase account, we require the following:

• Purchase agreement, lease agreement, and loan account statement (for the purchase year only)
• Bank statements for operating account (preferably in Excel format)
• Bank statements for any loans
• Annual statements from mortgage institutions and, where applicable, holders of mortgage deeds
• Expense vouchers
• Access to your tax file and, where relevant, that of a co-owning spouse or partner (full access required)

On the basis of this material, we prepare the accounts and forward them for your approval, following which we undertake submission to the Danish Tax Agency.

The fee for the parent property purchase account package is DKK 4,400 incl. VAT (+ DKK 2,000 incl. VAT per additional property). The fee is invoiced upon engagement and is tax-deductible. Where you request preparation of accounts for an as-yet incomplete income year, invoicing takes place on 10 January of the following year (e.g., invoicing on 10 January 2019 for the preparation of 2018 accounts, which are completed in the first half of 2019).

For subsequent years, we will send an annual request for materials in January, together with the invoice. You are only obligated to continue with the service and pay the invoice if the requested material is submitted. Should we receive no material, we send a reminder in May. If still no material is received, you will be removed from our follow-up list and the invoice will be credited. This ensures a simple and transparent process for all parties.