Accounting and tax reporting for a parent-owned property

For most taxpayers, proper accounting records must be kept for rental activities. . Where the business taxation scheme (virksomhedseordningen) is used—which, as a general rule, is strongly recommended—there is a statutory obligation to prepare financial statements based on bookkeeping that complies with the Danish Bookkeeping Act (Bogføringsloven) and the Executive Order on Minimum Requirements for Financial Reporting (Mindstekravsbekendtgørelsen).

Furthermore, when using the business taxation scheme, taxpayers are required to maintain specific tax accounts relating to the 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 realised. 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 the income statement, balance sheet, and tax specifications under the business taxation scheme. This covers: 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 during the year. Regarding your parents’ property purchase apartment, we are happy to assist.

To prepare the parental property purchase account, we will need the following:

• Purchase agreement, lease agreement, and loan account statement (for the year of purchase only)
• Bank statements for the 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)