Tax on holiday rentals

Holiday homes covered by the Holiday Homes Act may not be rented for commercial purposes

A holiday home that is covered by the Holiday Homes Act may not be rented for business purposes. We can therefore categorize cottage rentals within the provisions for partial rentals. You can choose to be taxed according to a fixed base deduction or the accounting method. There is freedom of choice for choice taxation method.

Bottom deduction

When using the floor deduction, the size of the floor deduction depends on whether you rent out your cottage through an agency or manage the rental yourself. You can rent through an agency.

Size of the base deduction:

• Private rental - Rental income of the first 11,500 DKK per cottage in 2020 (11,700 DKK in 2021) is tax-free if you rent out privately.

• Rental by agency - Rental income of the first 41,800 DKK per cottage in 2020 (42,700 DKK in 2021) is tax-free if you rent out through an agency.

You automatically get the high deductible when the agency reports the figures to the Tax Agency. Therefore, you do not need to do anything.  

When the rental income from the cottage rental is greater than the bottom deduction, the tax base makes up 60 percent of the remaining portion. You can't get a deduction for the actual expenses when you use the bottom deduction.

The accounting method

The accounting method has the same principle as in the case of partial housing rental. Here you need to prepare a statement of your rental income and expenses when renting. No bottom deduction or deduction for deficit is given. There can be no change of principle to base deductions in later income years.

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Disclaimer

‍The above information is for guidance purposes only, and we accept no responsibility for decisions made based on this information without prior individual advice. We accept no responsibility for errors or omissions.

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