Denmark to refund property tax interest to 500,000 homeowners

Denmark is set to refund interest and surcharges to around 500,000 homeowners who were charged due to delays in property valuations. Tax and Growth Minister Jakob Engel-Schmidt announced that legislation for a retroactive compensation scheme, effective from 2021, will be presented later this year. "It offends my sense of justice that taxpayers have to pay for delayed property valuations they do not know the extent of," Engel-Schmidt stated. The issue arose because final property valuations have been delayed for several years, leading homeowners to be taxed based on preliminary assessments. When final valuations are later issued, homeowners' annual assessments are recalculated retroactively. If a property is deemed more valuable than initially assessed, it results in a back tax, which incurs interest and surcharges under current rules. "It is completely unreasonable that we have a property valuation system that sometimes spits out incorrect valuations, so people pay too little tax without having had the opportunity to pay the correct amount," the minister added. Homeowners will not need to apply for compensation; the repayment will be automatic, expected in 2027. The ministry estimates a significant seven-figure sum will be allocated for the refunds. Henning Boye Hansen, chief consultant at BDO, called the upcoming repayment unusual, noting he cannot recall a similar instance of adjusting relatively small amounts for so many people at once in his 40 years of working with tax. He stressed that for homeowners, it is primarily a matter of legal certainty, as being charged interest on back taxes they could not avoid challenges trust in the tax system.

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It offends my sense of justice that taxpayers have to pay for delayed property valuations they do not know the extent of.