Denmark: Unmarried couples face gift tax risks on large transfers

Unmarried cohabiting couples in Denmark may face significant tax implications when transferring large sums of money between private accounts. A recent ruling by the National Tax Tribunal (Landsskatteretten) highlighted this risk after an unmarried couple was ordered to pay over 25,000 DKK in gift tax following a transfer of nearly 240,000 DKK.

Although the couple claimed the funds covered shared household expenses, holidays, and other common costs, the tribunal ruled that the documentation provided was insufficient to prove the transfers were not gifts. For couples living together for more than two years, an annual tax-free gift limit of 80,600 DKK applies, with a 15 percent tax rate on amounts exceeding this threshold.

Tax authorities (Skattestyrelsen) can review bank accounts and digital payment records, such as MobilePay, during audits. Experts suggest that cohabiting partners should maintain receipts and clear documentation for large transfers or consider joint accounts for shared expenses like rent and groceries to avoid unexpected tax liabilities.