Inheritance tax in Denmark: rates and planning

When someone dies and leaves wealth behind, the heirs must pay a duty to the state. In Denmark it is called estate duty (boafgift), in everyday speech inheritance tax. For many families the inheritance tax is a significant amount, and with a little planning it is possible to lawfully reduce what ends up with the tax authorities.

This article gives you an overview of the applicable rates for inheritance tax in 2026, who pays what, and which methods you can lawfully use to optimise the distribution of the estate.

What is estate duty (inheritance tax)?

Estate duty is the duty that heirs pay to the state on inheritance from a deceased person. The duty is calculated on the part of the inheritance that exceeds a basic allowance, and the rate depends on who the heir is.

Important: It is the heirs (not the deceased's estate) who pay the estate duty. The duty is calculated and paid during the administration of the estate.

Rates and basic allowance 2026

Basic allowance

Each estate has a total basic allowance of DKK 392,300 (2026 rate, regulated annually). The allowance is distributed proportionally among the heirs. If you inherit below the allowance, no duty is paid.

Rates

Heir	Estate duty	Additional estate duty
Spouse	0%	n/a
Children, stepchildren, grandchildren	15%	n/a
Parents	15%	n/a
Siblings, siblings' children, grandparents	15%	25%
Other heirs (friends, unmarried cohabitants, etc.)	15%	25%

Note: Unmarried cohabitants are treated as "other heirs" and pay 15% + 25% = up to 36.25% in total duty, unless special conditions on cohabitation are met (see below).

Spouses' inheritance: 0% duty

A spouse pays no estate duty on inheritance from their spouse. This is one of the strongest arguments for marriage from an inheritance perspective.

Relationship with the additional estate duty

The additional estate duty of 25% is calculated on the basis after deduction of the ordinary 15% estate duty.

Example: A fictional acquaintance inherits DKK 500,000 (above the allowance):

• Estate duty (15%): DKK 75,000
• Additional estate duty (25% of DKK 425,000): DKK 106,250
• Total duty: DKK 181,250 = approx. 36% of the inheritance

Unmarried cohabitants and estate duty

Unmarried cohabitants are treated as "other heirs" as a starting point, but there is an exception for registered cohabitants:

If you have lived together with the same person for at least 2 years or have had a joint child, and it appears from the will, you are entitled to the lower estate-duty rate, that is, only 15% (without additional estate duty).

To secure this lower rate, it must appear clearly from the will that the cohabitant is provided for. LegalDock's will template guides you through the necessary wording.

What is the inheritance tax on businesses?

Generational succession of businesses is particularly complex. There are rules on succession, the ability to transfer a business to heirs so that tax and duty are deferred until the heir sells the business.

Succession involves:

• The heir takes over the business at the deceased's tax acquisition value (not the market value)
• The heir pays inheritance tax on the business's market value
• But the latent tax (that the deceased would have paid on a sale) is transferred to the heir

Succession can markedly reduce the immediate inheritance-tax burden, but requires precise planning and typically professional assistance.

Strategies for lawful inheritance-tax planning

1. Give gifts while you live

Gifts to family members are in certain cases duty-free. Gifts to children, stepchildren and grandchildren are duty-free up to an amount (2026: DKK 80,600/year per giver). Gifts to children-in-law are duty-free up to DKK 28,200 (2026).

Gifts you give while you are alive are not part of the estate statement itself, but are dealt with under the gift rules (gift duty). Only gifts given on the deathbed can be drawn into the estate. Gifts are therefore an effective tool for reducing the taxable wealth.

2. Life insurance with a beneficiary declaration

Life insurance sums paid to a named beneficiary fall outside the estate itself, but they are as a rule included in the estate-duty base (the Estate Duty Act § 1). Exempt are amounts that pass to the spouse (duty-free). A basic allowance is not normally calculated on insurance payments.

3. Make a will that uses lower duty rates

By prioritising heirs with lower rates (spouse and children over more distant relatives and friends) you can reduce the overall duty burden. A will gives you the freedom to control this.

4. Pension savings

Pensions with ongoing payments (for example a rate pension) paid to a beneficiary are exempt from estate duty, but are in return income-taxable for the recipient. Capital pensions and capital insurance pay a duty of 40% under the Pension Taxation Act, after which the remaining amount is included in the estate-duty base. Payments to the spouse are duty-free.

Note: The rules depend on the type of pension and on who the beneficiary is, so seek specific advice.

5. Generational succession of the business in good time

Transferring a business to heirs while you live, for example as a gift with tax succession, can markedly reduce the inheritance tax. Plan this in good time with an accountant and a lawyer.

The process: what happens on a death?

1. Notification to the probate court within 60 days of death
2. Choice of form of administration, private administration (the heirs handle it themselves) or the probate court's estate administrator
3. Statement of the estate, assets, liabilities and calculation of the duty base
4. Submission of the opening balance and estate statement to the probate court and the tax authorities
5. Payment of estate duty before distribution to the heirs
6. Final tax is calculated and paid by the estate

Private administration is cheapest, but requires that the heirs agree and have the capacity for the task.

Practical example of a calculation

A fictional person leaves an estate of net DKK 1,200,000 to three heirs:

• Spouse Fictional (inherits DKK 600,000)
• Child 1 Fictional (inherits DKK 300,000)
• Child 2 Fictional (inherits DKK 300,000)

Basic allowance: DKK 392,300 (2026) is distributed proportionally among the heirs.

• Spouse: 0% duty, pays DKK 0
• Each child pays 15% estate duty on their inheritance after deduction of their proportionate share of the basic allowance

Because the spouse is duty-free, and a large part of the children's inheritance is covered by the basic allowance, the total estate duty is modest in relation to the size of the estate.

Note: The calculation is simplified. The precise figures depend on the exact distribution of the basic allowance and the applicable rates.

Use LegalDock's will template

A well-drafted will is the key to effective inheritance planning. It gives you control over who inherits, in what shares, and thereby what estate duty is paid.

Frequently asked questions

When is the estate duty paid?

The estate duty is paid before the estate is distributed to the heirs. It is typically collected via the estate statement submitted to the probate court.

Can you avoid inheritance tax?

Lawful inheritance-tax optimisation is possible, gifts during your lifetime, life insurance, pension and a smart will are the most important tools. Tax evasion (hiding inheritance), by contrast, is a criminal offence.

What happens if I inherit a property?

The property is valued at market value and included in the estate. The estate duty is calculated on your share. If you cannot pay the duty in cash, it can in certain cases be financed via a loan on the property.

Is duty paid on inheritance from abroad?

A complex situation, it depends on whether Denmark has a double-taxation agreement with the country in question, and whether the deceased was a Danish citizen/resident in Denmark. Seek professional advice.

Are gifts to charities duty-free?

Yes. Inheritance to approved charitable associations (for example the Danish Cancer Society, the Red Cross) is duty-free. It can also reduce the estate's duty base.

Conclusion

Inheritance tax is a reality for most heirs, but it need not come as a surprise. With well-considered inheritance planning, a will that uses allowances and low rates, gifts during your lifetime and smart use of pension and insurance, you can markedly reduce the overall duty burden and ensure that as much as possible ends up with your loved ones.

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The content of this article is for guidance only and does not constitute legal or tax advice. The rates for estate duty and the basic allowance are regulated annually, always check the current rates with the tax authorities (skat.dk). Consult a tax adviser for advice on your specific situation.