Politicians push to reform tax rules for holiday homes

Danish politicians are moving to reform tax rules after a DR analysis found that in 28 postal districts, at least one in five detached houses are owned by residents of other municipalities, often used as holiday homes.

The current system means these owners pay property taxes locally but contribute income tax to their registered home municipality, leaving holiday destinations with reduced revenue for services like roads and home care, according to Kasper Friis Bavnbæk, a postdoc at the University of Southern Denmark’s Center for Rural Research.

The government’s coalition agreement includes plans for a new tax equalization reform to redistribute income tax revenue, ensuring holiday home owners contribute to the local economies where their properties are located. Social Democrats’ rural affairs spokesperson Bjørn Brandenburg said the goal is fairness, as many Danes spend significant time in areas where they do not pay income tax.

Danish People’s Party rural affairs spokesperson Julie Jacobsen supports the change, emphasizing that roads in rural Denmark still require maintenance regardless of where owners pay tax.

Researcher Bavnbæk warned that high demand for holiday homes in coastal areas drives up prices, making it harder for locals, particularly young families, to afford housing. While occupied homes prevent decay, he called the trend unsustainable in the long term.

DR’s analysis used public registries to track ownership, defining a house as non-local if none of its owners have a registered address in the municipality where the property is located.