Tax cases, private loans
Private loans and the Danish Tax Agency
A loan agreement is not always enough. The documentation as a whole can be decisive when the Danish Tax Agency asks whether a loan really was a loan.
Have you received money from family or other private parties, and does the Danish Tax Agency consider the amount taxable income? The case is often about more than the loan agreement itself.
We assess the facts, the money flows and the documentation together, and help you choose the right way forward.
When a private loan is taxed
The Danish Tax Agency may question money transferred between family members or other private parties. If the agency does not consider a loan sufficiently documented, the amount may instead be treated as a gift or other taxable income.
This can matter a great deal if the loan financed a property purchase or another significant transaction. The case should be assessed on both the documents and the actual course of events surrounding the loan.
What does the Danish Tax Agency look at?
A loan agreement is relevant, but rarely stands alone. The agency typically considers whether there is a genuine repayment obligation, and whether the explanation is consistent with the other information in the case.
- A promissory note or other written loan agreement
- When the loan was established
- Money flows between lender and borrower
- The lender's financial ability to provide the loan
- Any instalments and the actual repayment
- The parties' explanations and the overall chronology
Documentation and evidence
In a private loan case we examine the facts closely. What matters is not only what a document says, but whether the documentation as a whole supports that there was a genuine loan.
We review loan documents, bank statements, communication, financial circumstances and information about repayment. On that basis we assess whether the case is best handled through comments on a proposed assessment, an appeal or further review.
What can the consequences be?
If the Danish Tax Agency treats a private loan as taxable income, it can lead to a significant tax increase. The specific outcome depends on the amount, the basis for the assessment and the documentation that can be presented.
A tax increase should not be assessed in isolation. Deadlines, interest, a possible appeal and the option of cost reimbursement may also be relevant.
What does a tax lawyer do?
HAY LAW reviews the case from the authority's first letter. We clarify what the Danish Tax Agency bases its assessment on, what information is missing and how the documentation should be presented.
Where necessary, we prepare objections or an appeal and assess whether the case should proceed to the Danish Tax Appeals Agency, the National Tax Tribunal or the courts.
When the loan must also be explained to the bank
A private loan can raise questions from both the Danish Tax Agency and the bank, particularly where the amount was paid in cash or transferred from abroad.
If the account is terminated, it helps considerably that the loan documentation and the flow of funds are already structured.
Private loan cases we have handled
- Full victory in a tax case. DKK 2,850,000 reassessment reduced to DKK 0
The matter was conducted by attorney Hussain Ali Alhaidary. Hussain Ali Alhaidary
- Full victory in a tax case. DKK 977,000 reassessment reduced to DKK 0
The matter was conducted by attorney Hussain Ali Alhaidary. Hussain Ali Alhaidary
- Full success on appeal, taxable income reduced by DKK 605,000
The matter was conducted by attorney Hussain Ali Alhaidary. Hussain Ali Alhaidary
This page provides general information and is not a substitute for specific legal advice. Outcomes in previous cases do not guarantee the outcome of a new case.
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