Tax Models for Generational Transfers and Sales: An Overview of the Key Options

Who takes over your company — family, employees or an external buyer — has a major impact on which tax models are relevant when selling a business in Denmark. Here's an overview of the key ones, so you know your options before working with an advisor.

Tax succession

With tax succession, the new owner takes over your tax position instead of full taxation occurring at the transfer itself. In practice, this means the tax that would otherwise be triggered for you as seller is deferred until the new owner themselves sells the business on at some point. This model is used particularly for transfers to close family and, in some cases, employees, and can be decisive for whether a younger generation or an employee group has the liquidity needed to take over at all.

Reduced duty on family transfers

If you transfer an active business to close family as a gift or inheritance, a reduced duty rate of 10% applies — compared to the standard rate of 15% that applies to gifts and inheritance generally. There's also an annual tax-free allowance, adjusted periodically; for 2026 it's DKK 80,600 for gifts to close family and DKK 392,300 for an estate. Only the amount exceeding the allowance is subject to duty. Want to know more about how a generational transfer is approached in practice? Read our full walkthrough of generational transfer of a business.

Tax-free business conversion

If you currently run a personally owned business, you can convert it to a company tax-free if a number of conditions are met. This means the conversion itself doesn't trigger taxation — the business's assets and tax values carry over into the new company, and you receive shares in return instead. This model is often used as a preparatory step before an actual generational transfer or sale, because a company typically offers far more flexibility in the subsequent process than a personally owned business.

Holding structure and tax-free share exchange

If you already own an operating company directly, you can, through a tax-free share exchange, contribute it to a newly established holding structure. This offers several advantages in a generational transfer or sale process: the operating activity can be isolated in its own company, profits can be distributed tax-free on an ongoing basis between the holding and operating company, and a capital reduction in the operating company can make a future takeover cheaper to finance for a buyer or the next generation. A holding structure typically needs to be established well in advance, though — ownership-period requirements apply before the structure can be fully utilized in connection with a sale.

Sale back to the issuing company

Another model is for you as seller to sell your shares back to the company itself, which then reduces its capital accordingly. This can make it easier for a buyer — for example an employee group in a generational transfer — to raise the necessary financing, because part of the purchase price is effectively paid by the company's own capital. Be aware that this model is taxed differently from an ordinary share sale: generally, the entire sale amount is taxed, not just the gain, unless a specific exception has been addressed. This makes it especially important to clarify the specific tax consequence before choosing this model.

Demerger as a model for a partial generational transfer or sale

If you only want to transfer part of the business — or separate activities before the rest is sold or passed to the next generation — a demerger can be relevant. In a demerger, parts of the business's activities are transferred to one or more new companies, which the seller themselves, family, or a buyer can then take over separately. A demerger can be carried out with or without approval from the Danish Tax Agency, and — like a holding structure — specific ownership-period requirements apply, meaning the model typically needs to be planned well in advance to be usable tax-free in connection with a specific sale.

Which model fits your situation when selling a business?

The choice depends heavily on three factors: whether the business is currently run personally or as a company, who's taking over — family, employees or an external buyer — and how much time you actually have to prepare the transfer. Several of the models, particularly holding structures and demergers, require being set up long before the sale or generational transfer itself to be usable tax-free. That's one of the main reasons tax planning should be part of your sale preparation, not something you only address once a buyer has already been found.

Frequently asked questions

Should I always use an advisor to choose the right model?

Yes. The tax consequences of choosing wrong can be significant and, in practice, impossible to change afterward, so professional advice should be brought in early — not only once a model has already been chosen.

How big is the tax-free allowance for a family transfer in 2026?

DKK 80,600 for gifts to close family and DKK 392,300 for an estate. Only amounts above the allowance are subject to duty, at 10% for the transfer of an active business to close family.

Can I still set up a holding structure if I'm already in a sale process?

Probably not in time to get the full tax benefit — the structure should be set up well before the sale due to the ownership-period requirements involved. If you're already in process, clarify with an advisor which models are realistically still usable in the time you have.

Considering a generational transfer or sale and unsure which tax model fits your situation? Book a no-obligation call, or read more about what you pay in tax on an ordinary sale, if an external buyer is more relevant for you.