On 20 November 2020, the Danish Ministry of Taxation tabled a bill to amend the Property Valuation Act. The bill includes, among other things, a change of the valuation method for properties where wind turbines and photovoltaic ("PV") plants are installed so that the land value of these properties is to be determined in proportion to the actual production of power. The Act has now been passed and comes into force on 1 March 2021.
Since 20 November 2020 when the original bill was tabled, several additional proposed amendments have been introduced. On 11 February 2021, the Ministry of Taxation consequently submitted an additional white paper in respect of the bill introducing several amendments of relevance to properties where wind turbines and PV plants are installed.
Reduction of the standardised price
According to the original bill, the land value was to be assessed at the standardised production capacity multiplied by a standardised price of DKK 250 per MWh. The proposed amendment still uses the same calculation method, but the standardised price has been reduced to DKK 180 per MWh. This implies that the land value and hence the land tax payable to the municipality will be less than first assumed, which must be deemed to be a positive development.
It also appears from the proposed amendment that areas which may be used for the installation of wind turbines and PV plants must be exempted from the land tax increase. This exemption applies until an agreement has been entered into on grid connection with the grid company or for three years as from approval of the local development plan. The proposed amendment consequently ensures that property owners subject to an amended local development allowing for the installation of wind turbines or PV plants are not charged land tax based on the amended local development plan before it is actually possible to install the wind turbine or PV plants allowed.
It is also important that the Ministry of Taxation confirms that the owners of wind turbine and PV plants enjoy the same rights in respect of property taxation as other owners of commercial properties, including
- considerably lower land tax rates per mille in 2024
- limited land tax increases following 2024
- tax discount
This implies, among other things, that the average municipal land tax rate per mille in 2024 is expected to be reduced from the current rate of approx. 26 per mille to an expected rate of just under 13 per mille of the tax base. It must be noted, however, that the advantages in the form of lower land tax rates per mille and limited land tax increases must be seen in the context that the property valuations are expected to increase using the new calculation method as accounted for in our previous newsletter.
The Act comes into force on 1 March 2021.