Rental income must be allocated to the period to which the rent pertains

Date 21 feb. 2011

The City Court has ruled that rental income must be allocated in a way that taxation occurs at the time to which the rent pertains, independently of the time of payment.


The case in brief

In 1999, the plaintiff signed a tenancy agreement with the company H1 ApS, in which the monthly rent was set at DKK 7.500.

For the income year 2003, the plaintiff claimed that the only rental amount which was to be added to his capital income was an amount stated by himself, even though this was lower than the amount agreed upon and did not correspond to the amount that the tenant had deducted as rental expenses.

The National Tax Tribunal chose to set the capital income at a level corresponding to the expenses that the tenant had deducted in the income year. Consequently, the plaintiff brought the case before the City Court.

The City Court’s decision

By way of introduction, the City Court established that rental income, both in terms of taxation and accounting, must be allocated to the period to which the rent pertains.

Consequently, the City Court ruled in favour of the claim of the Ministry of Taxation and set the plaintiff’s capital income to the claimed amount, since the plaintiff had not proven that the actual rental income was lower. The amount corresponded to the expense which the tenant had deducted for the income year.

Lastly, it was mentioned that the time of payment of the rental income is irrelevant with regard to the allocation.

Consequences of the ruling

The ruling is interesting because it acknowledges the lengthy practice of SKAT regarding allocation of rental income. According to this practice, rental income is allocated to the period to which the rent pertains, regardless of the time of payment.

If you have any questions or require additional information on the ruling, please contact Partner, Adjunct Professor Jakob Bundgaard ( or Junior Associate Kim David Lexner (  

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis for decisions or considerations.