The move, which still needs approval by parliament, comes as several countries try to rein in Airbnb tax evaders, reports the BBC.
Tax minister Karsten Lauritzen said the country wants the sharing economy to flourish, but on the condition that taxes are paid.
Patrick Robinson, director of public policy Emea at Airbnb, said: “We believe the proposed rules are right for Denmark and we are committed to ensuring hosts on Airbnb can benefit from these innovative and forward-thinking rules.
“The progressive attitude of Denmark is an example to the world and demonstrates how positive results can be achieved when policymakers and Airbnb work together on the shared goals of making cities better places to live, work and visit.”
How it works
Owners will get an annual tax-free allowance of DKK28,000 (£3,282, $4,438, €3,759) for their primary residence and DKK40,000 for holiday homes.
It will be up to local authorities to decide how long primary residences can be shared.
A nationwide base total of 70 nights can be increased up to a maximum 100 nights by individual municipalities.
A typical host in Denmark earned DKK15,500 by renting their space for 23 nights during 2017.
One Danish Airbnb host told International Adviser that he is not worried about the change, as “it will all run automatically so we don’t need to do anything”.
“Other than pay the taxes at the end of the year.”