Denmark Tightens Transfer Pricing Documentation Requirements
Denmark has significantly tightened its transfer pricing documentation requirements for financial years from 2021. Foreign groups are often unaware of their obligations, which can lead to substantial penalties.
Denmark's rules on transfer pricing documentation have been significantly strengthened for financial years beginning in 2021. The new regulations apply to companies within groups employing 250 or more individuals, or groups with an annual revenue exceeding DKK 250 million and a balance sheet total above DKK 125 million.
Furthermore, companies engaging in intercompany transactions with entities outside the EU/EEA, or with countries lacking a double taxation agreement with Denmark, are subject to these rules regardless of group size. The thresholds are assessed at the group level, meaning even a small Danish subsidiary of a large multinational may be obligated to comply.
Mandatory submission of Master File and Local File documentation is required within 60 days after the tax return deadline. The documentation must be uploaded in a computer-readable format to the Danish Tax Agency's digital platform.
Failure to submit or submitting non-compliant documentation can result in penalties of DKK 250,000 (approximately EUR 33,600) per company per financial year, plus 10% of any potential income adjustment. The burden of proof may also shift to the company in transfer pricing disputes.