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Denmark: Proposals for changes to transfer pricing documentation rules

Denmark: Changes, transfer pricing documentation rules

The Danish Ministry of Taxation has proposed changes to the current transfer pricing documentation requirements.

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Background

Under the current transfer pricing rules, companies must prepare transfer pricing documentation contemporaneously. Also, the transfer pricing documentation must be ready no later than at the time for submission of the tax return. This means that the deadline for preparing the FY 2019 transfer pricing documentation for most companies is 30 June 2020—less than 100 business days from today. For companies with a financial year that does not follow the calendar year, other deadlines apply.

Under the current transfer pricing documentation rules, once requested by the tax authorities, the taxpayer must submit the contemporaneously prepared transfer pricing documentation within 60 days of the request. The Ministry of Taxation, however, has proposed changes to the rules so that if adopted, companies would be required to file their transfer pricing documentation.


Proposals for changes to transfer pricing documentation rules

Changes are proposed to the current documentation requirements— including two notable transfer pricing rule changes.

If the proposals are finalized, companies would be required to file the statutory transfer pricing documentation shortly after the tax return is filed (no exemptions seem to apply). Moreover, the legal basis for discretionary assessments would be formally tightened, significantly, in favor of the tax authorities.

If finalized, the submission requirement would apply for income years starting 1 January 2020 or later (i.e., the first submission under the new rules would be in August 2021 with the submission of transfer pricing documentation for FY 2020).

Read a March 2020 report prepared by the KPMG member firm in Denmark

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