Denmark: New deadline, transfer pricing documentation | KPMG | GLOBAL
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Denmark: New deadlines for preparing, submitting transfer pricing documentation

Denmark: New deadlines, transfer pricing documentation

The Danish Parliament (Folketinget) on 7 December 2017 passed major amendments to the Danish tax control law (SKL). The intended purpose of the new legislation (L113) is to simplify and clarify the provisions of SKL—including the provisions related to transfer pricing and the rules for preparing and submitting transfer pricing documentation.


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New deadline for preparing statutory transfer pricing documentation

The new law specifies that the statutory transfer pricing documentation must be prepared on a contemporaneous basis (“contemporaneous documentation”) and must be finalized by or on the date when the disclosure form (previously referred to as the tax return) must be submitted to the Danish tax authorities (SKAT) for the tax year covered by the disclosure form.

The explanatory memorandum to the legislation states that the position of the Ministry of Taxation has been that the requirement for contemporaneous preparation of transfer pricing documentation has been in effect since the adoption of the documentation rules in 1998. Thus, the legislature codified the requirement about contemporaneous documentation.

New deadline for submitting statutory transfer pricing documentation

Taxpayers must submit transfer pricing documentation to the local tax authorities upon request.

Consistent with common practice, SKAT imposes a non-negotiable deadline of no more than 60 days on taxpayers in relation to a request for submission of statutory documentation. This deadline is now stated expressly in the law, despite the provision that documentation itself must be prepared contemporaneously on a year-by-year basis.

Discretionary assessment

Up until now, the law contained a provision allowing the tax authority to make a discretionary assessment of income if the statutory transfer pricing documentation were incomplete. The wording of the provision has been changed. According to the legislative history, the new law “re-enacts” current rules. The purpose of the amendment of the law, therefore, is not to change the authority of SKAT to make discretionary assessments or to reverse the burden of proof in transfer pricing matters. Rather, it appears the intent is to continue (re-enact) the practice of the tax authority in making discretionary assessments related to transfer pricing matters. 

Effective date

The new requirements will at the earliest apply for companies with financial years beginning 1 January 2018 and that have a tax filing date in June 2019 or later.

For companies with financial year-end 31 December 2018 (calendar year), the new rules apply for the statutory transfer pricing documentation for income year 2018 which must be finalized no later than 30 June 2019 (that is, the date when the disclosure form / tax return is due for income year 2018).

KPMG observation

With the new law, there is a clear distinction between the deadline for the preparation of the transfer pricing documentation and the deadline for the submission of the documentation at the request of the tax authorities. The effect is that transfer pricing documentation must be prepared contemporaneously and must be finalized no later than the date when the disclosure form (previously referred to as the tax return) must be submitted to SKAT. 

In light of the focus and activity level of SKAT in dealing with transfer pricing issues, taxpayers can expect that SKAT will strictly adhere to the statutory requirements. Prudent taxpayers would therefore make certain that their contemporaneous documentation satisfies the statutory requirements and that they meet the deadline for finalization. Failure to maintain adequate transfer pricing documentation can result in penalties and audit challenges.

As mentioned in the explanatory memorandum to the legislation (noted above), there are a number of cases pending before the courts with issues related to whether the transfer pricing documentation, under the current rules, must be prepared on a contemporaneous basis or not. With the new law, it is explicitly stated that the statutory transfer pricing documentation must be prepared on a contemporaneous basis and be finalized no later than on the date when the disclosure form (previously referred to as the tax return) must be submitted to SKAT. 


For more information, contact a transfer pricing professional with KPMG Acor Tax in Denmark:

Johnny Bøgebjerg | +45 3945 1700 |

Mads Frid Norgaard | +45 5374 7038 |

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