Do you have related party transactions with a Danish group company or branch?

Here are three key topics you need to be aware of if you have transactions with a related company or branch in Denmark.

1. Penalty of EUR 35,000 for non-compliance with the rules

• The penalty is given for non-compliance, i.e. late submission, no submission at all or submission of insufficient Transfer Pricing documentation.
• The penalty applies per unit per year.
• 10% penalty of a subsequent revenue adjustment. This is in addition to the penalty of EUR 35,000.

2. Low threshold for when documentation is required

• Documentation is required for all entities in Denmark that are part of a group where 1) the group employs more than 250 FTEs, OR 2) the group on a consolidated basis has more than EUR 33.5 million in revenue and EUR 17 million in assets.
• No minimum size requirements or controlled transaction thresholds for Danish entities (may have very limited activities). If the Danish company is part of a larger group with branches to Norway, the Danish documentation requirements may therefore apply.

3. Spesific local documentation requirements

• The documentation must be submitted electronically no later than 60 days after the tax return.
• A Master File and a Local File are required (as one of the few countries in Europe).
• The Local File must contain information that goes beyond the "standard OECD Local File".

The standard filing deadline for a Danish subsidiary with a financial year of 31 December 2024 is 30 June  2025 for the tax return and 1 September 2025 for the transfer pricing documentation.

The above-mentioned Transfer Pricing rules in Denmark are different from the rules in Norway. In particular, it is important to note that in Norway there is a requirement to submit the Transfer Pricing documentation upon request from the tax authorities. In the event of such a demand from the tax authorities, the taxpayer must submit the documentation within 45 days. In Denmark, the company must submit the documentation unsolicited no later than 60 days after the tax return has been submitted.

The Danish Ministry of Taxation has submitted for consultation a bill on adaptations to the OECD's administrative guidelines, which also proposes changes to the documentation rules for transfer pricing. There may therefore be changes in the near future depending on the legislative process in Denmark.

If you have any questions about this, please contact us.