Tightened rules on transfer pricing documentation

26 January 2018

Anders Kiærskou, Manager, Tax |

Insufficient transfer pricing documentation can result in significant fines.  

The Danish rules on transfer pricing documentation from 2006 has been replaced by new rules, which entails significant changes in the requirements for the preparation of transfer pricing documentation.

It is necessary to compile an entirely new transfer pricing documentation, and the company cannot rely simply on updating the transfer pricing documentation of previous years, that has been prepared according to the old transfer pricing documentation rules.

Inadequate transfer pricing documentation can result in significant fines in the order of at least DKK 250,000.

Depending on the size of the business, it may be very comprehensive to prepare transfer pricing documentation according to the new rules. The documentation must be prepared in accordance with the new rules for income years commencing January 1, 2017 or later, and the documentation must be available no later than the deadline for filing the tax return, which for companies with a financial year following the calendar year is July 1, 2018.

Work should begin now to ensure that the business complies with the rules and avoids fines.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge. Please sign up here.