globaltaxnews.ey.comSign up for tax alert emailsForwardPrintDownload |
07 December 2017 Denmark enacts deadline for preparation of transfer pricing documentation On 7 December 2017, the Danish Parliament enacted Bill No. L 13 establishing a deadline for the preparation of Danish transfer pricing documentation. Danish taxpayers are required to prepare transfer pricing documentation in line with the Organisation for Economic Co-operation and Development's concept of a local file, a master file, and Country-by-Country (CbC) report under Action 13 of the Base Erosion and Profit Shifting (BEPS) Action Plan. The documentation must be submitted to the tax authorities within 60 days of a request. However, the law does not specify any deadline for the preparation of the documentation. In pending cases, the tax authorities are taking the position that the documentation must be prepared by the deadline for the corporate income tax return, which generally is six months after the end of the financial year, e.g., 30 June for companies with calendar year accounts. It has now been codified that transfer pricing documentation must be prepared by the deadline for the tax return. The documentation need not be filed together with the tax return. Noncompliance with the deadline may mean that: (1) the burden of proof shifts from the tax authorities to the taxpayer; (2) taxable income may be determined on an estimated basis; and (3) transfer pricing penalties are imposed. These consequences may arise even if a taxpayer submits proper documentation within the 60-day deadline, provided the documentation was not prepared in due time. The deadline is quite tight and may cause practical issues with respect to compliance for multinational enterprises. The new law is applicable from 1 January 2019. This means that the law normally will be effective with respect to transfer pricing documentation that must be prepared for income year 2018. However, for companies with a 2018 income year ending in the period 2 April–30 June 2018, the new law is applicable for income year 2019, i.e., the income year ending in the period 2 April–30 June 2019.
Document ID: 2017-5014 |
