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October 11, 2021

Denmark publishes bill relaxing transfer pricing documentation requirements in relation to domestic controlled transactions

Executive summary

On 6 October 2021, the Danish Government published bill No. L7 which to a large extent abolishes the requirement to include domestic controlled transactions in transfer pricing (TP) documentation.

The bill is expected to be enacted during the fall of 2021 taking effect for income years starting 1 January 2021 or later.

Detailed discussion

Under existing law, Danish companies must prepare TP documentation for all intercompany transactions including domestic controlled transactions.

Main rule

According to the bill, TP documentation is not required for transactions between Danish group entities subject to ordinary company taxation.


According to the bill, TP documentation is still required in pure domestic transactions where at least one of the entities is taxed under one of the following regimes:

  • Tonnage taxation
  • Hydrocarbon taxation
  • Co-operative taxation

Pure domestic transactions must be analyzed in the TP documentation if the transactions form the basis for a cross-border transaction. This would be the case, for instance, if:

  • The transfer price for a product sold cross-border is based on the cost-plus-method and the cost base includes a service provided in a pure domestic transaction.
  • The services provided cross-border include the application of intellectual property licensed by another Danish entity in a pure domestic transaction.

In such cases the domestic transaction must be included in the TP documentation.

Permanent establishments (PEs)

The bill also includes specific rules to be applied by PEs with respect to TP documentation.


For additional information with respect to this Alert, please contact the following:

EY Godkendt Revisionspartnerselskab, Copenhagen

EY Godkendt Revisionspartnerselskab, Aarhus


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