Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

May 2, 2022
2022-5445

Denmark introduces new filing requirements for transfer pricing documentation

Denmark recently introduced a requirement to pro-actively submit transfer pricing documentation (TPD) annually to the Danish tax authorities. Failure to submit within the applicable deadline will likely result in automatic financial penalties. Most companies within scope will need to submit their financial year (FY) 2021 TPD by 29 August 2022.

Summary of Legislation

For financial years starting on or after 1 January 2021, new legislation requires TPD to be submitted annually. The deadline for submitting compliant documentation is 60 days after the due date for the filing of the annual corporate income tax return. Therefore, for financial years ended on 31 December 2021, the deadline for submission of FY21 TPD will be 29 August 2022.

Under the new rules, taxpayers subject to TPD requirements are obliged to submit both the entity specific local file and group-wide master file (including appendices as applicable) annually.

However, it is recognized that in certain situations multinational groups are not able to finalize the master file in time to meet the deadline. Therefore, it is possible to request an extension of the master file submission deadline and/or to use the master file prepared for the previous financial year as a temporary document if certain requirements are met.

Entities in scope

The TPD requirement applies to all Danish entities and permanent establishments of Groups which (measured on a global Group consolidated level) meet one of the following two thresholds:

  • Have more than 250 employees
  • Have more than DKK125 million in assets and more than DKK250 million in revenue

If one of the above criteria is met when measured on a Group consolidated basis, then the Danish entity (or permanent establishment) falls within scope of these rules.

Potential penalties for non-compliance

As a starting point, the penalty for non-compliance is DKK250,000 (approx. €33,500) per legal entity, per year. It is anticipated that this penalty will be imposed automatically on the entities that do not meet the deadline for the pro-active submission of the TPD. Additionally, a penalty of 10% may be imposed on a potential income adjustment.

It is not clear at this stage what will be the practicalities associated with the submissions of the relevant documents.

_________________________________________

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

EY Godkendt Revisionspartnerselskab, Transfer Pricing

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more