Competent Transfer Pricing

Avoid penalties of DKK 250,000 per year

The Danish penalty regime for missing, insufficient, or late Transfer Pricing documentation is among the strictest in the world.

The penalty starts at DKK 250,000 per company per year, plus an additional 10% of any income adjustment.

The penalty may subsequently be reduced to DKK 125,000 if the company later submits sufficient Transfer Pricing documentation.

Limited Danish Transfer Pricing Documentation Requirement

If a company is part of a group which, on a consolidated basis, has fewer than 250 employees and either less than DKK 391 million in revenue or less than DKK 195 million in total assets, the company may be subject to a limited documentation requirement.

The company must still prepare and retain Transfer Pricing documentation if it has controlled transactions with individuals or legal entities resident in a foreign state that does not have a tax treaty with Denmark and is not a member of the EU or EEA.

Typical examples of such jurisdictions include the United Arab Emirates or Hong Kong.
Contact us if you believe this situation may apply to you.

Full Danish Transfer Pricing Documentation Requirement

If a company is part of a group which, on a consolidated basis, has more than 250 employees or both revenue above DKK 391 million and total assets above DKK 195 million, the company may be subject to the full documentation requirement.

This applies only in cases involving cross‑border controlled transactions or controlled transactions between Danish entities taxed under different tax regimes.

Under new rules, a company is not required to prepare Transfer Pricing documentation if its controlled transactions do not exceed DKK 5 million, and controlled receivables and payables do not exceed DKK 50 million.

However, documentation is still required for controlled transactions involving intangible assets or transactions with group companies located in non‑EU/EEA countries, which do not have a tax treaty with Denmark.

The Danish Transfer Pricing rules are complex and includes many exceptions. Contact us if you have questions or uncertainties.

Disclosure Requirement in the Danish Tax Return

All controlled transactions must be disclosed in the Danish tax return.

This applies to transactions between Danish entities and between Danish and non‑Danish entities.

There are no minimum thresholds.

Contact us if you need assistance with reporting controlled transactions in the tax return.

Master File

Must be prepared for each income year and include a group‑level description of:

1. Legal and organizational structure
2. Strategy, business model, and value‑creating activities
3. R&D strategy, activities, and intangible assets
4. Value chain analysis and functional analysis
5. Internal and external financing
6. Material intra‑group agreements
7. Agreements with tax authorities

Local File

Must be prepared annually and include a description for each Danish company:

1. Legal and organizational structure
2. Management
3. Strategy, business model, and value‑creating activities
4. Restructurings
5. Intangible assets
6. Value chain analysis and functional analysis
7. Material intra‑group agreements
8. Controlled transactions and their pricing
9. Agreements with tax authorities
10. Dividends and contributions (received or paid)

Benchmark Studies

The Danish Tax Agency expects a benchmark study to be prepared and submitted for each controlled transaction where this is considered relevant.

An example could be a benchmark study supporting a target profit margin for a sales entity.

SKAT’s Legal Guidelines & Executive Order

The Danish Tax Agency has published legal guidance on Transfer Pricing. It can be found here.

The Danish Tax Agency has also published an executive order specifying the required content of the Master File and Local File. It can be found here.

OECD Transfer Pricing Guidelines

The global standard for Transfer Pricing.

The most recent version is from 2022 and can be downloaded for free here.