Tax News Update    Email this document    Print this document  

November 29, 2021
2021-2152

Denmark adopts new rules relaxing transfer pricing documentation requirements for domestic controlled transactions and addressing application of benchmarking

On 25 November 2021, the Danish Parliament adopted bill No. L7 which to a large extent abolishes the requirement to include domestic controlled transactions in transfer pricing (TP) documentation.

The bill also specifies the requirement to apply appropriate benchmarking in the comparability analysis.

The bill will be effective for income years starting 1 January 2021 or later.

The Bill

Domestic controlled transactions

According to the bill, TP documentation is no longer required for transactions between Danish group entities subject to ordinary company taxation. The bill includes a comprehensive list of exceptions which essentially limits the application of the new bill to domestic controlled transactions in which there is no risk of tax speculation.

Benchmarking

The bill includes an amendment which specifies the Danish requirements to support intercompany transactions by benchmarking. When documenting intercompany transactions for income years starting 1 January 2021 or later, a benchmark is required to support the transaction regardless of materiality.

If an appropriate benchmarking is not included in the comparability analysis there is a potential risk of being challenged with a reversed burden of proof and a potential risk of being fined.

_________________________________________

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

EY Godkendt Revisionspartnerselskab, Copenhagen

EY Godkendt Revisionspartnerselskab, Aarhus

 

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 © 1996 – 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.

 

EY US Tax News Update Master Agreement | EY Privacy Statement