January 14, 2024
Greenland | New transfer pricing rules for 2023 income year
As of the income year 2023, it is mandatory for companies to submit transfer pricing documentation in Greenland if they are required to prepare transfer pricing documentation and have intercompany transactions above a certain threshold.
More specifically, an executive order issued in Greenland on 17 October 2023 states that companies (company, branch or permanent establishment) must submit transfer pricing documentation within 60 days of the tax return deadline; i.e., companies with a financial year following the calendar year must submit transfer pricing documentation on 13 August 2024.
Greenlandic transfer pricing rules apply to transactions between related parties (e.g., intra-group transactions). The rules apply when a company or person directly or indirectly owns more than 50% of the share capital or 50% of the voting rights in another company. Transfer pricing documentation must be prepared if a company, alone or jointly with affiliated parties, has more than 250 employees or an annual balance of more than 125 million Danish Krone (DKK 125m) and an annual turnover of more than DKK 250m. Companies that fall below this threshold but have controlled transactions with foreign affiliated entities where no double tax treaty exists between Greenland and the foreign state in question, must also prepare transfer pricing documentation.
Whether the company is obliged to submit transfer pricing documentation depends on the level of controlled transactions. The threshold for FY2023 for all transaction types is DKK 500m (2024: DKK 250m). The threshold will be continuously reduced and, from 2030, all companies with controlled transactions, regardless of transaction amount, will be required to submit transfer pricing documentation every year (if they are required to prepare transfer pricing documentation).
Failure to submit transfer pricing documentation in due time may result in penalties.
Controlled transactions between Greenlandic entities (i.e., a company, branch or permanent establishment) must also be documented. As there are no rules on joint taxation in Greenland, the likelihood of the transactions between Greenlandic entities being exempted from transfer pricing documentation is limited.
In addition, note that a number of legislative amendments concerning the tax rules in Greenland were adopted on 14 November 2023; these included rules relating to on account taxation, limiting interest deductions/thin capitalization and reducing withholding tax on interest.