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