Denmark: Transfer pricing documentation requirements | KPMG | US

Denmark: New transfer pricing documentation requirements

Denmark: Transfer pricing documentation requirements

A new executive order on Danish transfer pricing documentation requirements has been issued to amend the Danish rules. The new transfer pricing documentation requirements appear to be aligned with the recommendations from the OECD.


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Following the Danish Parliament passing legislation to adopt country-by-country reporting and new reporting requirements in December 2015, a new Danish executive order No. 401 (28 April 2016) was issued to revise the Danish documentation content requirements. 

OECD streamlining

With the new executive order, the Danish content requirements have been aligned with the requirements set forth in the final recommendations under the OECD’s base erosion and profit shifting (BEPS) Action 13, "Transfer Pricing Documentation and Country-by-Country Reporting" published in October 2015. The documentation requirements set forth in the new executive order are divided into two parts. 

  • The first part sets the content requirements for the Master file.
  • The second part sets the content requirements for the country-specific reporting or Local file.

Both sections follow the structure and requirements as set forth in Annex I and II of the BEPS Action 13 final recommendations.

With the current executive order, there is guidance concerning the required information in the Master file and Local file, with this depending on the extent and complexity of the group, the local entity, and the controlled transactions. The general purpose of the rule is that the documentation must contain sufficient information and analyses to allow for an arm's length evaluation to be performed.

Extended deadline

As stated in the legislation adopting country-by-country reporting and new reporting requirements, the Master file / Local file approach will be mandatory for those Danish entities required to prepare transfer pricing documentation, and apply for the documentation covering the income year 2016. 

In comparison to the draft executive order released last year, one significant change have been made in regards to timing. The content requirements for the transfer pricing documentation covering the financial year that begins up and until 31 December 2016 can be fulfilled by preparing the documentation in accordance with either the new or the old content requirements. Thus, the new documentation requirements will be optional for the financial year of 2016. 

KPMG observation

Multinational enterprises with operations in Denmark need to be aware that the new content requirements will be required for transfer pricing documentation from 2017 and onwards. Given the documentation requirements recommended by OECD have been fully integrated into the Danish requirements, the documentation process may be seen as being more predictable in that the international standards will apply. 

While the documentation requirements under the executive order are somewhat similar to the current requirements, there are certain changes that may increase the administrative burden, as the new requirements need to be considered in conjunction with the new guidance on the interpretation of the arm's length principle. This means that the new requirements may imply additional work in order to prepare compliant transfer pricing documentation. Even though the new requirements may seem more comprehensive and less flexible, the documentation still must be submitted to SKAT (Danish tax authorities) within 60 days after a request has been made. Taxpayers may be subject to penalties if the documentation is not timely submitted.


For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services group in Denmark, with the KPMG member firm in Denmark, KPMG Acor Tax: 

Simon K. Schaadt | +45 5374 7044 | 

Martin Nielsen | +45 5374 7055 | 

Henrik Lund | +45 5374 7066 |

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