The Danish Parliament has passed legislation that adopts country-by-country reporting. The new reporting requirements are expected to be implemented by means of a change to the Danish executive order concerning documentation relating to the pricing of controlled transactions, with effect from 1 January 2016.
The Danish government in September 2015 proposed legislation to provide measures that would enhance the Danish transfer pricing documentation requirements and include country-by-country (CbC) reporting. Read TaxNewsFlash-Transfer Pricing
The Danish Parliament on 18 December 2015 passed the legislation to require CbC reporting. Accordingly, multinational groups whose ultimate parent company is a resident in Denmark will be required to make CbC reporting submissions.
The CbC reporting rules will also affect foreign group entities that are residents in Denmark if certain conditions are met.
The new Danish rules are generally in line with the CbC reporting plan as published by the OECD in October 2015.
The structure and requirements of the new documentation standards are also similar to current transfer pricing requirements in Denmark, but with additional requirements with respect to tax agreements, intangible assets, and financing under the CbC rules.
The new CbC rules are based on the OECD's three-step approach requiring: (1) a master file, (2) a local file, and (3) a CbC report. The CbC report is to be submitted no later than 12 months after the end of the income year. The new rules will apply for income years beginning 1 January 2016 and later.
For CbC reporting purposes, all Danish multinational groups with a consolidated turnover of at least DKK 5.6 billion (approximately U.S. $839 million) will be required to file a CbC report. The CbC report will then be made available to all countries where the group operates (i.e., through its subsidiaries and/or permanent establishments).
When the ultimate parent company of the group is a tax resident in Denmark, the CbC report will have to be submitted to the Danish tax authorities (SKAT).
Other subsidiaries in Denmark or foreign-based groups will have to submit the CbC report if certain conditions are met. These conditions would apply when:
Entities that form part of a group and that are subject to the Danish documentation requirements need to consider steps to prepare their documentation structure so as to comply with the additional content requirements. Groups whose ultimate parent company is a resident in Denmark and have a turnover exceeding DKK 5.6 billion need to be ready to file CbC reports.
According to information provided by SKAT to the Minister of Taxation, the number of Danish groups required to submit CbC reports is expected to range between 50 to 75 entities.
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 | email@example.com
Martin Nielsen | +45 5374 7055 | firstname.lastname@example.org
Henrik Lund | +45 5374 7066 | email@example.com
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