Denmark: Transfer pricing adjustment statistics, trends and forecast

Denmark: Transfer pricing adjustment statistics

The Danish tax authorities (SKAT) published an annual report of last year’s transfer pricing statistics.

Related content

The 2015 report (Danish) [PDF 362 KB], released 2 May 2016, reveals a steady high number of tax audits and taxable income adjustments—but one that is significantly lower than previous years’ results. For 2015, the total income adjustments amounted to DKK 5.9 billion (approximately € 0.79 billion). The SKAT report for 2015 reveals:

  • SKAT completed 142 transfer pricing tax audits, with adjustments totaling DKK 5.9 billion (approximately € 0.79 billion)
  • SKAT completed 26 downward adjustments totaling DKK 449 million (approximately € 60.38 million) for companies that applied for corresponding adjustments and relief from double taxation.
  • There were 25 mutual agreement procedure (MAP) cases resolved in 2015, with 129 MAP cases still pending.
  • There were eight advance pricing agreement (APA) cases completed in 2015, with 19 APA applications still pending.

Future focus

SKAT announced that for 2016 (as in 2015), its efforts would focus on transfer pricing cases involving: (1) goods and services; (2) intangibles; and (3) financial transactions. The selection process for an audit overall would be prioritized based on criteria of materiality and risk. 

To allow for faster resolution of the tax audit process and thereby reduce uncertainty for taxpayers with transfer pricing issues, the Danish Ministry of Taxation announced a trial project allowing alternative dispute resolution (ADR) and mediation, in part following a practice of the UK tax authority. Mediation is an alternative way to deal with conflicts between the tax authority and taxpayers without the use of courts, by using a third party to assist the parties to reach a settlement of the conflict. In the pilot project, an internal mediator may be assigned to the case, on a request by the taxpayer.

KPMG observation

Transfer pricing professionals in Denmark have observed that there had been a high number of audits and large amount of adjustments in the previous three years. The income adjustments in 2015 continue this trend, and the high number of cases and large amounts of adjustments may be viewed primarily to reflect continued political pressure for audits of Danish multinational companies and for enhanced revenue collection for the Danish government.  Based on the historical trends and the political interest for transfer pricing in Denmark, combined with implementation of the OECD action plans on base erosion and profit shifting (BEPS), it does not seem that the current level of tax audits or adjustments would likely decline in the near future.

 

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 | simon.schaadt@kpmg.com 

Martin Nielsen | +45 5374 7055 | martin.nielsen@kpmg.com 

Henrik Lund | +45 5374 7066 | henrik.lund@kpmg.com

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