Recent Amendments to Danish Transfer Pricing Legislation

Transfer pricing regulations govern the pricing of transactions between related parties, ensuring that such dealings reflect terms that would be agreed upon by unrelated parties in the open market. In Denmark, on June 3, 2025, recent legislative amendments by the Danish Parliament mark a significant shift in the approach to transfer pricing compliance, with a clear focus on simplification and reducing the documentation burden for Danish taxpayers. The legislative amendments will apply for the income year 2025.

Aims of the New Legislation 

The primary objective of these amendments is to streamline the transfer pricing framework, making it more accessible and less administratively demanding for businesses. By refining the scope of documentation requirements and clarifying the obligations of different categories of taxpayers, the new rules seek to foster a more efficient compliance environment. 

Targeted Documentation Exemptions and Automatic Extension of Deadline 

The revised law introduces several exemptions from the obligation to prepare written transfer pricing documentation. Taxpayers, either alone or together with affiliated companies, who have fewer than 250 employees and either a total annual balance sheet below DKK 195 million or annual turnover below DKK 391 million, are exempted for preparing transfer pricing documentation. Moreover, taxpayers are no longer required to document controlled transactions if their total value is less than DKK 5 million in the income year, and if total controlled receivables and debts at year-end are below DKK 50 million. However, this exemption does not apply on transactions involving intangible assets. It shall also be noted that this exemption does not apply if the transactions take place with a counterparty that is located in a foreign state outside of the EU and EEA and that does not exchange tax information with Denmark. Further exemptions apply for some situations of limited ownership and to specific types of transactions, such as dividends and subsidies paid in cash Additionally, transactions deemed insignificant are also excluded from documentation requirements. 

The new amendment also introduces modifications in the law in order to provide for an automatic extension of the 60-day deadline for submitting transfer pricing documentation, if an extension is granted for the corporate tax return. Consequently, it is no longer necessary to request separate extensions for the corporate tax return and the transfer pricing documentation deadlines. 

Removal of Auditor Statement Requirements 

The changes also represent a significant procedural change. The Danish tax agency no longer has the authority to request auditor statements in relation to transfer pricing documentation. This change eliminates a layer of compliance previously required of taxpayers, further contributing to the overall simplification of the transfer pricing regime. 

Historical Context and the Evolution of Transfer Pricing Compliance Norms 

These legislative changes can be viewed in the broader context of the evolution of tax compliance standards. Historically, the introduction of detailed reporting and documentation requirements was driven by the need for transparency and regulatory oversight. However, as the compliance landscape matures, there is a growing recognition of the need to balance regulatory objectives with the practical realities faced by businesses. The legislation passed by the Danish Parliament amending parts of the Danish Tax Control Act related to transfer pricing reflect this shift, prioritizing efficiency and proportionality without compromising the core principles of transfer pricing. 

Restating the Values Underpinning Transfer Pricing Compliance 

The new legislation does not represent a departure from the values that underpin transfer pricing compliance — namely, fairness, transparency, and the prevention of profit shifting. Rather, it restates these values in a manner that is more attuned to the needs of modern businesses. By focusing documentation requirements on material transactions and providing relief for smaller enterprises, the amendments reinforce the principle that compliance should be commensurate with risk and complexity. 

Our comment 

The recent amendments to the Danish Tax Control Act’s transfer pricing provisions mark a significant step towards a more streamlined and business-friendly compliance environment. By introducing targeted exemptions and an automatic extension of deadline and removing the obligation to submit auditor statements, the legislation reduces unnecessary administrative burdens while maintaining the integrity of the transfer pricing framework. These changes reflect an ongoing evolution in compliance norms, emphasizing efficiency, proportionality, and the continued importance of fair and transparent tax practices.