On 25 November 2021, the Danish Parliament passed Draft Law No. L7, which largely abolishes the obligation to include domestically, controlled transactions in the Transfer Pricing Documentation (TP). The draft law also specifies the requirement to apply a corresponding benchmarking in the comparability analysis. The bill includes the following measures:
- The new measures provide taxpayers with purely domestic controlled transactions (i.e. DK-to-DK transactions) an exemption from the documentation requirement for transfer pricing. Taxpayers with pure or exclusive DK-to-DK transactions no longer need to submit transfer pricing documentation. The exemption of purely Danish transactions applies to financial years beginning on or after 1 January 2021.
- Database research in connection with benchmark studies will be required to a much greater extent than before. When documenting intra-group transactions for income years from 1 January 2021, regardless of their materiality, a benchmark is required to strengthen the transaction.
