On 9 December 2020, the Ministry of Taxation Officially published L 28 Proposal for a Law No. 1835 of 8 December 2020 to establish the timeline for filing transfer pricing (TP) documentation and amends the Corporation Tax Act and various other acts and implementing the OECD’s recommendations on permanent establishment, so that the Danish rules are brought into line with the latest international standards. The President finally signed this Act on 8 December 2020. It was adopted by the Parliament on 3 December 2020.

According to the Law, for income years beginning on or after 1 January 2021, taxpayers will have to submit statutory transfer pricing documentation no later than 60 days after the tax return deadline (i.e., 29 August 2022). For tax years prior 1 January 2021, taxpayers are required to prepare the documentation contemporaneously and must be able to submit it at the same time as the tax return. The last day to finalize the MF is the taxpayer’s last day to file its annual tax return. However, the documentation needs only to be submitted after request and typically within 60 days from such request. Also, the Act was adopted the amendments to the transfer pricing regulations which introduce a mandatory submission of a Master file and a Local file to the Danish tax authorities within 60 days after the filing deadline of the corporate income tax return.

Under the Act, penalties apply for failure to submit MF upon request, or to meet the requirements, and may also apply if MF was not prepared contemporaneously and finalized at the time of the tax return, even if submitted within 60 days of request. The minimum penalty is DKK 250,000 per year, which applies per legal entity, plus an additional penalty of 10% which is linked to the income adjustment, if any. Other discretionary penalties may apply.