On 6 October 2021, the Danish parliament is taking into account draft bill L 7, which proposed an amendment to the Danish Tax Control Act in order to relax the documentation requirements for transfer pricing for purely Danish transactions.
The draft law L 7 provides for the so-called transfer pricing documentation to be relaxed so that it does not go beyond what results from EU law. According to the draft law, no TP documentation is required for transactions between Danish group companies that are subject to ordinary corporate taxation.
In addition, the draft law allows TP documentation to continue to be required for purely domestic transactions if at least one of the entities is taxed including tonnage taxation or hydrocarbon taxation or cooperative taxation.
However, the arm’s length principle still applies to transactions between related Danish companies. Accordingly, the tax administration may, at its own discretion, continue to require the taxpayer to provide evidence that the prices and terms of a transaction between interested parties have been established using the arm’s length principle.
