Denmark’s Minister of Taxation introduced Bill L 194 to Parliament, aiming to align national legislation with OECD minimum tax standards and reduce administrative burdens related to transfer pricing (TP) documentation on 9 April 2025.
The bill would implement OECD Pillar Two administrative guidance issued in June 2024 and January 2025 and amend the Minimum Taxation Act and Corporation Tax Act to prevent adverse interactions between minimum taxation and international joint taxation rules. It also includes measures to adopt the OECD’s “Amount B” framework for simplified pricing of certain distribution transactions involving qualified distributors in treaty jurisdictions.
Additional proposals include:
- Expanding limited tax liability on interest from controlled debt linked to foreign entities earning real estate income in Denmark;
- Strengthening rules for withholding tax on interest and royalties;
- Introducing exemptions from TP documentation for smaller taxpayers and certain transaction types, such as cash-based dividends and some investments via transparent entities;
- Revising the treatment of transparent entities to counter hybrid mismatches;
- Updating the list of jurisdictions subject to defensive tax measures based on the EU’s latest blacklist.
The amendments are proposed to take effect from 1 July 2025. Changes to the Minimum Taxation Act would apply to financial years beginning on or after 31 December 2023.
Earlier, the Danish Ministry of Taxation initiated a public consultation on the draft legislation to amend the Minimum Taxation Act, the Tax Assessment Act, the Corporate Tax Act, the Tax Administration Act, and the Tax Control Act on 3 February 2025.
