The Danish Minister of Taxation introduced Bill L 194 to align with the OECD’s Minimum Tax Guidelines and ease transfer pricing (TP) documentation on 9 April 2025.
The Bill aims to implement OECD administrative guidance under Pillar Two, address qualified distributor remuneration, adjust rules on transparent entity reclassification, extend Danish tax liability on interest from controlled debt, and simplify international joint taxation rules.
Key amendments include incorporating OECD guidance from June 2024 and January 2025 into the Minimum Taxation Act and Corporation Tax Act to avoid unintended tax outcomes. The Bill also proposes adopting the OECD’s “Amount B Report” (February 2024) by allowing simplified pricing for controlled transactions with qualified distributors in treaty countries.
Further changes extend limited tax liability to interest payments by foreign companies with Danish real estate income, where the interest is tied to that property. The Bill tightens rules on withholding tax for interest and royalties and proposes targeted TP documentation relief, especially for SMEs. Specifically, no documentation is required if total controlled transactions are below DKK 5 million and year-end receivables/payables are under DKK 50 million, excluding intangibles or dealings with low-transparency jurisdictions.
Documentation exemptions will also apply to dividends and contributions made as cash, and certain investments through tax-transparent entities. Section 2C of the Corporation Tax Act will be amended to curb hybrid mismatches, and the list of countries subject to defensive tax measures will be updated based on the EU’s blacklist. Most changes take effect on 1 July 2025; minimum tax rules apply from 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.
