Danish government initiatives to tighten the grip on multinational enterprises

Tax Insights ()

The Danish Government has proposed legislation to tighten the grip on multinational enterprises in a general effort to increase tax revenues.

Tightening of transfer pricing rules

The draft bill includes the following elements in relation to transfer pricing (TP):

  • After having requested and reviewed a company’s TP documentation, the Danish tax authorities can request that companies file an auditor’s report confirming that the company’s controlled transactions are undertaken in accordance with the arm’s length principle. The statutory minimum period for submitting the auditor’s report will be 90 days, with the cost borne by the taxpayer. The findings of the auditor’s report will not be binding upon the tax authority’s assessment of whether the company’s transfer prices are arm’s length. The proposal is limited to companies that have made an overall loss during a four year period and to companies having transactions with countries outside the EU/EEA with whom Denmark does not have a double taxation treaty.