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Transfer pricing documentation & compliance advisory
If your company is part of a multinational group with intercompany transactions, Danish law requires the Danish entity to document that the pricing of these transactions complies with the arm’s length principle.
In Denmark, annual transfer pricing documentation must be prepared and submitted to the tax authorities. Failure to comply can result in fines of up to DKK 250.000, and the Danish tax authorities actively conduct audits that often lead to adjustments in taxable income.
We specialize in preparing transfer pricing documentation and advising on optimizing the compliance strategy to:
- Meet all regulatory requirements and avoid penalties
- Align internal pricing with the arm’s length principle and global best practices
- Minimize audit risks through proactive planning and defensible documentation
The arm's length principle
The arm's length principle requires that the prices and terms for transactions between related companies such as subsidiaries, affiliates, or group entities must be set in the same way as if the transactions had taken place between independent, unrelated companies under similar circumstances. The principle applies worldwide and is incorporated into all Danish double taxation agreements and domestic tax law, ensuring that intercompany transactions are priced in accordance with the arm’s length principle and thereby preventing profit shifting.
In the statutory transfer pricing documentation, your company must document each year that the arm's length principle has been followed. If there are major changes in the company, such as acquisitions, divestments, restructuring, or new intercompany agreements, the documentation must be assessed and updated in relation to the changes that have taken place.
Grant Thornton has a team of experienced transfer pricing specialists who can help your company with:
- Preparation of mandatory transfer pricing documentation for companies and permanent establishments
- Review of your transfer pricing documentation to assess compliance and risk
- Implementation of new transfer pricing policies in the event of changes in the company
- Advice and assistance if your company has been selected for a tax audit, has been fined for not submitting transfer pricing documentation, or has received a tax assessment from the tax authorities
- Requests to the tax authorities for reopening of the tax return, MAP, or APA
