Transfer Pricing guide: Denmark
Read below for more detailed information on transfer pricing regulations, document requirements, and other considerations for Denmark, as well as recent industry hot topics and key developments in the country's business landscape.
Page updated 1st July 2026
Transfer Pricing regulations
Is the jurisdiction part of OECD/G20 Inclusive Framework on BEPS?
Yes.
Relevant Transfer Pricing regulation
Skattekontrolloven (Tax Control Act)
Is this regulation aligned with the OECD Guidelines
Yes.
Transfer Pricing documentation requirements
Documentation Threshold for Preparation of Local File/ TP Documentation
As a general rule, all companies that engage in controlled transactions with related parties are subject to the documentation requirement. However, companies that, at the group level, meet at least two of the following three criteria — fewer than 250 employees, annual revenue of less than DKK 250 million, or a balance sheet total of less than DKK 125 million — are only required to prepare transfer pricing documentation if they have transactions with companies in low-tax jurisdictions, permanent establishments abroad, or where there is a risk of tax base erosion.
Documentation Threshold for Preparation of Master File
Companies that are subject to the transfer pricing documentation requirement must always prepare both a Master File and a Local File.
Documentation Threshold for Preparation of Country by Country Report
The OECD guidance for Country-by-Country (CbC) Reporting has been implemented into Danish legislation, with a reporting threshold of EUR 750 million in consolidated group revenue. The
Submission of Local File, Master File, and CbC Report Required? If so, when?
Submission of the Local File and Master File must take place no later than 60 days after the deadline for filing the corporate tax return, which for companies with a calendar year is August 31. The Country-by-Country (CbC) Report must be submitted no later than 12 months after the end of the accounting period to which the report relates
If No Submission Required, any Other Deadline?
N/A
Other Documentation Requirements
Denmark has implemented the EU Public Country-by-Country Reporting (PCbCR), which means that companies whose financial year begins after 22 June 2024 must publish a specific PCbCR. The EU directive is regulated in the Danish Annual Financial Statements Act, Part IX, Sections 137b to 137h. The threshold for reporting is EUR 750 millionj
Does TP documentation / Local file Need to be Prepared Contemporaneously with Tax Return Filing (i.e., before filing the return)?
Transfer pricing documentation must be prepared on an ongoing basis and submitted no later than 60 days after the deadline for filing the corporate tax return.
Transfer Pricing Specific Returns
Preparation of TP Return Required?
The corporate tax return includes fields for reporting intra-group transactions, so there is no separate transfer pricing return
Deadline for TP Return Filing
As with the corporate tax return, which is typically due six months after the end of the financial year.
Key information to be included in the TP Return
Companies subject to transfer pricing documentation requirements must complete the following fields:
Field 503 – Indicates whether the company is subject to TP documentation requirements.
Field 503a – Confirms whether TP documentation has been prepared.
Field 503b – Indicates whether the documentation has been submitted.
Fields 505–509 – Provide additional details about the nature and scope of controlled transactions.
Benchmarking - Local Tax Authority Preferences
Local vs Regional Comparables Set
Both local and regional comparables sets are accepted, but there are preferences and expectations depending on the context and data availability
Single-Year vs Multi-Year Analysis
Both single-year and multi-year analyses are accepted, but they serve different purposes and are used under different circumstances.
Public vs Private Comparables
Both public and private comparables can be used in benchmarking analyses, but there are important distinctions and preferences.
Interquartile Range or Full Range
Danish tax authorities accept the use of the interquartile range (IQR) in transfer pricing analyses, particularly when there are comparability defects in the benchmarking data. However, they tend to prefer the use of the median within the IQR when making adjustments or assessing arm’s length pricing.
Transaction-Based or Aggregate Approach, or Both
The Danish Tax Authority accepts both approaches, but expects the taxpayer to justify the chosen method. If the aggregate approach is used, the taxpayer must demonstrate that the transactions are sufficiently homogeneous. This practice aligns with the OECD Transfer Pricing Guidelines, which Denmark follows.
How Often are Benchmarking Sets Renewed (financial update versus full scope BMS preparation)
In Denmark, the frequency of updating benchmarking sets for transfer pricing purposes is not rigidly defined in legislation, but follows OECD guidelines and SKAT’s administrative practice.
Benchmarking Update Practices:
Full-scope benchmarking studies (BMS) are typically expected to be renewed every 3 years, provided that the comparability factors and business model remain stable.
Financial updates (i.e. updating the financial data of the selected comparables) should be performed annually to reflect the most recent financial year data.
TP Penalties
In Case of Delayed Submission of Documentation
If the documentation is not submitted within the required 60-day deadline after the tax return filing date, SKAT may impose a fine of up to DKK 250,000 per year. However the fine may be reduced to DKK 125,000 if the company subsequently submits adequate documentation.
In case of Income Adjustments in Course of a Tax audit
In addition to the above-mentioned fine, a penalty of 10% of the income adjustment may be imposed.
Other Considerations
APA & MAP Availability
Denmark offers both Advance Pricing Agreements (APAs) and access to the Mutual Agreement Procedure (MAP) as part of its transfer pricing framework.
Applicability of Safe Harbour Rules
Denmark does not have a general safe harbour regime for transfer pricing.
Critical Transfer Pricing Issues Prevailing in the Jurisdiction, if any
The tax authorities continues to show a preference for the median within the interquartile range when assessing arm’s length pricing. Additionally, local comparables are preferred over regional ones unless justified by data limitations.
The tax authorities also maintain a strong and increasingly detailed focus on intra-group financial transactions, including intercompany loans, cash pool arrangements, guarantees, and other forms of group financing. In line with OECD guidance, the authorities expect taxpayers to provide robust documentation that clearly supports the arm’s length nature of such transactions
Denmark does not offer broad safe harbour rules, unlike some other jurisdictions. This means companies must perform full transfer pricing analyses and cannot rely on simplified margins or rates unless part of an APA or explicitly accepted by the authorities.
Criteria/ Guidelines for Transfer Pricing Audit/ Assessments by Tax Authority
In Denmark, the criteria and guidelines for transfer pricing audits and assessments by the Danish Tax Authority are based on the principles outlined in the Danish Tax Control Act and the OECD Transfer Pricing Guidelines.
Relevant Regulations and Rulings with Respect to Thin Capitalization or Debt Capacity in the Jurisdiction
Under section 11 of the Danish Corporate Tax Act, thin capitalisation rules apply to limit the deductibility of interest expenses on loans from related parties. Specifically, if a company’s debt-to-equity ratio exceeds 4:1 and the amount of controlled debt surpasses DKK 10 million, a portion of the interest will be non-deductible. The disallowed amount corresponds to the share of the controlled debt that would need to be reclassified as equity to restore the 4:1 ratio by the end of the fiscal year. These rules apply exclusively to debt owed to affiliated entities.
In addition to thin capitalisation, Denmark has implemented two further interest limitation rules, both of which are aligned with the EU Anti-Tax Avoidance Directive (ATAD):
• Interest Limitation Rule (Asset-Based Cap)
Under section 11 B of the Danish Corporate Tax Act, net financing expenses that exceed a standard return on the tax value of the company’s operating assets are non-deductible. This rule applies to both related-party and third-party debt. The disallowed amount cannot reduce the deductible net financing expenses below a base amount of DKK 21.3 million (2025 threshold). Where interest deductions are limited, losses on receivables, debt, and financial contracts under the Capital Gains Tax Act are deemed to be disallowed first.
• EBITDA Rule
In accordance with section 11 C of the Corporate Tax Act and Article 4 of the ATAD, companies may only deduct net financing expenses up to 30% of their tax-adjusted EBITDA. The maximum disallowance is capped at DKK 22,313,400, which corresponds to the ATAD’s minimum threshold of EUR 3 million. This rule applies to all corporate taxpayers, including companies, foundations, and associations.
These rules operate cumulatively and may apply in parallel. As such, companies engaged in intercompany financing must carefully assess the impact of each rule and ensure proper documentation of the arm’s length nature of their financing arrangements.
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Under the current provision of the Danish Tax Control Act, taxpayers are required to prepare transfer pricing documentation that substantiates that intra-group transactions are conducted on arm’s length terms. However, taxpayers who, either alone or together with affiliated enterprises, employ fewer than 250 persons and either have an annual balance sheet total of less than DKK 125 million or an annual turnover of less than DKK 250 million, are subject to a limited documentation obligation. These taxpayers are only required to prepare and retain written documentation regarding the pricing of the following types of controlled transactions:
- Transactions with individuals or legal entities resident in a jurisdiction outside the EU and EEA that does not have a double taxation agreement with Denmark.
- Transactions with permanent establishments located in such jurisdictions as mentioned above.
- Transactions with permanent establishments located in Denmark, where the taxpayer is resident in a jurisdiction outside the EU and EEA that does not have a double taxation agreement with Denmark, cf. section 37, no. 6, letter e of the Tax Control Act.
The obligation to prepare transfer pricing documentation generally applies to all cross-border transactions between associated enterprises.
Simplified Approach, Implementation of a materiality threshold for intra-group transaction volumes
A current bill (2024/1 L 194), which is expected to enter into force on 1 January 2025, proposes a simplified approach to the documentation requirement. According to the bill, taxpayers will generally be exempt from the obligation to prepare transfer pricing documentation if the total amount of controlled transactions during the income year – excluding receivables and liabilities – is less than DKK 5 million, and the total amount of controlled receivables and liabilities at the end of the income year is less than DKK 50 million. Only transactions, receivables, and liabilities subject to the documentation requirement under subsection 1 are to be included in this calculation.
However, this exemption does not apply to controlled transactions involving intangible assets as defined in section 40 of the Danish Depreciation Act. Nor does it apply to controlled transactions where the counterparty is resident or located in a jurisdiction outside the EU and EEA that is not obligated to exchange information with the Danish tax authorities under a tax assistance agreement.
Simplified Approach, Increased thresholds for triggering transfer pricing documentation obligations for corporate groups
The same legislative proposal includes amendments to the threshold values for full transfer pricing documentation requirements. The proposed changes increase the annual balance sheet total from DKK 125 million to DKK 195 million and raise the annual revenue threshold from DKK 250 million to DKK 391 million.
Corporate groups will still be subject to the obligation to prepare transfer pricing documentation if they have more than 250 employees, even if they fall below the revised financial thresholds.
Mandatory Submission of Transfer Pricing Documentation to the Danish Tax Authorities
Pursuant to section 39(3) of the Danish Tax Control Act, written transfer pricing documentation must be prepared on an ongoing basis and submitted to the Danish Customs and Tax Administration no later than 60 days after the deadline for filing the tax return form, cf. sections 11–13 of the Tax Control Act. For companies with a calendar year accounting period, this deadline will generally fall on 31 August. The tax authorities may, upon request from the taxpayer, grant an extension of the deadline if special circumstances justify such an extension
Audit Environment in Danish Transfer Pricing Enforcement
Because of the mandatory submission requirement for transfer pricing documentation, there has been a renewed and intensified enforcement focus by the Danish Tax Agency. The authorities now have access to more timely and comprehensive data, which has enabled a more targeted and risk-based audit approach.
To support this effort, the Danish Tax Agency has established dedicated units with specialized expertise in transfer pricing. These units are primarily tasked with assessing whether intra-group transactions are conducted at arm’s length and typically focus on large and complex multinational groups, where the risk of profit shifting is considered highest.
The audit process is fundamentally risk-based. Companies are selected for review based on several factors, including the quality of their documentation, the nature and complexity of the transactions, the geographical location of counterparties (particularly in low-tax jurisdictions), and the involvement of intangible assets.
In recent years, this enhanced audit environment has led to increased scrutiny of a broader range of intra-group transactions. We have observed a heightened focus on financial transactions, business restructurings, and mergers and acquisitions. Companies engaging in such activities should be aware that these may be subject to detailed examination.
Notably, the Danish Tax Agency appears increasingly focused on identifying and taxing situations involving a potential “transfer of something of value.” This concept is interpreted broadly and may include transfers of functions, risks, or intangible assets—even in the absence of formal agreements. As such, it is crucial for taxpayers to maintain clear, contemporaneous documentation that substantiates the nature of the transactions, and the pricing applied.
In Denmark, it is possible to apply for bilateral or multilateral APAs covering all types of controlled transactions that a company intends to carry out. Generally, APAs cannot be issued for transactions that have already been executed. However, under certain conditions, a roll-back of the APA may be granted.
In principle, a company may submit an APA request at any time, including after a tax audit has commenced. However, the Danish competent authority reserves the right to reject an application if an audit or investigation is already underway, or if it determines that significant considerations weigh against initiating an APA process concurrently.
Alignment with OECD Guidelines
Danish transfer pricing rules are fully aligned with the OECD Transfer Pricing Guidelines. The arm’s length principle is codified in section 2 of the Danish Tax Assessment Act, and the documentation requirements are detailed in the Danish Tax Control Act and the related executive order (BEK nr. 468 af 19/04/2022). Taxpayers must prepare documentation that demonstrates that intra-group transactions are priced as if they were conducted between unrelated parties under comparable circumstances. The documentation must include both a Master File and a Local File, consistent with OECD standards.
Benchmarking Analyses – Nuances and Preferences
Benchmarking analyses are a central element of Danish transfer pricing documentation. The Danish Tax Agency expects taxpayers to use external comparable data where possible and to apply consistent selection criteria. While there is no formal preference for a specific database, the use of European comparables is generally encouraged. Adjustments to comparables must be well-documented, and the selection of tested parties and profit level indicators must be justified. The authorities may challenge the reliability of internal comparables or the use of foreign benchmarks if not properly substantiated.
Thin Capitalisation Considerations for Intercompany Loans
Under section 11 of the Danish Corporate Tax Act, thin capitalisation rules apply to limit the deductibility of interest expenses on loans from related parties. Specifically, if a company’s debt-to-equity ratio exceeds 4:1 and the amount of controlled debt surpasses DKK 10 million, a portion of the interest will be non-deductible. The disallowed amount corresponds to the share of the controlled debt that would need to be reclassified as equity to restore the 4:1 ratio by the end of the fiscal year. These rules apply exclusively to debt owed to affiliated entities.
In addition to thin capitalisation, Denmark has implemented two further interest limitation rules, both of which are aligned with the EU Anti-Tax Avoidance Directive (ATAD):
Interest Limitation Rule (Asset-Based Cap)
Under section 11 B of the Danish Corporate Tax Act, net financing expenses that exceed a standard return on the tax value of the company’s operating assets are non-deductible. This rule applies to both related-party and third-party debt. The disallowed amount cannot reduce the deductible net financing expenses below a base amount of DKK 21.3 million (2025 threshold). Where interest deductions are limited, losses on receivables, debt, and financial contracts under the Capital Gains Tax Act are deemed to be disallowed first.
EBITDA Rule
In accordance with section 11 C of the Corporate Tax Act and Article 4 of the ATAD, companies may only deduct net financing expenses up to 30% of their tax-adjusted EBITDA. The maximum disallowance is capped at DKK 22,313,400, which corresponds to the ATAD’s minimum threshold of EUR 3 million. This rule applies to all corporate taxpayers, including companies, foundations, and associations.
These rules operate cumulatively and may apply in parallel. As such, companies engaged in intercompany financing must carefully assess the impact of each rule and ensure proper documentation of the arm’s length nature of their financing arrangements.
Country by Country Reporting
The OECD guidance for Country-by-Country (CbC) Reporting has been implemented into Danish legislation, with a reporting threshold of EUR 750 million in consolidated group revenue. The CbC Report must be submitted no later than 12 months after the end of the accounting period to which the report relates.
Transfer Pricing Primary Risk Areas in Jurisdiction
Focus on Financial Transactions
The Danish Tax Authorities maintain a strong and increasingly detailed focus on intra-group financial transactions, including intercompany loans, cash pool arrangements, guarantees, and other forms of group financing. In line with OECD guidance, the authorities expect taxpayers to provide robust documentation that clearly supports the arm’s length nature of such transactions.
A key area of scrutiny is the transfer pricing method applied, particularly the use of the Comparable Uncontrolled Price (CUP) method. The authorities do not accept a “one-size-fits-all” approach and will challenge the appropriateness of the method if not properly justified. Loan agreements and group financing policies must be fully aligned with the transfer pricing analysis, including functional and risk assessments.
The authorities also apply outcome testing and will often require that complex or bundled transactions be disaggregated. For example, a combined financial arrangement may need to be split into its constituent elements—loan, cash pool participation, and guarantee—each of which must be supported by a separate functional analysis, risk allocation (FAR), and comparability study.
In terms of pricing, the authorities apply a statistical interquartile range when evaluating arm’s length interest rates or fees. If a tested result falls outside this range, the authorities will typically adjust the taxable income to the median of the range.
Another area of focus is the nature of intercompany service arrangements, including management fees, cost sharing, and profit split mechanisms. These must be clearly documented and supported by a consistent allocation of functions and benefits.
