Transfer pricing: deadline for filing documentation approaches
Danish companies are obliged to file their transfer pricing documentation within 60 days after the deadline for submitting the tax return. Companies with the calendar year as income year must therefore file transfer pricing documentation for 2021 by Monday 29 August 2022.
With effect for income years beginning on or after 1 January 2021, Danish companies must file their transfer pricing documentation with the Danish Tax Agency within 60 days after the deadline for submitting the tax return. Generally, both the master file and the local file must be submitted.
Read more about the new deadline here (in Danish): Transfer pricing: New deadline for submission of documentation
Is the master file not ready?
If the master file is not ready by the deadline for submission, the documentation for the previous income year may be submitted provisionally if it is not more than one year old. In case of such provisional submission, the date of submission of the master file for the income year in question must be indicated. Further, material changes which would have been included in the master file and are of relevance to the Danish taxpayer should be described (if not included in the local file). In the above outlined situation, the Danish company does not need to specifically request an extension of the deadline. The local file must be submitted in due time, unless, on request, a postponement is granted for exceptional reasons.
If a master file less than one year old cannot be submitted, an extension of the deadline may be requested. An extension of the deadline may also be requested if the master file for the income year in question cannot be submitted before the provisional master file is one year old.
Fine for late submission
If the complete documentation is not submitted in time, the Danish Tax Agency will issue a fine, normally fixed at DKK 250,000. The fine may be reduced to DKK 125,000 if the missing documentation is subsequently produced. The fine is maintained even if it appears that the documentation is in order and that there are no grounds for carrying out a transfer pricing adjustment.
If the taxpayer follows the guidelines for submitting a provisional master file, this will be considered as a timely submission of the transfer pricing documentation.
The fine will be increased by 10% of any increase in taxable income if a transfer pricing adjustment is carried out.
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