On 3 June 2025, the Danish Parliament passed significant amendments to the Danish Tax Control Act. These legislative changes reshape Denmark’s transfer pricing landscape. The aim is to ease compliance for smaller businesses while enhancing oversight of high-risk transactions. This article provides an in-depth overview of the new rules, their implications, and key considerations for tax professionals and investors.
New De Minimis Thresholds: Documentation Relief for Smaller Transactions
A major feature of the reform is the introduction of de minimis thresholds for transfer pricing documentation. Companies with total controlled transactions under DKK 5 million per year are now exempt from preparing formal documentation. This measure significantly reduces the compliance burden for businesses with limited intra-group activity.
However, this exemption does not apply to:
- Transactions involving intangible assets such as royalties or intellectual property.
- Dealings with related parties in non-EEA countries that lack a double tax treaty with Denmark.
In these cases, full documentation is required regardless of the transaction size.
Additionally, companies with intra-group receivables and payables below DKK 50 million can benefit from the exemption.
Higher Small Group Thresholds: Broader Eligibility for Relief
The financial thresholds that define a small group have been increased:
- Turnover threshold: from DKK 250 million to DKK 391 million
- Balance sheet total: from DKK 125 million to DKK 195 million
- Employee threshold: remains at fewer than 250 full-time employees
This change allows more groups to qualify for documentation exemptions, offering relief to a wider range of companies.
Documentation Requirements That Continue to Apply
While the new rules provide relief for many, certain documentation obligations remain in force:
- Groups with 250 or more employees must still prepare transfer pricing documentation, regardless of turnover or balance sheet totals.
- Transactions involving intangible assets or dealings with related parties in non-EEA, non-treaty jurisdictions must always be documented.
- The Danish Tax Agency continues to focus on high-risk areas such as intra-group loans, restructurings, and supply chain adjustments.
Simplified Compliance Processes
The reforms also simplify compliance in several ways:
- The requirement for auditor statements in connection with transfer pricing documentation has been abolished. This removes a significant administrative step.
- Transfer pricing documentation deadlines will now automatically align with extensions granted for the corporate income tax return. This means companies no longer need to apply separately for deadline extensions.
Implications for Businesses
These changes are expected to benefit around 1,500 companies in Denmark, primarily small and medium-sized enterprises (SMEs). SMEs with limited intra-group dealings will find compliance simpler and less costly.
For larger companies, or those involved in complex or high-risk transactions, documentation requirements remain unchanged. These businesses should expect continued scrutiny from the Danish Tax Agency, particularly for transactions involving intangibles, financial arrangements, and cross-border restructuring.
Even where exemptions apply, companies are advised to maintain internal records that demonstrate arm’s-length pricing. This precaution can help defend positions during any future audit.
Strategic Considerations
Businesses should review their operations to ensure they take advantage of the new thresholds while remaining compliant. Recommended actions include:
- Assess eligibility for exemptions based on new limits.
- Review intra-group transactions to identify any that still require documentation.
- Update compliance calendars to reflect the automatic deadline alignment.
- Strengthen internal policies to support arm’s-length pricing, even for exempt transactions.
Conclusion
The transfer pricing reforms introduced in Denmark from 3 June 2025 mark a shift towards more proportionate compliance obligations. While the rules ease the burden for smaller businesses, they reinforce the importance of robust policies and documentation for complex or higher-risk transactions. Companies should review their structures, processes, and records to ensure compliance and mitigate tax risks under the updated regime.
Need Expert Guidance on Transfer Pricing and Tax Strategy?
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Whether you’re dealing with a transfer pricing audit, managing cross-border tax issues, or looking to streamline your transfer pricing documentation, we have the expertise to support you every step of the way.
Get in touch with our team here to learn how we can help you achieve your tax objectives with confidence.
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