Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘Denmark’

Denmark: New TP / PE rules

As of 1/1/2021, the TP Master File and Local File are required to be submitted to the tax authorities within 60 days after filing the tax return, with daily penalties imposed for not meeting the timeline.

The permanent establishment (PE) rules are also being modified: the PE definition will be conformed to the 2017 OECD definition, with deviations for a building site becoming a PE from day 1, and a trading activity is required for a PE resulting from investments in shares, receivables and financial instruments.

Additionally, the Court of Justice of the European Union (CJEU) on 12 June 2018 (case C-650/16, Bevola) held that Danish law was incompatible with European Union law because a Danish company could not claim a tax deduction for a final loss in a foreign PE. Denmark’s revised guidance will be effective from 2019, providing opportunities to claim such losses.

Denmark’s TP documentation: OECD+

Denmark has new transfer pricing documentation rules in place, effective for tax year 2016, while country-by-country (CbC) reporting for non-Danish HQ companies is delayed until tax year 2017.

The local transfer pricing file is to include a copy of intercompany arrangements and details of IP re: “DEMPE” functions including the Development, Enhancement, Maintenance, Protection and Exploitation attributes.

The additional details extend beyond the OECD Guidelines and will lead to further complexity re: the ability to efficiently provide globally consistent transfer pricing documentation around the world. This may be followed by other countries as they follow the particular leader at the team, and thus EY”s Alert should be reviewed by interested tax practitioners.

Click to access 2016G_01098-161Gbl_TP_DK%20issues%20stricter%20requirements%20for%20TP%20documentation.pdf

%d bloggers like this: