Denmark has since 1998 had a detailed Transfer Pricing legislation, which from its inception imposed a documentation obligation (TP-documentation) on larger groups of companies, transactions with tax heavens etc. The national legislation now appears in sections 37-52 of the Tax Control Act. The detailed requirements for TP documentation are set out in Executive Order no. 468 of 2022 on documentation of controlled transactions, which is further detailed in the Danish Tax Agency’s Guidelines of 21 January 2019. The rules, including the detailed content of the documentation requirements, follow the norms and standards developed by the OECD.

The legislation is characterised by the fact that the duty to made and delivers a TP-documentation is imposed under criminal liability. Section 84(5) of the Tax Control Act therefore prescribes a penalty for anyone who intentionally or through gross negligence fails to submit TP documentation or submits such documentation too late. Until now, there has been some ambiguity in practice as to how offences should be sanctioned. A number of test cases have therefore been decided by the courts for clarification. The judgments have established some guidelines for the imposition of fines. These guidelines can be briefly summarised as follows: a fine of DKK 250,000 is imposed for every complete failure to submit TP documentation and DKK 125,000 for the mere delayed submission. At the same time, the courts have ruled that there is full cumulation, i.e. full aggregation in the case of offences committed over several years.

The problem and the judgements in question are described in an article written by special consultant, Professor, Dr. jur. et jur.dr. h.c. Jan Pedersen, Bachmann Partners, Denmark in the tax magazine SR-Skat 2022.299. The article is published below in English translation.

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