When affiliated companies trade with each other, prices and terms of trade must be at a so-called arm’s length term. This means that prices and terms must be set in the same way as independent parties would set them with each other. If trade takes place across national borders, a pricing of an intra-group transaction that is not on arm’s length terms may mean that one of the countries receives a smaller share of the group’s taxable income, which means less tax revenue for the country.

It appears from SKAT’s control plan that the existing control efforts will be continued in 2017. The control cases are selected based on, among other things, the size of the transactions and the risk of errors, but all companies in the target group can be selected for control. SKAT thus focuses on ensuring that the companies’ taxable income reflects that the intra-group transactions take place on arm’s length terms. Companies that have intra-group transactions with each other must prepare and keep written documentation on how prices and terms for the intra-group trade are determined. The written documentation must be of such a nature that it can form the basis for SKAT’s assessment of whether prices and terms are set at arm’s length. If no documentation has been prepared, SKAT may determine arm’s length prices and terms on a discretionary basis. If SKAT is of the opinion that transactions have not been made on arm’s length terms, the prices and terms set may be changed to arm’s length prices and terms, regardless of the documentation provided. In most other Western countries, the tax authorities carry out controls of intra-group transactions in a similar way as in Denmark. A change in Denmark should in principle lead to a corresponding change (with the opposite sign) in the other country, otherwise double taxation will arise.