On June 3, 2025, the Danish Parliament (Folketinget) approved Law No. 750 of 2025, which introduces significant changes to transfer pricing documentation requirements. The main purpose of this reform is to reduce the administrative burden on small and medium-sized enterprises (SMEs), while maintaining the principles of transparency and international tax compliance.
The measure entered into force with effect for tax years beginning on or after April 2, 2024, and will formally apply from the 2025 tax year.
Regulatory context and objectives of the reform
With this amendment, Denmark continues to adjust its tax framework to balance international compliance requirements with domestic business competitiveness. The decision to relax the documentation requirement is based on the need to align regulatory costs with the size and risk level of taxpayers. It is estimated that, as a direct result of this change, more than 1,500 companies will be exempt from filing transfer pricing documentation.
New thresholds for the documentation requirement
One of the most significant changes introduced by the reform is the increase in the financial thresholds that determine the obligation to prepare transfer pricing documentation.
Under the new regime, a Danish company—individually or together with its associated companies—will be exempt from this obligation if it meets the following criteria:
- Have fewer than 250 employees.
- Have a total annual balance sheet of less than 195 million Danish kroner (previously 125 million), or
- Have an annual turnover of less than 391 million Danish kroner (previously 250 million).
Although the obligation is completely eliminated in these cases, companies may still be subject to a limited documentation obligation, depending on the nature of their transactions.
Introduction of a de minimis rule
The reform also establishes a de minimis rule, also known as a materiality threshold, which seeks to exclude from documentary compliance those transactions considered to be of low tax risk due to their limited scale. This concept is common in tax legislation and aims to focus compliance and enforcement efforts on transactions with greater economic impact or complexity.
In the Danish case, the de minimis rule exempts from the obligation to prepare transfer pricing documentation when transactions with related parties within a fiscal year do not exceed certain quantitative limits. This exemption applies if all of the following conditions are met:
- Total controlled transactions (excluding accounts receivable and payables) do not exceed DKK 5 million during the fiscal year.
- Controlled accounts receivable and liabilities at the end of the fiscal year do not exceed DKK 50 million.
To determine compliance with these limits, only those transactions and balances that fall within the scope of the documentation obligation should be considered.
It is important to note that this exemption does not apply in certain specific situations that pose a greater risk to the Danish tax base. In particular, it does not apply when:
- The transactions relate to intangible assets covered by §40 of the Amortization Act.
- The counterparty to the transaction is outside the European Union or the European Economic Area, and there is no tax information exchange agreement with Denmark.
These exceptions seek to ensure that, even in low-value transactions, there is transparency when sensitive jurisdictions or high-risk assets are involved.
New specific exemptions
The legislation incorporates several additional exemptions that reduce the scope of the obligation to document intra-group transactions:
- Dividends, capital contributions, and similar transactions are exempt provided they are made in cash.
- In the case of transparent entities (e.g., partnerships or funds), the obligation to document transactions is eliminated when:
- The taxpayer and its related companies own less than 5% of the capital and voting rights in the entity.
- The investments are made through transparent structures.
- There is no joint control agreement over the management of the entity.
These provisions seek to exclude passive or non-significantly controlled investment structures from the scope of application, reducing the unnecessary documentation burden in low tax risk scenarios.
Coordination with the tax information form deadline
Another relevant practical change is that, as of the reform, if a taxpayer obtains an extension to file the general tax information form (oplysningsskema), this extension will automatically apply to the deadline for filing transfer pricing documentation as well. This provision improves the consistency of administrative deadlines and provides greater predictability for companies in their tax planning.
Entry into force and temporary application
The reform enters into force for tax years beginning on or after April 2, 2024, and will apply generally from the start of the 2025 tax year. According to the Danish Corporation Tax Act (§10, stk. 1), this date marks the point from which the new conditions can become operational for the companies concerned.
Conclusion
The relaxation of transfer pricing documentation requirements adopted by Denmark reflects a pragmatic evolution of the tax system, which recognizes the limitations of SMEs and optimizes the use of resources for both the administration and taxpayers. By raising financial thresholds, introducing de minimis rules, and expanding exemptions, the country strengthens its ability to focus its enforcement efforts on transactions and structures with the greatest tax impact.
For multinational groups and tax advisors, this change implies a need to review risk segmentation, adjust internal documentation policies, and ensure that cross-border transactions continue to comply with the arm’s length principle, particularly in cases that fall outside the new exemptions.
Source: https://www.retsinformation.dk/eli/lta/2025/750