The legal framework
Denmark's arm's length rule is compact on the page and expansive in reach. Ligningsloven § 2(1), consolidated at LBK nr 42 af 13. januar 2023, requires controlled commercial and financial transactions to be priced as independent parties would have priced them, and it captures six categories of taxpayer: those under another person's control, those exercising control, group-affiliated entities, Danish taxpayers with foreign permanent establishments, foreign persons with Danish permanent establishments, and hydrocarbon taxpayers. Individuals sit inside the regime alongside companies, and ligningsloven § 2 A extends the same discipline to trusts and their settlors. Control means more than 50% of capital or votes, aggregated across group companies, close family, family foundations and co-shareholders acting jointly — a test repeated word for word in skattekontrolloven § 37.
The OECD Guidelines are not Danish statute. They are the interpretive source. Den juridiske vejledning C.D.11.2.1.1 states that § 2 is read consistently with Article 9 of the OECD Model, with the Guidelines supplying the content of the principle; the 2022 edition is treated as current and successive OECD updates are characterised as clarification rather than substantive change. The practical consequence is that later Guidelines are applied to earlier income years, and a taxpayer defending a historic position should be ready to argue that a specific passage went beyond clarification rather than accepting the framing wholesale. Pricing also never stands alone. The GAAR in ligningsloven § 3, thin capitalisation in selskabsskatteloven § 11, the interest limitations in §§ 11 B and 11 C, and withholding tax on intercompany interest under § 2(1)(d) each apply independently of whether a price is arm's length, and service charges must separately clear the general deductibility test in statsskatteloven § 6.
Methods, comparables and benchmarking
All five OECD methods are available and there is no hierarchy: the most appropriate method wins, with reasons required in the local file. Denmark also accepts methods outside the OECD five through the TPG 2.9 gateway, though the taxpayer then carries the burden of showing the alternative is the better fit, and valuation techniques are expressly used for businesses and intangibles. Oil and gas extraction runs on its own track under the Hydrocarbon Tax Act, where controlled commodity transactions are priced on a CUP-equivalent basis.
On ranges, Danish practice is settled but not statutory. Where a database study supports a profit-based method, the interquartile range governs, and a controlled result outside it is adjusted to the point within the range most comparable to the controlled transaction — to the median only where the information available does not identify one point as more comparable than another. The guidance is careful to say that statistics cannot replace qualitative comparability, and warns that caution is required where the database analysis rests on few comparables. The Supreme Court gave that warning teeth in SKM2025.295.HR, reversing SKM2024.506.ØLR: the fact that several sales companies' margins fell outside the interquartile range was not in itself sufficient to show non-arm's length dealing, and interquartile calculations carried only limited probative value where information existed on a fairly small number of benchmark companies. The tested party will usually be the least complex participant, but selecting one does not licence a thin analysis of the counterparty — in SKM2018.62.LSR the Landsskatteret upheld the Danish company as tested party under TNMM precisely because there was insufficient information on the foreign sales companies. There is no Danish-only comparables rule and no stated preference for local over pan-European sets, and SKM2021.251.HR shows that an unsubstantiated attack on comparables drawn from lower-wage jurisdictions will fail. Critically, a benchmarking study is not part of the standard package: Skattestyrelsen can demand one only during an audit, with a statutory floor of 60 days under skattekontrolloven § 39(4) and a 60-to-90-day window under BEK nr 883 af 24. juni 2025.
Documentation: what Skattestyrelsen expects
Denmark is a mandatory-submission jurisdiction, and that is the single most important compliance fact about it. For income years beginning on or after 1 January 2021, skattekontrolloven § 39(3) requires documentation to be prepared on an ongoing basis and filed with the Agency within 60 days of the information return deadline — not produced on request. For a calendar-year company the return is due 30 June and the file on 29 August. The package is the familiar two-tier master file and country-specific local file, with content prescribed by BEK nr 883 af 24. juni 2025 and expressly scaled to the size and complexity of the group. Danish, Norwegian, Swedish and English are all acceptable. Filing runs through the DIAS module in TastSelv Selskabsskat, unlocked once the return flags the company as documentation-liable.
Several third-party summaries claim the June 2025 reform abolished the 60-day rule. It did not. What LOV nr 750 af 20. juni 2025 changed was who is caught and how the clock moves: the deadline now follows automatically any extension of the return deadline under SKL § 14, and Skattestyrelsen may extend on request in special circumstances. From income year 2025 a de minimis exemption applies where controlled transactions fall below DKK 5m and year-end intercompany receivables and debt below DKK 50m — both tests, with carve-outs for intangibles within afskrivningsloven § 40 and for counterparties in non-EU/EEA states without information exchange. SME thresholds rose to under 250 employees and either a balance sheet below DKK 195m or turnover below DKK 391m. Purely domestic Danish transactions have been outside the documentation duty since 2021. None of this touches the substantive obligation: LL § 2 still applies, and evidence can be demanded on audit. Country-by-country reporting is separate, at a DKK 5.6bn consolidated turnover threshold, due 12 months after year end, with notification by the end of the income year.
Audits, penalties and the enforcement climate
Fines for late or materially deficient documentation are set by tariff: DKK 250,000 per income year, halved to DKK 125,000 where acceptable documentation is later produced, plus 10% of any income adjustment. SKM2026.343.BR, decided in March 2026, shows how quickly that compounds — two years of missed deadlines produced a fine of DKK 1,906,329, of which only DKK 250,000 was base penalty and the remainder 10% of adjustments totalling DKK 16.5m. The uplift, not the tariff, is the exposure. Separately, skattekontrolloven § 46(1) gives Skattestyrelsen a discretionary assessment power where documentation was not prepared and filed on time, and daily coercive fines are available under § 72(1). The assessment window is long: skatteforvaltningsloven § 26(5) pushes expiry into the sixth year after the income year for controlled transactions.
The enforcement pendulum has moved. The gateway to discretionary assessment is not mere deficiency but documentation so substantially deficient that it can be equated with missing documentation — a threshold met in SKM2021.251.HR, where the file left the authorities without a sufficient basis to assess arm's length compliance and the taxpayer could not then displace the discretionary estimate, but decisively not met in two 2025 Supreme Court decisions, SKM2025.76.HR (Accenture, January 2025) and SKM2025.295.HR (EET Group, May 2025). In Accenture the Court held that a file built on the Guidelines, with a reasoned method choice, a function and risk analysis and a comparability analysis on an informed data basis, could not be set aside, and the Ministry had not independently proved the mark-up or royalty rate wrong. Against that, SKM2024.255.HR (Maersk Oil/TotalEnergies) upheld an adjustment of roughly DKK 1.3bn where pre-exploration work of real economic value was transferred to subsidiaries for nothing. The lesson is consistent: file quality is the whole defence, and once the file survives, the Ministry must prove its own case on the merits.
Dispute resolution and advance certainty
Denmark offers bilateral and multilateral APAs and charges nothing for them. There is no separate domestic unilateral programme — the OECD profile ticks unilateral APAs, but Den juridiske vejledning describes APAs solely as competent-authority agreements under Article 25 and TPG Chapter IV, and practitioners should plan on that basis. There is no statutory term; five years is the practice, renewal should be raised well before expiry, and rollback is possible where the other competent authorities accept it. One risk deserves flagging to clients before an application: if the fact-gathering exposes non-arm's length earlier years, those years can be adjusted under the ordinary rules.
Unilateral certainty comes instead from a binding ruling under skatteforvaltningsloven §§ 21-25, which binds the authorities for five years for a base fee of DKK 300 at 2010 levels — although the OECD profile records that such rulings are rarely given on transfer pricing questions. MAP is available under treaty Article 25, the EU Arbitration Convention, Directive 2017/1852 and the MLI, free of charge, handled by Store Selskaber, Kompetent Myndighed. The EU Directive route has hard timelines worth diarising: three years to complain from first notification, six months for the competent authorities to decide admissibility, two years to reach agreement (extendable by one), and failing that an advisory commission set up within 120 days of the request, an opinion within six months (extendable by three) and a final decision six months after the opinion. Domestically, an assessment is appealed within three months to Skatteankestyrelsen or Landsskatteretten for a refundable fee of DKK 1,300. Where an adjustment has been made, ligningsloven § 2(5) lets a taxpayer avoid secondary adjustment consequences by undertaking a matching payment, provided the undertaking is given in direct connection with the primary correction and, cross-border, the foreign authority actually taxes on the corrected terms.
Amount B, Pillar Two and what changes now
Denmark has moved past political commitment on Amount B and legislated it. Ligningsloven § 2 B, inserted by LOV nr 750/2025 and effective for income years beginning on or after 1 January 2025, deems prices set under the simplified and streamlined approach to satisfy LL § 2 for qualifying distribution transactions with counterparties in 23 listed jurisdictions that have elected to apply it. Five cumulative conditions apply, the most operationally significant being an operating-expense intensity between 3% and 20% of annual net revenue (up to a 30% cap where the distribution jurisdiction applies a higher figure), exclusion of intangibles, services and commodity activity, and a wholesale test requiring retail sales not to exceed 20% of the last three years' net revenue. Anyone working from the May 2025 OECD profile, which records the legislation as still in drafting, is working from a superseded position.
Two further layers now sit above transfer pricing. Minimumsbeskatningsloven, consolidated at LBK nr 1089 af 2. september 2025, implements an IIR, a UTPR and a qualified domestic minimum top-up tax, with the UTPR chapter biting for financial years beginning on or after 31 December 2024 and the transitional CbCR safe harbours in § 72 running out for years beginning after 31 December 2026. Public country-by-country reporting sits elsewhere again — in årsregnskabsloven §§ 137 b-137 j, filed with Erhvervsstyrelsen rather than the Tax Agency at the same DKK 5.6bn turnover trigger, published within 12 months and kept on the company's website for five years, with no omission ever permitted for jurisdictions on the EU non-cooperative list. A drafting trap deserves mention: skattekontrolloven remains consolidated at LBK nr 12 af 8. januar 2024, so the consolidated text still shows the old exemptions, the superseded DKK 125m/250m thresholds and the repealed auditor's-certificate provisions. LOV nr 750/2025 must be read alongside it.
How practitioners should respond
Work backwards from the filing date, not the return date. For a calendar-year Danish entity the master and local file must be complete and submitted by 29 August, roughly two months after the return, which means group-level input has to be commissioned in the first quarter, not the third. Where the parent's cycle makes that impossible, use the concession allowing the prior year's master file to be filed provisionally, provided it is no more than a year older than the Danish deadline. Test the new exemptions deliberately rather than assuming them: the DKK 5m and DKK 50m tests are cumulative, the intangibles and non-exchange-jurisdiction carve-outs are easy to trip, and none of the 2025 relief reaches income year 2024, which stays on the old rules and the old thresholds.
Then invest where the case law says the value is. Two Supreme Court defeats for the Ministry in 2025 turned on the same point — a file grounded in the Guidelines, with a reasoned method choice, a real functional and risk analysis and a defensible comparability study, cannot be equated with missing documentation, and once that gateway closes the authorities must prove the price wrong on the merits. SKM2025.295.HR adds a second lesson for the Agency's side of the argument: a result outside the interquartile range is not by itself proof of anything, least of all on a thin benchmark set. Keep benchmarking material in a state where a full study can be produced inside 60 to 90 days from a standing start, document comparability adjustments and the reasoning behind screening criteria at the time, and keep the return disclosure under skattekontrolloven § 38 consistent with the file. On the horizon, confirm whether any distribution flow qualifies under LL § 2 B before pricing it conventionally, and check that Pillar Two data and transfer pricing positions tell the same story.
