By Joel André Malan, Chief Consultant, Transfer Pricing, Danish Tax Agency, Copenhagen
Background
Beginning this year, all taxpayers subject to Danish transfer pricing documentation requirements must file their master file and local file through the Danish Tax Agency’s central portal within 60 days of the tax return deadline for that given year. For a taxpayer with a calendar financial year, this implies a filing deadline of August 29, 2022, for financial year 2021.
The requirement to file the master file by this deadline is problematic, however, for taxpayers headquartered in jurisdictions with more lenient deadlines. Therefore, it could not be reasonably expected that these taxpayers would have completed their master file for the given year in time to meet the Danish filing deadline.
To account for this situation, the Danish Tax Agency has issued a clarification in its legal guidance.
The new guidance
The new guidance, published on January 31, 2022, states that a taxpayer unable to provide a master file for the given year can be granted a temporary reprieve, providing the below three conditions are met:
First, such a taxpayer must be able to file the previous year’s master file. To illustrate, if the taxpayer has a tax/accounting year matching the calendar year, and that taxpayer is unable to provide the 2021 master file by August 29, 2022, they instead may provide the master file covering the 2020 calendar year.
Second, the taxpayer must commit in writing to a date by when the master file for the given year will be submitted within the central portal.
Third, any significant changes impacting the Danish taxpayer in the year in question that are not already described in the local file must be briefly described.
Providing these three conditions can be met, then the taxpayer is not obligated to request an extension of the deadline for submission.
Other takeaways
In keeping with the earlier version of the legal guidance, if the taxpayer is unable to provide a master file that is less than one-year-old—or for some other reason is unable to meet the filing deadline—then the taxpayer may make a formal request for an extension to the standard deadline for submission. It should be noted, however, that approval of such a request is not granted automatically, but rather is subject to an individual evaluation by an assigned case handler within the Danish Tax Agency.
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Joel André Malan is a chief consultant at the Danish Tax Agency in Copenhagen.
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