Denmark court applies broad interpretation of transfer pricing law

By Peter S. Andersen, Transfer Pricing Partner, Questro International, Amsterdam

On 3 January, Denmark’s National Tax Court published a decision that adopts an expansive view of what constitutes a “controlled transaction” for purposes of Denmark’s transfer pricing legislation.

At issue in the decision, SKM2020.4.LSR; dated 11 December 2019, was whether the longer (6 year) statute of limitation for tax assessments applicable to controlled transactions would apply in the case. This was the reason that the question regarding the interpretation of the term “controlled transactions” came up.

Transfer pricing rules are normally associated with classic types of intercompany transactions, such as the sale of goods, licensing of intangibles, provision of services and loans, and transfer of assets, but in this case the issue was whether a less typical transaction was within the scope of the term “controlled transactions”.

In the case at hand, a Danish resident individual together with her father owned a majority equity stake in a Norwegian company. The Danish resident received payments from the Norwegian company as a result of decreases in the nominal value of shares in the Norwegian company.

After an extensive analysis of earlier practice, court decisions, and the legislative history of Denmark’s transfer pricing law, Denmark’s National Tax Court decided on a broad application of the term “controlled transaction”, concluding that the Danish transfer pricing legislation and thus the longer statute of limitations did apply.

Multinational taxpayers with Danish companies should take note of this decision as it illustrates that Denmark’s transfer pricing legislation could apply in other types of less typical transactions.

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Peter S. Andersen

Partner at Questro International

Peter S. Andersen advises on transfer pricing, and his practice focuses on corporates headquartered in Scandinavia, the Benelux, and the United Kingdom. His firm also has a strong transfer pricing practice for real estate fund managers investing in Europe.

Peter holds master degrees in law from Denmark and the United Kingdom and has practiced transfer pricing since the late 90s.

Latest posts by Peter S. Andersen (see all)

• Denmark court applies broad interpretation of transfer pricing law - January 21, 2020
• Danish staffing company can’t deduct royalties paid to Swiss parent, High Court rules - November 19, 2019
• Denmark tax bill clarifies timing rules for transfer pricing documentation - September 25, 2019

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