Denmark Legislates For CbC Reporting
On September 18, 2015, the Danish Ministry of Taxation published draft legislation to introduce a new country-by-country reporting obligation for multinational corporations.
The draft Bill would introduce the new three-tiered approach to transfer pricing documentation that is to be proposed formally by the OECD as part of the BEPS deliverables due to be released on October 5.
The regulations would require Dutch ultimate parent companies to file a CbC report if the group’s net turnover is DKK5.6bn (USD840m) or more. In some limited circumstances, a member of a multinational group resident in Denmark for tax purposes may also be required to file a CbC report.
A “local file,” covering material transactions of the local taxpayer, would need to be prepared by entities established in Denmark that engage in related-party transactions, and a “master file” is required from group parents, containing standardized information relevant to all MNE group members.
The reforms will mean that large groups may now need to disclose detailed information on: the nature and value of transactions with related parties; revenues before tax; tax payments; intangible assets and their ownership; any advance pricing agreements secured; significant intra-group transactions concerning intangibles that occurred during the reporting period; strategies to develop intangible assets and the location of research and development activities; the group’s transfer pricing policies; and other financial activities, among other things.
The new reporting requirement will apply to financial years beginning on or after January 1, 2016.
