Danish Tax Authority Issues Clarifications on Master File Filing Requirements – MNE Tax

By Joel André Malan, Senior Consultant, Transfer Pricing, Danish Tax Agency, Copenhagen

Background

Starting this year, all taxpayers subject to the Danish transfer pricing documentation requirements must file their master file and local file through the central portal of the Danish Tax Agency within 60 days of the deadline for tax return for the year in question. For a taxpayer with a calendar year, this implies a filing deadline of August 29, 2022, for the 2021 fiscal year.

However, the obligation to file the master file within this time limit is problematic for taxpayers whose head office is located in jurisdictions where the time limits are more lenient. Therefore, these taxpayers could not reasonably be expected to have completed their master file for the given year in time to meet the Danish filing deadline.

To take this situation into account, the Danish Tax Agency has issued a clarification in its legal guidance.

The new direction

The new guidelines, issued on January 31, 2022, state that a taxpayer unable to provide a main file for the given year may be granted a temporary stay, provided the three conditions below are met:

First, such a taxpayer must be able to produce the master file for the previous year. For example, if the taxpayer has a fiscal/accounting year that matches the calendar year and that taxpayer is unable to provide the 2021 master file by August 29, 2022, they can instead provide the master file covering calendar year 2020.

Second, the taxpayer must commit in writing to a date on which the master file for the given year will be deposited in the central portal.

Third, any significant changes impacting the Danish taxpayer during the year in question that are not already described in the local file should be briefly described.

If these three conditions can be met, the taxpayer is not obliged to request an extension of the filing deadline.

Other takeaways

According to the earlier version of the legal guidelines, 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 a formal request for an extension of the standard submission deadline. It should be noted, however, that approval of such a request is not granted automatically, but rather is subject to individual assessment by an appointed case handler within the Danish Tax Agency.

  • Joël André Malan is chief consultant at the Danish Tax Agency in Copenhagen.

Esther L. Steinbach