It is often difficult to keep up with the protean Transfer Pricing (“TP”) rules of a country, let alone an entire continent. Today’s newsletter will delve into some new European TP updates, namely in Denmark, Germany and Belgium, keeping you ahead of the curve.
What’s new in Denmark
A recent bill introduced by the Danish Parliament on the 3rd of June 2025 has provided some relief for Danish taxpayers. This bill has simplified the existing TP rules, reducing the compliance burden for MNEs operating in Denmark.
As of 1 July 2025, taxpayers engaging in related party transactions (“RPTs”) that are less than 5 million Danish Krone (“DKK”) (USD 763 000) are exempt from the preparation of TP documentation. This exemption further applies to the same taxpayers if they have intra-group receivables or payables of less than DKK 50 million (approximately USD 7.7 million).
For taxpayers who do not meet the aforementioned requirements, worry not, as there are still some additional exemptions applicable to these RPTs:
- Distributions of dividends
- Capital contributions
- Small passive investments
- Other insignificant transactions which do not meet the thresholds.
The previous materiality thresholds for the preparation of TP documentation were annual total balances of DKK 125 million (approximately USD 19 million) and turnover thresholds of DKK 250 million (approximately USD 38 million). The new thresholds for annual total balances and turnover are DKK 195 million (approximately USD 29 million) and DKK 391 million (approximately USD 59 million), respectively. This upward adjustment offers relief to what we would classify as medium-sized entities that previously exceeded the old thresholds and were therefore subject to full TP documentation requirements.
Lastly, the new rules now state that when a corporate income tax return deadline extension is requested and provided, this will automatically also apply to the submission of TP documentation, reducing the overall administrative burden.
What’s new in Germany
While the Danish Parliament seems to be looking to reduce the compliance burden, the same cannot be said about the German Ministry of Finance (“GMF”). As of 1 January 2025, the submission deadline for TP documentation upon request for a tax audit has been reduced from 60 days to 30 days. This deadline begins on the date that the request is received by the taxpayer. The German Federal Central Tax Office is now entitled to request a taxpayer’s TP documentation at any point, and not just during a tax audit.
Additionally, according to the Fourth Bureaucracy Relief Act passed on the 2nd of April 2025, the Intercompany Transaction Matrix (“ICT Matrix”) is now a compulsory component of the TP documentation which needs to be submitted. In short, an ICT matrix is a high-level summary of the RPTs that a taxpayer has entered into with its related parties. The key components are as follows:
- Transaction types (e.g. Sale of goods, provision of services)
- Parties involved with a clear distinction between the recipients and the providers as well as their jurisdictions
- Transactional amounts (in EURO (“EUR”))
- TP Method used
- Contract on which the transaction is based
- Any preferential tax treatment
What this means for German Taxpayers
The 30-day deadline for TP documentation is tight and may not allow enough time to prepare robust TP Documentation, with a EUR 5,000 penalty for failing to submit the ICT matrix.
Not a train smash though as this can be easily avoided by preparing TP documentation contemporaneously and regularly monitoring the nature and value of the RPTs against the compliance thresholds summarised below:
- A Local File must be prepared if the cross-border RPTs involving the supply of tangible goods exceeds EUR 6 million and any other RPTs exceeds EUR 600 000.
- A Master File must be prepared when the group revenue has exceeded EUR 100 million in the previous fiscal year.
- Additionally, extraordinary TP documentation must be prepared within 6 months after the end of the fiscal year that the extraordinary transaction occurred.
What’s new in Belgium
Belgian taxpayers forming part of Multinational Enterprises (“MNEs”) need to be aware of the three royal decrees published on the 15th of July 2024. These decrees provided updates on TP documentation requirements for taxpayers effective from 1st January 2025.
When preparing Master Files, companies are required to conduct a thorough analysis of the profit to determine the allocation and compare this with the current business models. Additionally, a Development, Enhancement, Maintenance, Protection and Exploitation (“DEMPE”) analysis is required for all transferred and used hard-to-value-intangibles.
For Local Files, available TP documentation such as benchmarking studies, contribution agreements or intercompany agreements must be filed along with the Local File. Failure to submit these documents increases the risk of scrutiny. For any RPTs exceeding EUR 1 million (approximately USD 1.1 million), a breakdown of the RPTs per country for each business unit must be provided.
Conclusion and next steps
Like many countries in Europe, Denmark, Germany and Belgium are clearly taking the necessary strides to standardise their TP processes. At Regan van Rooy, we can assist you in identifying and addressing any transfer pricing compliance gaps, ultimately keeping you and your business up to date and aligned with regulatory requirements.
If you’d like to discuss these changes in more detail, please feel free to reach out to us and book an appointment.
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