This section explains what bilateral and multilateral APAs are and which rules govern the conclusion of such agreements.
The section contains the following:

  • Definition;
  • Legal basis for APAs;
  • Bilateral and multilateral agreements.


An Advance Pricing Arrangement (APA) is an advance agreement between the tax authorities of two or more states concerning the transactions within a particular business group. The arrangement sets out criteria and principles for the transfer pricing of a particular enterprise’s intra-group transactions between the states concerned for a specified future period. The criteria include, for example, transfer pricing methods, comparable data and any necessary adjustments and critical assumptions The arrangement must be consented to by the group of companies involved.

APAs are described in detail in Section F of Chapter IV of the OECD Transfer Pricing Guidelines, and the process for concluding APAs is described in a long appendix to Chapter IV.

Legal basis for APAs

Such an agreement must be concluded in accordance with the principles of Article 25 of the OECD Model Tax Convention on the mutual agreement procedure.

Not all states wish to participate in negotiations on bilateral or multilateral APAs. Detailed information on each of the 80 or so states with which Denmark has concluded DTCs must be requested from the respective competent foreign tax authorities. In any case, there will be different national rules to take into account in the process. It is the responsibility of the enterprise to be aware of these rules.

Bilateral and multilateral arrangements

The enterprise can apply for both bilateral and multilateral APAs, i.e. it can choose whether the agreement must be concluded between the Danish Tax Agency and another foreign tax authority or between the Danish Tax Agency and two or more foreign tax authorities.