This section describes the types of transactions that can be covered by an APA application.

The section deals with the following aspects:

  • All types of transactions;
  • Complexity and scope;
  • Rejection by the Danish Tax Agency of an APA application.

All types of transactions

It is possible to apply for bilateral and multilateral APAs for all types of controlled transactions which an entity expects to carry out. Consequently, APAs cannot in principle be concluded for transactions that have already been carried out. However, see section C.D. below on roll-back.
The case may cover one or more future transactions/transaction types and may cover any transfer pricing issues.

Complexity and scope

The Danish Tax Agency has not set a lower limit for the complexity of issues, their scope, or for the monetary value of the transactions to be discussed. Some other states have certain requirements for the scope or the complexity of the controlled transactions.

In principle, an enterprise may apply for an APA at any time, even after a tax audit of the enterprise has commenced. However, the competent authority may reject an application submitted while an audit of the enterprise is underway, or if the competent authority considers that fundamental considerations go against initiating an APA process at the same time.

As regards bilateral and multilateral APAs, the situation may arise that one or both of the competent authorities consider that the enterprise’s application is too narrowly defined. Subject to the assessment of the tax authorities, an answer may require, for example, that additional transactions or companies in the group be included in the APA. If the applicant either disagrees with this assessment or does not wish to submit additional documentation, the competent tax authorities may refuse to enter into an APA.

The Danish Tax Agency’s experience is that taxpayers often want the APA to include all significant controlled transactions, since otherwise there would be no protection against double taxation. However, it will always be determined on a case-by-case basis what transactions should be included in an APA, and it will often be appropriate to discuss this at a pre-filing meeting.

Rejection by the Danish Tax Agency of an APA application

The taxpayer cannot demand that an APA application be processed and negotiated, and the competent authority of the Danish Tax Agency can thus reject APA applications.