Denmark has fully implemented the Country-by-Country Reporting (CbCR) requirements as part of its alignment with the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13 framework. The Danish Tax Authority (Skattestyrelsen) oversees compliance, ensuring multinational enterprise (MNE) groups operating in Denmark adhere to these obligations.

This article provides key details for Chief Financial Officers and tax directors of MNEs, covering applicability, reporting requirements, submission procedures, penalties, and resources for compliance.

Applicability of CbCR in Denmark

Criteria for Reporting:
CbCR applies to MNE groups meeting the following conditions:

• The group’s consolidated annual revenue exceeds DKK 5.6 billion (Danish kroner, equivalent to €750 million) in the preceding fiscal year.
• The group includes a Danish tax-resident entity, such as:
  • The Ultimate Parent Entity (UPE), or
  • A subsidiary or permanent establishment in Denmark.

Local Filing Obligation:

• A local Danish entity may need to file the CbCR report if:
  • The UPE is not obligated to file in its home jurisdiction.
  • The jurisdiction of the UPE does not exchange CbCR information with Denmark.

Relevant Legislation:

• CbCR is governed by Section 3B of the Danish Tax Control Act (Skattekontrolloven), implementing BEPS Action 13.

Reporting Requirements

Content of the CbC Report:
MNE groups must report aggregated financial data on a per-jurisdiction basis, including:

• Total revenue (related and unrelated party transactions),
• Profit or loss before income tax,
• Income tax paid and accrued,
• Stated capital and retained earnings,
• Number of employees,
• Tangible assets (excluding cash and cash equivalents).

Filing Notifications:

• Danish entities must annually notify the Skattestyrelsen about the identity and jurisdiction of the reporting entity within their group.

Submission Platform:

• Reports must be submitted electronically through the Danish Tax Administration’s online platform using the prescribed XML schema.

Resource:
For submission details, visit the official Skattestyrelsen website: Skattestyrelsen.

Filing Deadlines

• CbC Reports must be filed within 12 months of the end of the reporting fiscal year.
  • Example: For a fiscal year ending 31 December 2023, the report must be filed by 31 December 2024.
• Notification of the reporting entity must be submitted by the end of the fiscal year.

Penalties for Non-Compliance

Consequences of Non-Compliance:
Failure to comply with CbCR obligations in Denmark may result in:

• Monetary fines, the size of which depends on the extent and severity of the non-compliance.
• Additional scrutiny or audits by the Danish Tax Administration.

Mitigating Circumstances:

• If a valid reason for non-compliance is demonstrated, penalties may be reduced or waived at the discretion of the authorities.

Confidentiality and Exchange of Information

Data Protection:

• Information reported in CbC reports is safeguarded under Danish confidentiality laws and used exclusively for:
  • Transfer pricing risk assessments,
  • Tax administration purposes.
• Denmark exchanges CbC reports with other jurisdictions under the Multilateral Competent Authority Agreement (MCAA) and EU directives, ensuring confidentiality and appropriate use of data.