Section 3B of the Danish Tax Control Act (skattekontrolloven) is a key provision governing transfer pricing documentation and reporting requirements for Danish taxpayers engaging in controlled transactions. The main aspects of this section include:

1. Documentation Requirements:
   • Danish taxpayers must prepare written documentation to substantiate that prices and conditions for intercompany transactions are at arm’s length.
   • This requirement applies to both cross-border and domestic intra-group transactions.
2. Exemptions:
   • Small and medium-sized enterprises may be exempt from preparing transfer pricing documentation if they meet certain criteria related to number of employees, total balance, and turnover.
3. Notification Requirements:
   • Danish businesses that are part of a multinational enterprise (MNE) group with a consolidated group turnover equal to or exceeding DKK 5.6 billion per income year must notify the Danish Tax Agency about which group entity will submit the Country-by-Country (CbC) Report.
4. Penalties:
   • Failure to fulfill transfer pricing documentation requirements within the deadline can result in penalties, even if no income adjustment is made.
   • The penalty is generally fixed at DKK 250,000 per financial year per entity, with potential reductions or increases based on specific circumstances.
5. Documentation Structure:
   • Denmark has adopted the OECD’s three-layered approach to transfer pricing documentation, consisting of:
     a) Master File
     b) Local File
     c) Country-by-Country Reporting
6. Language Requirements:
   • The Local File, Master File, and CbC report can be provided in Danish, Norwegian, Swedish, or English.

It’s important to note that as of January 1, 2019, the content of Section 3B has been replaced by sections 37 to 52 of the new Tax Control Act, although the rules remain generally unchanged.