Controlled transactions in Denmark in 2024 – What is your obligation as a majority shareholder?
Majority shareholders, who are physical persons and limited or fully tax residents in Denmark, must submit a special declaration each year to the Danish Tax Agency relating to controlled transactions between themselves and their controlled entities in addition to their tax return.
Controlled transactions in Denmark in 2024 – What is your obligation as a majority shareholder?
In this blog, we examine controlled transactions in Denmark in 2024 – What is your obligation as a majority shareholder?
Majority shareholders, who are physical persons and limited or fully tax residents in Denmark, must submit a special declaration each year to the Danish Tax Agency relating to controlled transactions between themselves and their controlled entities in addition to their tax return.
Furthermore, Transfer Pricing documentation for controlled transactions between a controlled company and the majority shareholder should always be prepared, even though it should only be submitted upon request from the Danish Tax Agency or when exceeding certain thresholds or having controlled transactions with companies located in countries outside the EU which does not have a double taxation treaty with Denmark.
It is also worth noting that limited liability companies in Denmark exceeding certain consolidated thresholds on the group level must submit transfer pricing documentation the latest two months after the tax return deadline.
We have written a blog here about Transfer Pricing rules in Denmark for 2024
The transfer pricing documentation should contain a Master file and a Local file following the OECD guidelines.
A failure to submit complete and compliant transfer pricing documentation can result in a 250.000 DKK fine.
Also, note that even though thresholds are not exceeded, transfer pricing documentation should still be prepared and submitted upon request from the Danish Tax Agency.
When is the deadline to submit the declaration regarding controlled transactions?
The declaration regarding controlled transactions must be submitted by the majority shareholder, who is a physical person, annually, regardless of having had controlled transactions or not with controlled companies.
The deadline for submitting the declaration regarding controlled transactions is the same as the deadline for the regular tax return for the majority shareholder.
For the year 2023, the deadline will be: 1.7.2024
For the year 2024, the deadline will be: 1.7.2025
When are you considered a majority shareholder?
You are a majority shareholder when you have a controlling influence in a company (e.g. when you own an ApS or an A/S).
If you own more than 50% of the shares in a company, you have a controlling influence and are considered the majority shareholder.
Must sole proprietors submit a declaration of controlled transactions?
Sole proprietors should not submit a declaration of controlled transactions relating to their sole proprietorship.
How to submit the declaration regarding controlled transactions
The declaration regarding controlled transactions is called “04.021”.
You need to fill out a form and submit it online.
It is important to note that ALL limited or fully tax residents of Denmark who are majority shareholders must submit the declaration annually.
This also applies even if you have NOT had any controlled transactions with your controlled entities.
Is there a fine for not declaring on time?
You should expect to be fined for not reporting controlled transactions on time.
Typically the fine will be 5.000 DKK.
The two most common types of controlled transactions with the majority shareholder are
1: Loans granted from the majority shareholder to the company (also if, for example, you pay bills for your company once in a while)
2: Interest income from loans granted to your company by you personally
NB: Your situation may, of course, be different. Other controlled transactions could relate to controlled sales, purchases, rentals, loans, shares and many other types of controlled transactions. Each type of controlled transaction must be specified.
The following types of controlled transactions with the majority shareholder should NOT be included
1: Salary you have received from a controlled company
2: Dividends you have received from a controlled company
(This blog is updated last time: 20.3.2024)
FAQ
What are majority shareholders in Denmark required to do regarding controlled transactions in 2024?
They must submit a special annual declaration to the Danish Tax Agency about controlled transactions between themselves and their controlled entities.
Do majority shareholders need to prepare Transfer Pricing documentation for these transactions?
Yes, even if it should only be submitted upon request or under certain conditions.
What happens if a company exceeds certain consolidated thresholds?
Limited liability companies must submit transfer pricing documentation two months after the tax return deadline.
What should the transfer pricing documentation include?
A Master file and a Local file following OECD guidelines.
What is the penalty for failing to submit compliant transfer pricing documentation?
A fine of 250.000 DKK
When is the declaration regarding controlled transactions due?
The same deadline as the regular tax return, with specific dates provided for 2023 and 2024.
Who is considered a majority shareholder?
Someone with controlling influence, usually owning more than 50% of a company.
Are sole proprietors required to submit a declaration of controlled transactions?
No, this does not apply to sole proprietorships.
How is the declaration regarding controlled transactions submitted?
Using form "04.021" and submitting it online.
What types of controlled transactions are commonly reported?
Loans from the majority shareholder to the company and interest income from such loans.