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Transfer pricing methods

Available methods

Which transfer pricing methods are used in your jurisdiction and what are the pros and cons of each method?

There are no statutory rules on the applicable methods for making transfer pricing adjustments in Denmark, but the applicable methods are consistent with the methods covered by the Organisation for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines, which are:

  • the comparable uncontrolled price method (CUP method);
  • the resale price method;
  • the cost-plus method;
  • the transactional net margin method; and
  • the profit split method.

According to the guidelines, other transfer pricing methods may be used if they are in accordance with the arm's-length principle in the specific case.

Preferred methods and restrictions

Is there a hierarchy of preferred methods? Are there explicit limits or restrictions on certain methods?

While the CUP method is the most commonly used model, there is no statutory hierarchy of the applicable methods as the aim of the Danish transfer pricing rules – in accordance with the OECD Transfer Pricing Guidelines – is to find the most appropriate method of determining the value of the transactions under the arm's-length principle.

Comparability analysis

What rules, standards and best practices should be considered when undertaking a comparability analysis?

The guidance on the comparability analysis under Danish domestic law is fully aligned with the guidance outlined in the OECD Transfer Pricing Guidelines.

Special considerations

Are there any special considerations or issues specific to your jurisdiction that associated parties should bear in mind when selecting transfer pricing methods?


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