Tax rules require that affiliated companies deal with each other on the same terms that apply to independent parties. This is called the arm's length principle. Compliance with the requirement therefore presupposes that internal rules for settlement etc. -transfer pricing -are established between the companies.
As in many other countries, Denmark has rules that require companies to provide information to the tax authorities about intra-group transactions. In many cases, writ-ten documentation must also be prepared and submitted to prove that such transactions are at arm's length.
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