Document background
The Advance Price Agreement (APA) is a crucial document for multinational enterprises operating in or through Denmark who seek certainty in their transfer pricing arrangements. It's particularly valuable when companies engage in complex or high-value intercompany transactions, or when traditional transfer pricing methods may be difficult to apply. The agreement, governed by Danish tax law and aligned with OECD guidelines, provides taxpayers with certainty about their transfer pricing methodology for a specified future period, typically 3-5 years. It includes detailed analysis of proposed pricing methods, critical assumptions, and compliance requirements. Companies typically seek an APA when entering new markets, restructuring operations, or dealing with unique intellectual property or services where comparable market prices are difficult to establish. The document can be unilateral (involving only Danish authorities) or bilateral/multilateral (involving multiple tax authorities).
