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).
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Key Requirements PROMPT example:
Advance Price Agreement
I need a bilateral Advance Price Agreement between our Danish manufacturing subsidiary and German parent company, covering transfer pricing methodology for finished goods and management services, to be effective from January 2025.
1. Parties: Identification of the taxpayer(s) and relevant tax authorities entering into the agreement
2. Background: Context of the application, description of the business operations, and reason for seeking the APA
3. Definitions: Definitions of technical terms, pricing concepts, and other key terminology used in the agreement
4. Scope of Agreement: Specific transactions, products, or services covered by the APA
5. Term of Agreement: Duration of the APA, including start and end dates
6. Transfer Pricing Methodology: Detailed description of the agreed pricing method(s) and how they will be applied
7. Critical Assumptions: Key business and economic conditions that must remain constant for the APA to remain valid
8. Annual Compliance Requirements: Requirements for annual reports and documentation to demonstrate compliance
9. Revision and Renewal Provisions: Conditions and procedures for revising or extending the agreement
10. Termination Provisions: Circumstances under which the APA may be terminated and the consequences
11. Confidentiality: Provisions regarding the confidentiality of information shared under the agreement
12. Governing Law: Specification of Danish law as the governing law and relevant jurisdictional matters
1. Competent Authority Provisions: Required for bilateral/multilateral APAs to define the role and jurisdiction of each tax authority
2. Dispute Resolution: Specific procedures for resolving disputes between multiple tax authorities, needed for bilateral/multilateral APAs
3. Roll-back Provisions: Optional provisions for applying the agreed methodology to previous tax years
4. Language: Required for bilateral/multilateral APAs to specify the controlling language version
5. Compensating Adjustments: Procedures for making adjustments when actual results fall outside agreed ranges
6. Force Majeure: Provisions for handling extraordinary events that might affect the application of the methodology
1. Schedule A - Covered Transactions: Detailed description of all intercompany transactions covered by the APA
2. Schedule B - Transfer Pricing Methodology Details: Complete technical explanation of pricing methods, including formulas and calculations
3. Schedule C - Critical Assumptions Detail: Comprehensive list and explanation of all critical assumptions
4. Schedule D - Financial Projections: Financial forecasts and budgets supporting the proposed methodology
5. Schedule E - Functional Analysis: Detailed analysis of functions, risks, and assets of all parties involved
6. Appendix 1 - Corporate Structure: Organization charts and description of relevant corporate relationships
7. Appendix 2 - Financial Data: Historical financial data supporting the proposed methodology
8. Appendix 3 - Comparables Analysis: Details of comparable transactions or companies used in the analysis
9. Appendix 4 - Annual Compliance Report Template: Template for required annual compliance reporting
10. Appendix 5 - Economic Analysis: Detailed economic analysis supporting the transfer pricing methodology
Authors
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Technology
Pharmaceuticals
Financial Services
Automotive
Consumer Goods
Energy and Utilities
Telecommunications
Professional Services
Retail
Software and Digital Services
Chemical Industry
Life Sciences
Relevant Teams
Tax
Finance
Legal
Treasury
International Business
Risk Management
Compliance
Corporate Development
Financial Planning and Analysis
Internal Audit
Relevant Roles
Chief Financial Officer
Tax Director
Transfer Pricing Manager
International Tax Manager
Group Financial Controller
Head of Tax
Finance Director
Treasury Manager
Tax Compliance Manager
Senior Tax Analyst
Corporate Controller
International Business Director
Legal Counsel
Finance Manager
Risk Management Officer
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