Swiss Administrative Guidance on TP

On 23 January, the Swiss Federal Tax Administration published a report on transfer pricing on its website. It reflects the contents of the OECD TP Guidelines with respect to the arm’s-length principle, comparability analysis, and transfer pricing methods.  Consistent with this, it also emphasizes that Swiss tax authorities as well as courts adhere to the international guidelines

Transfer Pricing Documentation

Regarding transfer pricing documentation, Swiss tax law only requires CbCR. This also only for grups with relatively high consolidated revenue.  Swiss taxpayers do not need to prepare an OECD-style Master File or a Local File.  Readers may form the impression, that they need no TP documentation for Switzerland. However, tax audits still require evidence that intra-group transactions are conducted at arm’s length.

In connection with the consistency with the OECD guidelines, this means increased documentation obligations. Master and Local File are a slimmed down versions of arm’s-length analyses.  Furthermore, the OECD requires annual and contemporaneous monitoring.  Preparing documentation “on-demand” when asked by tax examiners is therefore not complying with the requirements.  Given the relatively short deadlines for provision, it also not practicable.

Administrative Procedures

Of special interest is the last section of the report which addresses administrative procedures in Switzerland.  This covers – on a high level – rulings, advance pricing agreements, primary adjustments and secondary adjustments.  While this part is extremely brief, it helps getting a first impression on the effects of the Swiss federalism on transfer pricing disputes.

The report is available on the Website of the Swiss Federal Tax Administration here (in Section B under the title “Verrechnungspreise”).