On 23 January 2024, the Swiss Federal Tax Administration published the updated Transfer Pricing Guide. The main provisions of the guide include:
An overview of the arm’s length principle and the consequences of non-compliance under Swiss law. It explains the hidden distribution of profit related to parties receiving excessive or insufficient remuneration and how it is subject to withholding tax.
An overview of comparability analysis providing an overview of a nine-step process based on OECD guidelines. The analysis considers various comparability factors, including the contractual provisions of the controlled transaction, the functions performed by each party, the characteristics of the property or services involved, the economic circumstances of the parties, the market the parties operate, and the economic strategies.
An overview of the transfer pricing methods, which encompasses the five traditional transaction-based methods and transactional profit methods based on OECD Guidelines. The guidance covers special areas of application pertaining to the sections of the OECD Guidelines, such as intangible assets, intra-group services, low-value services, and financial transactions.
An overview of the transfer pricing documentation as per Swiss law which mandates the submission of a Country-by-Country report for eligible groups. However, there is no requirement for a Master or Local file. This obligation extends to transfer pricing, ensuring compliance with the arm’s length principle.
The list of procedural aspects, such as the authorities responsible for transfer pricing, includes:
- The cantonal tax authorities ( for income tax collection)
- The Federal Tax Administration (for withholding tax collection)
- The State Secretariat for International Financial Matters (for negotiating advance pricing agreements and mutual agreement agreements)
