Swiss Federal Tax Administration (SFTA). There are no specific references to transfer pricing in Swiss tax law. However, legal support for adjusting profits of a taxpayer is derived from the arm’s length principle in Article 58 of the Federal Direct Tax Act.
There are no specific transfer pricing regulations.
The SFTA instructed the cantonal tax administrations, in a circular issued in 1997, to adhere to the OECD Transfer Pricing Guidelines for transfer pricing, and Switzerland has agreed to adopt key aspects of the OECD guidelines.
The Swiss tax administration adheres to the OECD guidelines and prefers the transactional methods over the profit-based methods. Circular Letter 4/2004 mentions that mark-ups of service companies must be determined in accordance with the arm’s length principle, on the basis of comparable uncontrol ed transactions and with appropriate ranges of mark-ups for any individual case. The circular also implicitly states that the Cost Plus method is the most appropriate method for service companies to price their services. However, where facts and circumstances indicate, other methods of arriving at a profit on the services may be appropriate.
There are no specific transfer pricing penalties, but general penalty rules apply. However, penalties are only imposed in case of fraud or negligence. Interest charges for late payment are due in case of adjustments.
There are no special provisions for reductions in penalties.
There are no specific documentation requirements. However, if chal enged by the tax authority, the taxpayer has to demonstrate that the transfer prices applied were based on sound economic and commercial reasoning on an arm’s length basis.
There are no special provisions for documentation deadlines.
The general rule provides up to 10 years back from the end of the assessment year, if new facts or circumstances are discovered.
There are no formal related party disclosure requirements. However, in the case of an audit or request from the competent authorities, the taxpayer must provide the requested information to a reasonable extent.
The risk that transfer pricing issues are scrutinized during an audit is at a medium level. Transfers of intangibles and transfers with offshore entities receive specific scrutiny.
There are no formal APA procedures. However, the Federal Tax Administration participates in multilateral APAs.
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