Transfer pricing documentation in Switzerland

  1. A. Transfer pricing documentation requirement
    1. 1. In your jurisdiction, are taxpayers obliged to maintain transfer pricing documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?
    2. 2. What is the content of the documentation that must be prepared?
    3. 3. What is the deadline or timescale for providing transfer pricing documentation to the tax authorities (is it to be provided for example upon filing of the tax returns, at the beginning of a tax audit, or on the specific request of the tax authorities)?
    4. 4. In the event that the documentation is not provided within the applicable timescale, or is incomplete, do documentation-related penalties apply in your jurisdiction? If so, please detail the penalties and the circumstances in which they do and do not apply.
    5. 5. Does the absence or incompleteness of documentation reverse the burden of proof as regards the arm’s length character of the transactions?
    6. 6. In the event that the tax authorities (i) impose documentation-related penalties and (ii) make a transfer pricing reassessment, does the imposition of documentation-related penalties prevent the taxpayer from initiating any mutual agreement procedure which may be contained in an applicable tax treaty (or, for EU countries, the procedure contained in the EU Arbitration Convention) with a view to eliminating any double taxation resulting from the transfer pricing reassessment?
    7. 7. Any other relevant aspect not addressed above?
  2. B. Country-by-Country reporting (“CbCR”)
    1. 1. Did your jurisdiction implement the obligation to file a CbCR? If not, is the introduction of the CbCR in your jurisdiction contemplated and, if so, when?
    2. 2. If the obligation to file a CbCR is in force, what is the tax year from which this obligation applies and what is the deadline for filing the CbCR?
    3. 3. Which taxpayers have to file a CbCR in your jurisdiction?
    4. 4. Is the content of the CbCR fully in line with the OECD model (final report on Action 13 of the BEPS project)? If not, what are the differences?
    5. 5. What is the penalty for failing to file the CbCR on time? Can local subsidiaries of a foreign group suffer the local penalty if the foreign group has not filed the CbCR?
    6. 6. Are there tax treaties in force in your jurisdiction allowing the communication of CbCR with other jurisdictions?
    7. 7. Any other relevant aspect not addressed above?
  3. C. As the case may be, other documentation/filing requirement in relation to transfer pricing?
    1. 1. In your jurisdiction, are there any other documentation/filing requirements in relation to transfer pricing?
    2. 2. If so, what is the content of such documentation/filing requirement? What language(s) are to be used by taxpayers?
    3. 3. What is the deadline for meeting this documentation/filing requirement?
    4. 4. Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?
    5. 5. What is the penalty for failing to meet this requirement on time?
    6. 6. Any other relevant aspect not addressed above?

A. Transfer pricing documentation requirement

1. In your jurisdiction, are taxpayers obliged to maintain transfer pricing documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?

No, there are no specific transfer pricing documentation obligations in Switzerland. However, it is intended to implement BEPS Action 13 as of 1 January 2018 (see Section B regarding CbCR).

Still, a sound business transaction documentation (accounts, contracts, invoices etc.) is considered a standard (duty of care) even now.

2. What is the content of the documentation that must be prepared?

Currently not applicable.

a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?

Currently not applicable.

b) What is the definition of “associated enterprises” for the purposes of this requirement (in particular, are transactions between a permanent establishment and its head office in the scope of the documentation requirement)?

Currently not applicable.

c) For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on transfer pricing documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?

Currently not applicable.

d) For all countries (and, in particular, OECD countries), is the content of the documentation similar to that described in the revisions to chapter V of the OECD transfer pricing guidelines (final report on Action 13 of the BEPS project)? If not, are taxpayers entitled to choose between the local requirements and the OECD approach?

Currently not applicable.

e) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?

Currently not applicable.

f) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?

Currently not applicable.

g) If comparable studies are to be provided in general, are safe harbours/specific circumstances exempting taxpayers from preparing benchmark studies (such as the EU Joint Transfer Pricing Forum guidelines on low value adding services 1 Report called “Guidelines on low value adding intra-group services” adopted by the European Union Joint Transfer Pricing Forum during the meeting of 4 February 2010. or revisions to chapter VII of the OECD transfer pricing guidelines about low value adding intra-group services) in your jurisdiction or are there situations in which tax authorities do not request benchmark studies? If so, in which circumstances taxpayers are exempted from benchmark studies?

Currently not applicable.

h) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?

Currently not applicable.

3. What is the deadline or timescale for providing transfer pricing documentation to the tax authorities (is it to be provided for example upon filing of the tax returns, at the beginning of a tax audit, or on the specific request of the tax authorities)?

Currently not applicable.

Currently not applicable.

5. Does the absence or incompleteness of documentation reverse the burden of proof as regards the arm’s length character of the transactions?

Since there is no formal documentation obligation, the absence of such does not lead to the reversal of the burden of proof per se. However, since it is, in general, the taxpayer’s obligation to prove all facts reducing its tax bill, the availability of a transfer pricing documentation (of the group including the Swiss entities) can de facto reverse the burden of proof in favour of the taxpayer.

Currently not applicable.

7. Any other relevant aspect not addressed above?

Currently not applicable.

B. Country-by-Country reporting (“CbCR”)

1. Did your jurisdiction implement the obligation to file a CbCR? If not, is the introduction of the CbCR in your jurisdiction contemplated and, if so, when?

Not yet, reporting requirements are currently in consultation process. The Swiss Federal Council released a discussion proposal for a Federal Act on the International Automatic Exchange of CbCR (“Proposal”) on 13 April 2016 and the respective consultation period ended 13 July 2016. A report has been released on 23 November 2016 together with the draft law (hereinafter “the draft”) which is now pending in parliament.

2. If the obligation to file a CbCR is in force, what is the tax year from which this obligation applies and what is the deadline for filing the CbCR?

According to the draft entering into force is planned for 2018 with first filing in 2020 (of the reports for year 2018). Earlier reporting – on a voluntary basis – for Swiss multinationals should be possible.

3. Which taxpayers have to file a CbCR in your jurisdiction?

According to the draft, filing obligations are only applicable to taxpayers meeting a threshold of consolidated turnover of CHF 900m or higher.

4. Is the content of the CbCR fully in line with the OECD model (final report on Action 13 of the BEPS project)? If not, what are the differences?

The draft should be in line with the OECD Standard.

5. What is the penalty for failing to file the CbCR on time? Can local subsidiaries of a foreign group suffer the local penalty if the foreign group has not filed the CbCR?

According to the draft, maximum penalty will be CHF 250,000. Penalties for subsidiaries are possible but procedures are not yet fully clear.

6. Are there tax treaties in force in your jurisdiction allowing the communication of CbCR with other jurisdictions?

Current bilateral tax treaties do not include automatic exchange of information. Switzerland is party to the OECD/Council of Europe administrative assistance convention.

7. Any other relevant aspect not addressed above?

The new Federal Law and Federal Ordinance on Administrative Assistance in Tax Matters have entered into force per 1 January 2017. They define the framework and the procedures required for the spontaneous exchange of information, including the exchange of tax rulings covering certain topics which are relevant under BEPS on the basis of the OECD Convention on Mutual Administrative Assistance in Tax Matters.

Based thereon Switzerland has started collecting data on 1 January 2017 and will exchange it – with EU member states and a selected number of other countries – for the first time in 2018. Tax ruling information exchange will only refer to tax rulings remaining in effect as per 1 January 2018, but excluding any tax rulings which have been granted before 1 January 2010.

The list of countries participating in the exchange of information with Switzerland and the respective entry into force date can currently be found on https://www.sif.admin.ch/sif/en/home/themen/internationale-steuerpolitik/automatischer-informationsaustausch.htm

C. As the case may be, other documentation/filing requirement in relation to transfer pricing?

1. In your jurisdiction, are there any other documentation/filing requirements in relation to transfer pricing?

Currently not applicable.

2. If so, what is the content of such documentation/filing requirement? What language(s) are to be used by taxpayers?

Currently not applicable.

3. What is the deadline for meeting this documentation/filing requirement?

Currently not applicable.

4. Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?

Currently not applicable.

5. What is the penalty for failing to meet this requirement on time?

Currently not applicable.

6. Any other relevant aspect not addressed above?

Currently not applicable.