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Documentation and reporting
Rules and procedures
What rules and procedures govern the preparation and filing of transfer pricing documentation (including submission deadlines or timeframes)?
Switzerland has signed the Multilateral Competent Authority Agreement for the Automatic Exchange of Country-by-Country Reports. Consequently, Swiss ultimate parent entities and surrogate parent entities with a group revenue exceeding Sfr900 million must file an annual country-by-country report. The corresponding law and ordinance entered into force on 1 December 2017. Consequently, as of 2018, qualifying Swiss entities are required by law to file country-by-country reports on an annual basis. The deadline for filing the report is 12 months after the end of the respective business year (Article 11 of the Country-by-Country Law).
Aside from the country-by-country report, Swiss law does not require Swiss entities to compile transfer pricing documentation. However, if the competent tax administration questions the arm’s-length comparability of a transaction, the respective entity may be required to provide conclusive proof for the relevant transaction to be at arm’s length.
For all companies and groups of companies with a significant cross-border exchange of personnel, services and goods, it is highly recommended to respect the general principles of corporate housekeeping. This includes the timely conclusion and updating of inter and intracompany contracts that reflect the actual conduct of the parties. In addition, it is highly useful to document any further legal and economic reasoning that has influenced the terms and conditions of internal dealings and transactions. Tax administrations consider this documentation to be more credible if it was demonstrably created at the moment that the transfer pricing issue first occurred, as opposed to the moment of a tax audit. This implies reliable document management and investigation of the facts by the taxpayers or their counsels, respectively.
Content requirements
What content requirements apply to transfer pricing documentation? Are master-file/local-file and country-by-country reporting required?
The law requires only country-by-country reports to be filed. Neither master nor local files are mandatory. Best practices apply.
Penalties
What are the penalties for non-compliance with documentation and reporting requirements?
The law on country-by-country reporting provides penalties for non-filing, incorrect filing and late filing of reports, violation of the registration obligation and general non-compliance with the orders of the Swiss Federal Tax Administration. In the case of an intentional offence, the fine may amount to a maximum of Sfr100,000 (Article 25 of the Country-by-Country Reporting Law).
Best practices
What best practices should be considered when compiling and maintaining transfer pricing documentation (eg, in terms of risk assessment and audits)?
Aside from the country-by-country report, the law does not require Swiss entities to compile transfer pricing documentation.
For all companies and groups of companies with a significant cross-border exchange of personnel, services and goods, it is highly recommended to respect the general principles of corporate housekeeping. This includes the timely conclusion and updating of inter and intracompany contracts that reflect the actual conduct of the parties. In addition, it is highly useful to document any further legal and economic reasoning that has influenced the terms and conditions of internal dealings and transactions. Tax administrations consider this documentation to be more credible if it was demonstrably created at the moment that the transfer pricing issue first occurred, as opposed to the moment of a tax audit. This implies reliable document management and investigation of the facts by the taxpayers or their counsels, respectively.
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