Concept and regulation in Switzerland

Switzerland does not have specific legislation defining or addressing transfer pricing but adheres to the Organization for Economic Cooperation and Development (OECD).

As an OECD member, Switzerland has accepted the Transfer Pricing Guidelines developed by this entity and is actively implementing the BEPS project recommendations.

Arm’s Length Principle: Concept

All transactions of parties related to Swiss entities must be carried out under the Arm’s Length Principle conditions, based on Art. 58, Paragraph 1, Letter B, clause 5 of the Corporate Income Tax Law of the country and Article 24 of the Federal Law on Harmonization of Cantonal and Communal Taxes.

Likewise, Switzerland is based on the OECD Transfer Pricing Guidelines (OECD TPG) as a source for the Arm’s Length Principle interpretation. The Swiss Tax Authority issued Circular Letter No.4, dated March 19, 2004, which emphasized that the OECD Transfer Pricing Guidelines should be considered in multinational companies.

Concept of Related Parties in Switzerland

The Value Added Tax Act of June 12, 2009, defines the ‘related parties’ concept as:

  • Owners of at least 20% of the nominal or basic capital of a company or an equivalent equity stake in a company or persons associated with them or
  • Foundations and associations in which there is a particularly close economic, contractual, or personal relationship.

The Swiss Federal Supreme Court has in its jurisprudence the definition of this expression. Accordingly, an entity is related if it is primarily commercial or secondarily personal, being a close relationship between the two entities. Therefore, an equity stake is not directly or indirectly required in administration, control, or capital.

Therefore, it is essential to determine whether the transaction was performed under certain conditions due to the close relationship of the parties or whether the same conditions had been demanded between independent parties.

Transfer Pricing Methods

All transfer pricing methodologies are accepted according to the OECD Transfer Pricing Guidelines, on which Switzerland is based.

Taxpayers can select the appropriate pricing method to determine the arm’s length price. It includes traditional transaction methods, such as:

  • Comparable Uncontrolled Price method
  • Cost Plus method
  • Resale Price method
  • Profit Split method.
  • Transactional Net Margin method.

There is no hierarchy between methods. The Comparable Uncontrolled Price method is preferred, and the Transactional Net Margin method is the most common.

Transfer Pricing Documentation

The law only requires filing the Country-by-Country Report, according to the Federal Law on automatic international exchange of Country-by-Country Reports for multinational companies, dated June 16, 2017. Neither (Master File nor a Local Report) is mandatory but recommended.

There is no formal transfer pricing documentation requirement in Switzerland. Conversely, Swiss tax laws require drafting documents to reconcile tax returns filed. If a taxpayer does not draft supporting documents, the burden of proof passes to the taxpayer. If the Swiss tax authorities question the transfer prices, the taxpayer must provide supporting documents and information demonstrating the economic and commercial reasons for the transactions with related parties.

The Master File and the Local Report must not be automatically filed before the Swiss federal tax authorities together with the Swiss corporate income tax return but at the request of the Swiss tax authorities.

Country by Country Report or CbCR

The federal law incorporating the Country-by-Country Report (CbCR) contains notification mechanisms to be applied to ultimate parent entities and surrogate parent entities in Switzerland.

The Country-by-Country report contains data relating to invoicing, taxes paid, and data on the main economic activities of the entities belonging to the multinational enterprise group. The Federal Council determines the required content of the Country-by-Country report, considering international standards.

Penalties for Non-Compliance with Transfer Pricing

In addition to non-compliance with Country-by-Country reporting, there are no specific transfer pricing penalties, but the general rules on tax penalties apply.

There are penalties concerning the filing and registration obligations of the Country-by-Country report: (i) Penalties for failure to file or late filing, (ii) incorrect filing penalties, and (iii) general penalties for non-compliance with the orders of the Swiss Federal Tax Administration.

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 Author:       Wolfgang Hartl
 Author URI:   https://my-webcraftdesign.at/
 DOCS:         https://my-webcraftdesign.at/tutorial/read-more-read-less-toggle-in-bricksbuilder/
function WCD_rmrl(options) {
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  const readMoreText = options.readMoreText;

  const rmrlContent = document.querySelectorAll("[wcd_rmrl_percentage]");

  rmrlContent.forEach((element) => {
    // INITIAL SETUP (define height, overflow and attributes)
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    trigger = element.nextSibling;
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        this.childNodes.forEach((node) => {
          if (node.nodeValue !== null) {
            node.nodeValue = readLessText;
      } else {
        element.style.height = element.getAttribute("wcd_rmrl_min");
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            node.nodeValue = readMoreText;
  const rmrl = new WCD_rmrl({
    readLessText : 'Read Less',
    readMoreText : 'Read More',


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