SWITZERLAND Trends and Developments Contributed by: René Matteotti, Monika Bieri, Daniel Schönenberger and Manuel Ulrich, Tax Partner AG
judgment therefore does not, in itself, preclude the consideration of multi-year comparisons in MAP or APA proceedings. New Developments: Considerations on the Interaction of TP and Customs Valuations in a Volatile Tariff Environment – Implications for Multinational Enterprises Introduction From a Swiss perspective, the interaction between transfer pricing and customs valuation has become an increasingly challenging topic for multinational enter - prises (MNEs) operating in Switzerland. Switzerland hosts a large number of global and regional head - quarters, principal companies, and entrepreneurial entities that manage complex cross-border supply chains. These structures are particularly exposed to geopolitical and trade policy developments outside Switzerland, despite Switzerland’s own rather stable regulatory and customs environment. Since 2025, the highly volatile political landscape and rapid changes in customs tariffs most notably in the United States have significantly increased uncertainty for Swiss-based MNEs. This volatility has intensified the need to reas - sess transfer pricing policies, customs strategies, and value chain configurations in an integrated manner, as tariff changes directly affect intra-group pricing, profit allocation and risk attribution. This development will continue in 2026 and most likely upcoming periods. Structural interaction between transfer pricing and customs The OECD TPG require that intra-group prices comply with the arm’s length principle, reflecting the economi - cally relevant characteristics of the controlled trans - action, including functions performed, risks assumed and assets employed. Customs valuation similarly relies on the transaction value of imported goods, subject to adjustments, provided that the relationship between the parties did not influence the price. Despite this conceptual overlap, the objectives of the two regimes diverge. Customs authorities focus on safeguarding customs revenue and preventing under - valuation of imports, while tax authorities aim to pre - vent base erosion and profit shifting. For Swiss MNEs acting as principals or central procurement entities, this divergence becomes more acute when tariff rates
fluctuate rapidly. This applies analogously to routine distribution or routine manufacturing entities of Swiss MNEs operating outside of Switzerland in countries with fluctuating tariff rates. Higher transfer prices may be defensible from a transfer pricing perspective, but increase customs duties, whereas lower prices may attract scrutiny from tax authorities. Volatile tariffs amplify this inherent tension and reduce the effec - tiveness of static pricing models. Volatile tariffs and operational transfer pricing challenges The post-2025 environment has been characterised by frequent and sometimes abrupt tariff changes, par - ticularly in the United States, affecting a wide range of products and industries. For MNEs with Swiss prin - cipals and operating entities abroad, these changes pose significant challenges for operational transfer pricing, especially margin management. Many Swiss-based MNEs operate with standardised target-margin models for limited-risk distributors or contract manufacturers. Sudden tariff increases – often treated as part of cost of goods sold – can erode local margins and lead to deviations from arm’s length outcomes. If market conditions prevent passing these additional costs on to third-party customers, local entities may incur losses that are inconsistent with their routine risk profile. Transfer pricing adjustments (prospectively during a financial year or at year-end) may correct margins from a direct tax perspective and may reduce direct tax risks in the country benefiting from such adjustments but may constitute a direct tax risk in the disadvantaged country (further details are provided below). However, especially retroactive price changes are often problematic for customs purposes, and may not be accepted by customs authorities or may trigger disputes, penalties or delays. This creates a structural compliance dilemma, particularly relevant for Swiss principals seeking to maintain consistent global policies and which needs to be managed from a risk and cost management perspective aiming to mitigate subsequent adverse consequences. Allocation of tariff-related risks and costs A critical issue is the allocation of additional costs resulting from increased tariffs. The OECD TPG emphasise that risks should be allocated based on
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