SWITZERLAND Law and Practice Contributed by: René Matteotti, Monika Bieri, Daniel Schönenberger and Caterina Colling-Russo, Tax Partner AG
4. Intangibles 4.1 Notable Rules
whereas the CUP method is the most commonly used method for intangible property licensing and financing. The hierarchy of transfer pricing methods as stipulated in the older versions of the OECD TPG can still be of relevance. This is due to a static approach to the application of the TPG that means that the version of the TPG in effect at the time the transaction was settled is applied (see 1.1 Statutes and Regulations ). It is sometimes difficult, however, to assess whether an update of the OECD TPG can be considered merely a more detailed explanation of the existing principles or an actual change in the guiding principles. If the former is the case, a dynamic approach to the application of the TPG is permissible as well. 3.4 Ranges and Statistical Measures The use of statistical tools that consider central tendency, such as the interquartile range or other percentiles, is not required. However, in prac - tice, such tools are usually used to narrow the range, in particular because the comparables in a benchmark study are usually not perfect. For the determination of adequate transfer pric - es, the tax authorities generally consider the interquartile range as the arm’s length remu - neration. 3.5 Comparability Adjustments Swiss domestic tax laws do not provide specific guidance on comparability adjustments. How - ever, the OECD TPG on how and when to apply comparability adjustments are applicable.
Swiss domestic tax laws do not provide specific guidance on the pricing of controlled transac - tions involving intangibles. Rather, the OECD TPG are to be consulted regarding transfer pric - ing of intangibles. 4.2 Hard-to-Value Intangibles Officially, Switzerland did not adopt the hard-to- value intangibles (HTVI) approach as defined in Chapter VI of the OECD TPG as this approach seems to collide with long-standing case law and the tax laws themselves. In particular, the question is whether ex post data can influence open or final tax assessments. However, in general, due to the adherence to the OECD TPG, the OECD’s approach regarding HTVI should be applicable in Switzerland. Open Tax Assessments If a tax assessment is not yet final, a transfer pricing adjustment requires, inter alia, an obvi - ous mismatch between the value of the trans - ferred intangible and the compensation received, and that this mismatch was recognisable for the persons in charge (see 1.1 Statutes and Regu- lations ). This mismatch is evaluated ex ante, namely at the time the transaction was settled. The hard-to-value intangibles (HTVI) approach, however, assesses the conditions of the trans - action ex post and does not provide an answer to whether a potential mismatch was ex ante already obvious and, thus, recognisable. Hence, the HTVI approach – as mentioned above – does not seem to fit into pre-existing domestic law and the respective case law. So far, however, there is no precedent on this issue.
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