SWITZERLAND Law and Practice Contributed by: René Matteotti, Monika Bieri, Daniel Schönenberger and Caterina Colling-Russo, Tax Partner AG
Final Tax Assessments If a tax assessment is already final and legally binding, an adjustment is generally only possi - ble if the tax administration becomes aware of new facts or evidence. As long as the taxpayer provided the tax administration with appropriate and correct transfer pricing documentation dur - ing the assessment relating to the ex ante valu - ation of the intangible in question, the adminis - tration is not entitled to come back to its own evaluation should ex post show that the value of the intangible is, in fact, higher. In this case, the ex post data would not qualify as new facts or evidence, and thus prohibit the final tax assess - ment from being reopened and changed. 4.3 Cost Sharing/Cost Contribution Arrangements Switzerland recognises cost contribution arrangements and applies the OECD TPG corre - spondingly. However, Switzerland does not have special rules that apply to such arrangements. 5. Adjustments 5.1 Upward Transfer Pricing Adjustments Switzerland does not have specific rules regard - ing upward transfer pricing adjustments. Gen - erally, pursuant to Swiss tax law, the financial statements prepared in accordance with com - mercial law are, in principle, binding for tax pur - poses. The tax administrations can only deviate from the financial statements in order to deter - mine the taxable base if the statements violate accounting principles as set forth in the federal Code of Obligations, or if specific rules of the tax law require an adjustment. However, as long as the tax return has not yet been filed by the taxpayer, the balance sheet can, in accordance with the Code of Obliga -
tions, be adjusted without further restrictions. Once the tax return has been filed, a balance sheet adjustment is only permissible if it vio - lates commercial law. Hence, if a transfer pricing issue arises once the tax return has been filed, an adjustment, in principle, will only be allowed if the original transfer prices also violate com - mercial law. Neither transfer pricing-specific returns nor related-party disclosures are required to be filed Secondary adjustments in Swiss practice are adjustments that arise from imposing tax on a secondary transaction. A secondary transac - tion is a constructive transaction resulting from the transfer of excessive remuneration, char - acterised as constructive dividends, construc - tive equity contributions or constructive loans, depending on the jurisdiction. In Switzerland, a secondary adjustment rep - resents the levying of withholding tax on the amount that qualifies as a hidden profit distri - bution in the context of transfer pricing. Sec - ondary adjustments in Switzerland are therefore carried out exclusively by the SFTA, which has sole authority for levying withholding tax. with the corporate income tax return. 5.2 Secondary Transfer Pricing Adjustments If a primary adjustment made by a cantonal tax administration is partly or fully confirmed in a mutual agreement procedure (MAP), the question of secondary adjustment arises – ie, the levying of withholding tax by the SFTA on the amount of the primary adjustment confirmed in the MAP. If the question of the levying of withholding tax is not covered in the mutual agreement, with - holding tax is to be levied on the amount of the
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