SWITZERLAND Law and Practice Contributed by: René Matteotti, Monika Bieri, Daniel Schönenberger and Caterina Colling-Russo, Tax Partner AG
judicial instances; though, typically, smaller can - tons only establish one judicial instance. Once the highest cantonal court has rendered its decision, an appeal with the FSC can be lodged, also within 30 days. In contrast to the cantonal instances, the FSC will only deal with questions concerning the correct application of the law, which includes the application of the OECD TPG as soft law. Issues concerning the facts will only be dealt with if the facts were arbitrarily established. In the context of transfer pricing, it is worth noting that the choice of the transfer pricing method and its correct application is a question of law, whereas the result is consid - ered a factual question. Hence, regarding the determination of the arm’s length remuneration, the FSC can only intervene if the remuneration appears arbitrary. The disputed tax needs to be paid irrespective of the fact of appealing a decision or moving the case forward into court. If the appeal/objection is successful, the tax already paid will be paid back, with interest. However, the FSC clarified that the tax administration is not entitled to enforce the disputed tax amount as long as the controversy has not been decided with legal effect. Never - theless, the tax authority may request a freezing order at any time, even before the tax amount has been legally determined, if the taxpayer is not domiciled in Switzerland or payment of the tax owed by them appears to be at risk. The freezing order is immediately enforceable and has the same effects in the debt collection pro - ceedings as an enforceable court judgment. Withholding Tax, Stamp Duty and VAT In contrast to the cantonal tax administrations, the SFTA can raise transfer pricing issues in con - nection with withholding tax, stamp duty and VAT. As at the cantonal level, the taxpayer can
object to a negative decision of the SFTA before appealing to the court. As such a decision affects taxes being levied by a federal administrative authority, the appeal has to be lodged with the Swiss Federal Administra - tive Court (FAC) – within 30 days. This court’s decision can then – again within 30 days – be appealed with the FSC. 14. Judicial Precedent 14.1 Judicial Precedent on Transfer Pricing Due to Switzerland’s practice of issuing transfer pricing rulings and its APA programme, disputes on core transfer pricing issues that have to be settled by courts are relatively rare. Neverthe - less, the FSC as well as the FAC have recently issued important decisions that raise key issues in the field of transfer pricing. Furthermore, it can be observed that cantonal courts are also scrutinising transfer pricing in more detail and increasingly refer to the OECD TPG. 14.2 Significant Court Rulings Decision of the Federal Supreme Court (BGer 6B_90/2024 and 6B_93/2024) In 2011, a real estate company belonging to an MNE received a CHF93 million long-term loan from an Irish group company, bearing interest at 3.15% per annum. During a cantonal audit in 2014, this interest rate was deemed exces - sive even if the interest rate was within the inter- quartile range of a benchmark study prepared retroactively due to the audit. To settle the case, the cantonal tax authorities and the taxpayer agreed on an arm’s length interest rate of 2.5% per annum. However, the taxpayer did not pro - actively declare this hidden dividend to the SFTA
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