SWITZERLAND Trends and Developments Contributed by: René Matteotti, Monika Bieri, Daniel Schönenberger and Caterina Colling-Russo, Tax Partner AG
Safe harbour interest rates The SFTA annually publishes safe harbour inter - est rates for intercompany loans. Adhering to these rates eliminates the need for further proof of compliance with the arm’s length principle. However, these rates basically do not apply to short-term loans, and foreign tax authorities are not bound by them. If a taxpayer chooses to deviate from the safe harbour rates, they must substantiate the arm’s length nature of the applied interest rate through a detailed transfer pricing study. Credit rating analysis The Q&A emphasises the importance of distin - guishing between the credit rating of the borrow - er and that of the specific financial transaction. While the OECD TP Guidelines acknowledge the use of a group’s credit rating in certain cir - cumstances, the SFTA advises that a subsidi - ary’s credit rating should generally be assessed on a standalone basis. The group’s credit rating should only be used in exceptional cases, with appropriate justification based on all relevant The SFTA outlines acceptable scenarios for an intercompany loan being denominated in a for - eign currency, such as when the currency aligns with the company’s functional currency, offers more favourable terms considering hedging costs, or corresponds to the currency in which the financed asset generates most of its revenue. The SFTA underscores the importance of using comparable transactions occurring at or near the issuance date of the intercompany loan for benchmarking purposes. Recognising the chal - lenge of finding comparables in Swiss francs, the SFTA permits the use of loans in other cur - rencies, particularly euros, provided that appro - facts and circumstances. Currency considerations
Introduction Switzerland continues to align its transfer pric - ing framework with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022 (the “OECD TP Guide- lines” ), while maintaining certain local specifici - ties. In 2025, Swiss tax authorities uphold the arm’s length principle as the cornerstone of intercompany pricing, requiring related par - ties to price transactions as if they were deal - ing at arm’s length. This article presents several noteworthy developments in the area of inter - company financing transactions and the penal implications of wrongly set transfer prices for the employees responsible for the pricing and their tax advisers. Swiss Federal Tax Administration Q&A On 23rd February 2024, the Swiss Federal Tax Administration (SFTA) published a Q&A list (in German, English and French), shedding light on its transfer pricing practice. It is intended that these questions and answers will be regularly updated. In this Q&A, the SFTA clarifies ques - tions in relation to transfer prices, always with reference to the OECD TP Guidelines. These clarifications reflect the SFTA’s commitment to aligning with international standards while pro - viding practical guidance tailored to the Swiss context. Most of the questions answered relate to financ - ing transactions. This shows the importance of financing transactions in general and the clear need to provide clarification by the tax authori - ties to taxpayers. Considering that the chapter on financing transactions is only part of the OECD TP Guidelines as of the 2022 update, it is unclear whether these answers are also valid for the years before. Focusing on intercompany financing transactions, the SFTA’s Q&A provides several valuable clarifications.
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