Background
Switzerland has no specific transfer pricing regulations. The arm’s-length principle is enforced via Art. 58(1)(b) DBG and Art. 24(1)(a) StHG—an intra-group service provided at non-arm’s-length terms is considered a monetary benefit and leads to a profit tax offset as well as potentially to withholding tax (secondary adjustment). The OECD Transfer Pricing Guidelines serve as the interpretive framework, and both the FTA and the Federal Supreme Court regularly rely on them.
Switzerland remains OECD-compliant but cautious regarding its own transfer pricing regulations. Last year, three topics dominated the landscape: established FTA practice with a Q&A website, the OECD Amount B approach (not adopted by Switzerland), and the integration of transfer pricing with Pillar 2.
New FTA practice: Q&A website, Federal Supreme Court ruling
In January 2024, the FTA published its own tax information dossier on “Transfer Pricing” and has since been operating a Q&A website on transfer pricing, which is being continuously expanded. The FTA’s dedicated Transfer Pricing Team in Bern is responsible for this and also serves as the point of contact for TP rulings ([email protected]).
Key points from current practice:
- Cost base – cost-plus method: Non-operating costs (taxes, financing costs) generally do not form part of the cost base because they do not contribute to value creation (Q&A No. 5).
- Intra-group loans: Failure to comply with the FTA’s safe-haven interest rates gives rise to a rebuttable presumption that the arm’s-length principle has not been observed; the taxpayer may provide counterevidence through a transfer pricing analysis (Q&A No. 22).
- Foreign-currency loans: To be assessed on a case-by-case basis—functional currency, more favorable terms, or the currency of the main income may justify them (Q&A No. 24).
Federal Supreme Court ruling 9C_37/2023 of June 11, 2024: The FTA has published its own statement on this matter; the ruling concerns the treatment of taxes in the cost base under the cost-plus method and marks the first time the highest court has addressed this issue. Those working with service companies or routine service providers should keep their cost base definition up to date.
Interest Circulars: The FTA publishes its new circulars on tax-recognized interest rates annually. For existing loans not automatically linked to the safe-haven rates, it must be determined whether the terms need to be adjusted or whether third-party comparative evidence is available.
OECD Amount B — Simplified Approach for routine sales functions
The consolidated OECD report on Amount B was published in early 2025 and has been included as an annex to Chapter IV of the OECD Transfer Pricing Guidelines. Amount B (the “simplified and streamlined approach”) establishes a simplified, matrix-based approach to transfer pricing for routine sales and marketing activities—typically buy-sell distributors and commission agents in wholesale trade. Digital products, intangible assets, services, raw materials, and retail (with a 20% de minimis rule) are not covered.
Politically, countries were expected to adopt Amount B as of January 1, 2025. In reality, the updated OECD Transfer Pricing Country Profile shows that the majority of countries have not (yet) adopted Amount B. Switzerland has also not yet introduced Amount B.
Practical implication: Until Switzerland makes a decision, Amount B remains an issue to monitor for Swiss groups. Where routine sales functions are located in countries that apply or recognize Amount B, a double taxation risk arises if Switzerland, as the principal location, does not participate—the result of the Amount B approach is not binding on the non-implementing state.
Pillar 2: Transfer pricing substance becomes more costly from a tax perspective
With the introduction of GloBE minimum taxation in Switzerland, transfer pricing takes on a new dimension. The Federal Council enacted the national supplementary tax (NES/QDMTT) effective January 1, 2024, and decided to apply the international supplementary tax (IIR) effective January 1, 2025. It deliberately did not enact the UTPR (Undertaxed Profits Rule). Where aggressive TP structures drive the effective tax burden in a jurisdiction below 15%, the supplementary tax applies; TP risks are thus penalized twice—once through the adjustment of the local tax base, and once through the top-up tax in another jurisdiction.
Keep a close eye on:
- DEMPE Concept (Development, Enhancement, Maintenance, Protection, Exploitation): Those who possess substance and control over intangible assets should also bear the risk of residual profits. Pure holding structures without personnel or decision-making functions can no longer credibly position themselves as IP owners.
- Substance-based Income Exclusion (SBIE) under GloBE rewards physical substance (labor costs, property and equipment)—this reinforces the importance of a coherent functional and risk analysis.
- OECD Side-by-Side Package: Introduction of several new GloBE safe harbors; Switzerland has specified which safe harbors can be applied and when (Simplified ETR Safe Harbor for fiscal years beginning on or after December 31, 2025; SbS, UPE, and SBTI Safe Harbors effective January 1, 2026).
Documentation in Switzerland - formally flexible, de facto mandatory
Switzerland has no formal TP documentation requirement (except for CbCR for consolidated group revenues of CHF 900 million or more). However:
- Burden of proof: According to established practice in an international context, the burden of proving arm’s-length compliance lies with the taxpayer as soon as the tax authority plausibly demonstrates that the transfer price is not at arm’s-length.
- TP rulings: The FTA requires “appropriate supporting documentation, e.g., a transfer pricing study.”
- Intra-group interest: A transfer pricing analysis is expected as soon as there is a deviation from the FTA’s safe-haven rates.
In practice, a Master File/Local File structure in accordance with OECD standards is now the minimum standard for internationally active Swiss groups—not least because foreign group companies must prepare their documentation in accordance with local law, and inconsistencies between countries lead to corrections.
