OECD TRANSFER PRICING GUIDELINES ADOPTED FOR SWISS INTRAGROUP SERVICES

The Swiss Federal Tax Administration issued new Circular No. 4/2004 on March 19, 2004, which will affect the transfer pricing methodology applicable to service companies and intragroup services. Switzerland has now abandoned the safe harbor rules in favor of the OECD Transfer Pricing Guidelines for...

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Bibliographic Details
Published in:Journal of International Taxation 2004-06, Vol.15 (6), p.11
Main Authors: Preisig, Alfred, Hull, Howard R, Bonvin, Nicolas, Huber, Markus Frank
Format: Article
Language:English
Subjects:
Beneficiaries
Documentation
Financial services
International taxation
Methods
Multinational corporations
Payroll costs
Tax services
Transfer pricing
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Summary:The Swiss Federal Tax Administration issued new Circular No. 4/2004 on March 19, 2004, which will affect the transfer pricing methodology applicable to service companies and intragroup services. Switzerland has now abandoned the safe harbor rules in favor of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines). This new circular will have implications for companies engaged in service activities in Switzerland. Its practical application by the taxing jurisdictions remains to be seen but it has already been established that, in some circumstances, there may be an increase or decrease in Swiss tax liability. Companies rendering intragroup services may need to assess their situation carefully to ensure compatibility of their transfer pricing with the OECD Guidelines. In particular, it may be necessary to determine whether services have been rendered and whether the charge for these services is in accordance with the arms-length principle. There may also be documentation requirements if the mark-up can be reduced and it may be necessary to determine the costs incurred that no longer require a mark-up.
ISSN:1049-6378