Switzerland – Transfer Pricing (2025)

Legal framework and scope

The legal basis for applying the Arm’s Length Principle in Switzerland is grounded in case law and provisions of federal and harmonization tax law. The Swiss Federal Supreme Court has confirmed that Article 58 of the Federal Law on Federal Direct Tax of December 14, 1990 (FDTL), and Article 24 of the Federal Law on Harmonization of the Cantonal and Communal Taxes of December 14, 1990 (FTHL) provide the necessary legal basis for application of the arm’s length principle. The profile specifically references Article 58(1)(b or c) of the FDTL and Article 24(1)(a or b) of the FTHL, and cites case law including 2C_1089/2018 (20 December 2019, para. 11.2), ATF 140 II 88 (para. 4.2), 2C_1082 and 1083/2013 (14 January 2015, para. 5.1), 2C_644/2013 (21 October 2013, para. 3.1), and 2C_834/2011 (6 July 2012, para. 2.1). These legal and judicial sources underpin the authority to adjust taxable income where related-party transactions are not at arm’s length.

Arm’s Length Principle and the role of the OECD Guidelines

Switzerland relies on the OECD Transfer Pricing Guidelines (OECD TPG) as an interpretative source for the arm’s length principle. There is no comprehensive domestic codification that displaces the OECD TPG; rather, Swiss tax authorities and courts refer to the TPG for methodological and technical guidance, including methods selection, comparability analysis, and other specialised aspects of transfer pricing.

Definition of related parties

Swiss domestic law does not provide a statutory, exhaustive definition of related parties in the profile. Instead, Swiss jurisprudence provides the relevant interpretation. According to the reference to RDAF 2004 II 41, the Federal Supreme Court has treated entities as related where a primarily commercial, or secondarily personal, close relationship exists between them. Direct or indirect participation in management, control or capital is not strictly required. The decisive question is whether the tested transaction was carried out solely as a consequence of the associated relationship. Therefore, the profile effectively indicates that No specific domestic guidance is provided in the profile as a statutory definition, and courts resort to the cited jurisprudential standard.

Methods and criteria for application

While Swiss law does not enumerate transfer pricing methods in a prescriptive statutory list, the profile confirms that Switzerland follows the methods set out in the OECD TPG. The methods considered include Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, Transactional Net Margin Method (TNMM), Profit Split and other methods recognised by the TPG. Switzerland applies the “most appropriate method” criterion and performs a functions, assets and risks (FAR) analysis to determine which method best fits the facts. The availability of reliable information and uncontrolled comparables is assessed and compared with the controlled transactions, and the need for comparability adjustments is evaluated. There is no legal hierarchy of methods; method selection depends on technical suitability for the particular case.

Comparability and ranges

Switzerland follows, in practice, the comparability analysis guidance of Chapter III of the OECD TPG. There is no preference for domestic comparables over foreign comparables. The tax administration does not use secret comparables for assessment purposes. Swiss law allows or requires the use of an arm’s length range and statistical measures; in practice statistical tools that take into account central tendencies such as the interquartile range or other percentiles are commonly used to narrow ranges. Comparability adjustments are not mandated by domestic legislation in absolute terms, although their necessity is assessed on a case-by-case basis.

Documentation and reporting

Switzerland requires the filing of a Country-by-Country Report (CbCR) under the Federal Act on the International Automatic Exchange of Country-by-Country Reports of Multinational Enterprise Groups (CbCR law), effective 1 December 2017, and the Ordinance on the International Automatic Exchange of Country-by-Country Reports of Multinationals (CbCR ordinance), also effective 1 December 2017. The CbCR law contains notification mechanisms applicable to Ultimate Parent Entities and Surrogate Parent Entities in Switzerland (see Article 10 of the CbCR law) and provides exemptions consistent with Annex III to Chapter V of the TPG, such as an exemption for MNEs with total consolidated group revenue of 900 million Swiss francs or less (see Article 6 of the CbCR law and Article 2 of the CbCR ordinance).

Other than the CbCR requirement, Switzerland does not impose specific statutory requirements to prepare a Master File or Local File in the profile, but taxpayers are required by domestic tax law to produce all documents necessary to properly assess taxable income. For related-party transactions the taxpayer must demonstrate that transfer prices are arm’s length. These general documentary obligations are supported by Article 124 of the FDTL and Article 42 of the FTHL. In practice, Master File, Local File and all relevant information are usually requested in MAP and APA procedures. The profile does not provide specific rules on language, timelines for Master/Local file preparation, or prescribed forms beyond the CbCR regime: No specific domestic guidance is provided in the profile. The CbCR regime itself sets out filing, registration and notification obligations per the CbCR law and ordinance.

Penalties and compliance incentives

The CbCR law contains penalties for non-compliance with filing and registration obligations. Article 12 of the CbCR law provides for a penalty for late filing or failure to file of 200 Swiss francs per day after the filing deadline up to a maximum of 50 000 Swiss francs. Article 25 contains a maximum penalty of 100 000 Swiss francs for willfully incorrect or incomplete CbC reports. Article 26 contains a maximum penalty of 10 000 Swiss francs for not following an administrative order of the Swiss Federal Tax Administration issued pursuant to Article 22 of the CbCR law. In addition, the Federal Tax Administration has issued circulars, including a Circular Letter of 4 March 1997, and may carry out inspections to verify compliance; sanctions may be imposed where taxpayers fail to cooperate.

Safe harbours, exemptions and materiality

The Swiss Federal Tax Administration has issued circulars that provide safe-harbour rules relating to thin capitalization and intra-group interest rates. The profile mentions Circular No. 6 of 6 June 1997 on hidden capital and the circular letters on admissible interest rates for intra-group loans in Swiss francs or foreign currency, which are updated periodically. The CbCR law contains specific exemptions aligned with Annex III of Chapter V of the TPG, including the consolidated revenue threshold of 900 million CHF for exemption.

APAs and MAPs; procedures and timing

Switzerland is authorised to enter into Advance Pricing Agreements (APAs) and engages in Mutual Agreement Procedures (MAPs) under applicable tax treaty provisions. Although Switzerland does not operate a formal domestic APA programme, it may enter into unilateral, bilateral and multilateral APAs based on the MAP provision in the relevant treaty. Switzerland permits APA roll-back if it falls within the domestic 10-year time limit; in practice Switzerland typically seeks to agree on five-year APAs, though durations can vary. Switzerland has extensive experience in resolving MAPs; further procedural details are provided in Switzerland’s MAP profile and peer review reports.

Penalties, secondary adjustments and year-end adjustments

Swiss law allows taxpayers to make year-end adjustments: financial statements can be amended, inter alia to make year-end adjustments, until they are formally approved by the competent corporate organ. Switzerland commonly performs secondary adjustments where appropriate. In matters relating to permanent establishments, Switzerland follows the Authorised OECD Approaches (AOA) for attributing profits to PEs and, in practice and subject to agreement by the other competent authority, will tend to apply the AOA even where the bilateral treaty has not been updated to the 2010 version or later of Article 7 of the OECD Model Tax Convention.

Other procedural aspects and unresolved items

For several technical areas—commodities, intangibles (including hard-to-value intangibles), pricing of intra-group services (except for the explicit application of the simplified approach for low value-adding intra-group services), financial transactions, and cost contribution arrangements—the profile states that Swiss domestic legislation does not contain specific guidance and that the practice is to rely on the OECD TPG. Accordingly, No specific domestic guidance is provided in the profile for those topics and the OECD TPG is the practical reference.

Conclusion

Switzerland’s transfer pricing framework is principally jurisprudential and administrative, with the OECD Transfer Pricing Guidelines playing a central interpretative role. The statutory anchors in the FDTL and FTHL allow tax authorities to adjust taxable income where transactions between related parties are not arm’s length, while the detailed technical application depends on the OECD TPG, administrative circulars (notably on thin capitalization and intra-group interest), and the specific facts of each case. The principal formal reporting obligation in statute is the Country-by-Country Reporting regime, which includes explicit thresholds and penalties; beyond that, taxpayers must retain and provide documentation upon request and may enter into APAs or MAPs under treaty provisions.

References

The Switzerland transfer pricing country profile is available on the OECD transfer pricing country profiles page: https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html