by Davide Anghileri
Switzerland’s Federal Council adopted an ordinance on the international automatic exchange of country-by-country reports on multinational firms during its meeting on 29 September.
These country-by-country reports are designed to help tax authorities determine if there is a risk that a multinational group is engaging in tax avoidance through incorrect transfer pricing or other means.
The Swiss ordinance will come into force on 1 December if the referendum deadline expires on 5 October without a referendum being called.
Hence, multinationals in Switzerland would thereby be obliged for the first time to draw up a country-by-country report from the 2018 tax year.
The exchange of country-by-country reports between Switzerland and its partner states would take place from 2020. In any case, groups can voluntarily submit a country-by-country report for tax periods before 2018 which the Federal Tax Administration (FTA) can transmit to partners states on the basis of the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports.
The Swiss ordinance would implement the global minimum standards provided by the G20/OECD project on base erosion and profit shifting (BEPS).
In particular, the ordinance provides a template for multinational enterprises to report annually and for each tax jurisdiction in which they do business certain information relating to the global allocation of the group’s income and taxes, together with indicators of the location of economic activity within the group.
The ordinance specifies that country-by-country reporting is mandatory for multinationals if the ultimate parent entity of a group resident in Switzerland has an annual consolidated group revenue equal to or higher than CHF 900 million (EUR 750 million) in the preceding fiscal year.
The exchange of the country-by-country reports is based on the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports of 27 January 2016 and the Federal Act on the International Automatic Exchange of Country-by-Country Reports of Multinationals of 16 June 2017.
Switzerland is conforming its international commitment to implementing OECD standards to improve transparency with regard to the taxation of multinationals and to establish a uniform framework for the exchange of the reports.
Davide Anghileri
Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.
Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues.
Davide can be reached at [email protected].
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