Tax and Legal blog
Stay up to date with the latest tax and legal issues and developments that may affect you and your business.
Improving your tax accounting operating model: A game of chutes and ladders
Hands up, who enjoyed the year-end tax provision process? All those Excel files, lots of last-minute new versions, mysterious hard-coded figures, chasing across time zones for missing explanations, all with Finance eagerly awaiting the tax submission – what fun! And now Pillar Two adds a new twist to this game.
The introduction of Pillar Two marks a significant shift in the global taxation landscape. From a practical perspective, for tax functions within impacted organisations it adds additional pressure on the tax provisioning process at year-end. For some, an already straining system risks breaking under the weight of the Pillar Two requirements.
Pillar Two could become a catalyst to finally reassess your operating model around tax accounting and kick-off a transformation. This may either be out of necessity to meet the imminent and dynamic compliance and reporting requirements of Pillar Two, from a wish to seize the opportunity and utilise synergies across tax data and processes, or the decision to finally fix a painful tax provision process.
To effectively navigate the gameboard to improve efficiency, accuracy, and transparency, we highlight some ladders to success that will accelerate your journey to an efficient tax accounting operating model. But watch out for the chutes representing pitfalls that hinder success and cause setbacks along the way.
Court Ruled Transfer Prices Must Be Arm’s Length Year-by-Year
In its decision of 5 December 2024 (A 2023 1, in German), the Zug Administrative Court addressed whether an average operating margin over three years, which corresponds to almost the lowest quartile of the arm’s length margin range, is acceptable for tax purposes. The court rejected this based on the principle of periodicity and ruled that transfer prices must be “at arm’s length” in each tax year.
Lucerne plans to introduce Qualified Refundable Tax Credits (QRTC)
Lucerne is the fourth canton after Basel-City, Grisons, and Zug to publish its plans to remain attractive as a business location despite the global minimum tax (media release, in German). The focus is on the introduction of Qualified Refundable Tax Credits (“QRTC”). The consultation process will last until 9 June 2025 and the act will come into force on 1 October 2026 at the earliest.
Australian Public CbCR: Disclosure of information for Switzerland on a jurisdictional basis – how should Swiss MNEs prepare?
On 10 December 2024, Australia passed its Public Country-by-Country Reporting (CbCR) law. This law affects multinational entities that have material operations in Australia by requiring the public release of specified tax and other information on a jurisdiction-by-jurisdiction basis together with a statement on their approach to taxation, for reporting periods starting on or after 1 July 2024. While information for most jurisdictions outside of Australia may be aggregated, Switzerland is on a list of specified jurisdictions, published by the government on 18 December 2024, for which such information will need to be provided on an individual jurisdiction basis.
Swiss Safe Harbour Intercompany Interest Rates for 2025 Announced
On 27 and 28 January 2025, the Swiss Federal Tax Administration (“SFTA”) published the Swiss safe harbour interest rates applicable for the year 2025, both for intercompany (“IC”) loans and advances denominated in Swiss francs (German / French / no English version) as well as in foreign currencies (German / French / no English version). These rates are used by the SFTA to assess the arm’s length nature of interest rates on intragroup loan receivables or payables and provide a level of tax certainty from a Swiss tax perspective, in absence of a bespoke arm’s length comparability analysis.
Incoming Trump Presidency and the Potential Tax Impact for US Persons in Switzerland
As the US prepares for President-elect Donald Trump to take office on January 20, 2025, the United States is preparing for significant shifts in tax policy. With Republicans controlling both chambers of the US Congress, and many individual income tax provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) sunsetting at the end of 2025, the stage is set for potential tax changes that will impact businesses, individuals, and the broader economy. For Americans living abroad, these changes could have significant implications and allow for new planning opportunities.
Swiss Immigration Update: A review of 2024 and preview of upcoming changes in 2025
As we enter 2025, we would like to reflect on the past 12 months, summarise the developments, look ahead to the new year, and elaborate on expected changes from an immigration perspective.
Share Grants under Incentive Plan not Subject to Securities Transfer Duty
In a decision published before Christmas (9C_168/2023 and 9C_176/2023, in French), the Federal Supreme Court addressed whether the grant of shares to managers without consideration under a management incentive plan established by a Swiss holding company is subject to Swiss Securities Transfer Duty. The court concluded that, subject to certain conditions, no Securities Transfer Duty is to be levied.
Pillar Two Registration in Switzerland as of 1 January 2025
With the operational launch of the web-based application OMTax on 1 January 2025, companies in Switzerland will be able to fulfil their legal obligation to register for Pillar Two purpose. Registration will be exclusively electronic and must be completed at the latest before filing the tax return (typically by 30 June 2026). If a multinational group has several entities in Switzerland, a responsible entity must be designated for registration. However, this cannot be freely chosen but must be determined based on legal requirements.
Swiss Immigration Update: Switzerland releases work permit quotas for 2025
The Swiss government has set work permit quotas for non-EU/EFTA nationals, UK nationals and EU nationals on assignment. Furthermore, as of January 2025, Croatian Nationals will not longer be subject to Swiss quotas.
Switzerland published draft law to extent tax loss period
The Federal Council (“Bundesrat”) published its draft law and the accompanying dispatch on the extension of the tax loss carry-forward period from seven to ten years (media release: German/French), but at the same time recommended that the proposal be rejected. What are the chances of this proposal being adopted by the Swiss Parliament?