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On 23 February 2024, the Swiss Federal Tax Administration ("SFTA") launched a new website on which the administration published its transfer pricing practice for the first time in the form of a Q&A. The website is initially available in German and French. This launch goes hand in hand with the recent transfer pricing paper published by the Swiss Tax Conference (see our blog). Which topics does the SFTA address (and which not), and how do Deloitte's transfer pricing experts assess the SFTA's newly published practice?
Between labour shortages and the desire to work part-time: ways out of the Swiss labour market crisis
We are pleased to announce the release of the third article in our Pulse of Switzerland series, which highlights the current state of the Swiss labour market and offers insights into the attitude of employees with regards to their employability and part-time work. In light of the labour shortage crisis, the article addresses how both policymakers and companies can make gainful employment more attractive for mature workers, and how to increase the value of full-time work.
On 19 February 2024, the Inclusive Framework on BEPS published its final report on Amount B of pillar one both in English and French, which provides a simplified and streamlined approach to the application of the arm's length principle to baseline marketing and distribution activities. This blog provides a summary of transactions in scope, the underlying transfer pricing method, the timing, and Deloitte Switzerland’s view.
Upcoming revision of the Swiss VAT Law – Understanding the potential impact of the new e-commerce rules
As announced in our previous blog, the Swiss Federal Council has confirmed that the partial revision of the Swiss VAT Law (rVATL), adopted by the Swiss Parliament in June 2023, will come into force on 1 January 2025. The revised law includes a wide range of changes, with the e-commerce rules one of the most significant.
Although it is a mandatory part of the notes to the financial statements, International Financial Reporting Standards (IFRS) do not specify the level of detail required in a tax reconciliation. In December 2023, the Financial Accounting Standards Board (FASB) issued new income tax disclosure requirements for US GAAP, in addition to modifying and eliminating certain existing requirements. Under the new guidance entities will be required to provide greater disaggregation of information in the rate reconciliation. Could these new US GAAP rules also affect income tax disclosures under IFRS?
The rapid and widespread adoption of artificial intelligence (AI) systems (and generative AI in particular) has been one of the major topics discussed over the past few years by the public and, to some extent, by legal scholars and legislators.
Although this technology is still recent, successful use cases can be found across all industries and allow businesses to create new opportunities or to streamline and simplify their current processes. However, companies must understand and manage the legal risks they are exposed to when they use AI systems in their activities. This may be challenging as national legislations have not caught up yet with this new technology and may be tempted to adopt different regulatory approaches, complexifying the international legal landscape companies will have to navigate.
In this article, we will provide a short overview of the EU and Swiss regulatory legal landscape on the use of AI systems as well as of the other common legal risks that arise from their use (intellectual property, data protection, contractual liabilities).
On 29 and 30 January 2024, the Swiss Federal Tax Administration (“SFTA”) published the Swiss safe harbour interest rates applicable for the year 2024, 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. Although not explicitly mentioned, these safe harbour intercompany interest rates only apply in practice to financial transactions with a term of more than 12 months, as recently stated by the Cantonal Administration Appellate Court of Zurich in a new decision (SB.2023.00014, in German). It should also be noted that these interest rates are only binding until the next publication. If the interest rates change in 2025, the new interest rates will apply from January 2025 and therefore the 2024 rates cannot be used for financial transactions with a fixed interest rate over a specific period of several years.
The safe harbour interest rates for 2024 apply retroactively as of 1 January 2024.
Transfer pricing has so far played a rather subordinate role in Switzerland, but this has changed in recent months, becoming a more eminent topic for multinational organisations with presence in Switzerland. The tax administrations have published a new, detailed paper on the subject in which explicit reference is made to various principles of the OECD Transfer Pricing Guidelines that still need to be well established in Switzerland (e.g., DEMPE concept, credit ratings, implicit support). We expect that this strong emphasis will motivate the tax administrations to approach the topics associated with transfer pricing more professionally and in more detail while aligning the Swiss practices with the OECD Guidelines in the coming years. The cantonal tax administrations are also receiving increasing support from the Transfer Pricing Unit of the Swiss Federal Tax Administration. The trend towards greater scrutiny of transfer pricing can also be seen in the recent increase in court cases and general tax assessments involving transfer pricing matters in more depth.
During the European Financial Services Transfer Pricing conference, hosted by Deloitte in Zurich on 18 January 2024, industry leaders, tax administrations and our global tax experts discussed the latest trends and developments. There are growing challenges for tax practitioners as a global patchwork of ever more complex rules develops. Tax law has not yet caught up with remote working – including cross-border. TP is and will remain a major topic, and with additional complexities in financial services.
As of 22nd of January 2024, the Zurich labour market authorities (AWA) will replace their previous online portal e-Workpermits to submit work permit applications with their new platform called eArbeitsbewilligungen. The updated platform aims to make the work permit submission process more efficient and user-friendly.
Deloitte was one of the test users during the trial phase in 2023. In this blog, we will delve into the key changes of the platform and provide an overview of it.