Tax Newsletter Switzerland

Switzerland and Croatia sign protocol of amendment to double taxation agreement

On 17 April 2025, the State Secretariat for International Financial Matters (SIF) renewed a mutual agreement between Switzerland and Liechtenstein regarding the treatment of dormant estates for claiming treaty benefits. This updated agreement replaces the mutual agreement of 10 July 2015, and includes clarifications aimed at avoiding double taxation.

For more information, see the following link.

Entry into force of the amending protocol to DTA with Serbia

The amending protocol to the double taxation agreement (DTA) between Switzerland and Serbia has entered into force. With a few exceptions, most of the changes will apply from 1 January 2026.

The protocol implements the minimum standards for double taxation agreements. In particular, it contains an abuse clause which refers to the main purpose of an arrangement or transaction and thus ensures that the DTA is not abused. It contains also an administrative assistance clause in accordance with the international standard for the exchange of information upon request.

For more information, see the following link.

Switzerland and Belgium sign protocol of amendment to double taxation agreement

On 16 July 2025 in Brussels, Switzerland and Belgium signed a protocol of amendment to the agreement between Switzerland and Belgium for the avoidance of double taxation with respect to taxes on income and capital (DTA). The protocol implements the minimum standards for double taxation agreements.

In particular, the protocol of amendment contains an abuse clause which refers to the main purpose of an arrangement or transaction and thus ensures that the DTA is not abused. It also adapts the CDI to the current treaty policy of both countries on minor points.

For more information, see the following link.

Entry into force of the additional agreement to the double taxation agreement between Switzerland and France

The additional agreement to the double taxation agreement between Switzerland and France entered into force on 24 July 2025. Its provisions, which permanently regulate the taxation of income from home office work, will apply from 1 January 2026.

The additional agreement is part of the solution agreed at the end of 2022 on the taxation of income from home office work. It provides for income from home office work to be taxed up to a limit of 40% of the working time per calendar year in the contracting state in which the employer is based. The new solution also provides that the employer's country will transfer 40% of the taxes it has levied on home office compensation in the employee's country of residence to the latter. Automatic exchange of information on wage data will ensure that the new rules are applied.

In addition, the additional agreement updates other provisions in the double taxation agreement between Switzerland and France. In particular, the additional agreement brings the double taxation agreement into line with the results of the OECD's work on base erosion and profit shifting (BEPS).

For more information, see the following link.

Federal Council adopts dispatch on exchange of information regarding OECD minimum tax rate

During its meeting on 12 September 2025, the Federal Council adopted the dispatch on approving the basis under international law for the exchange of information in relation to the OECD minimum tax rate. In the future, it should be possible for the multinational enterprise (MNE) groups concerned to submit this information centrally in a single jurisdiction. On this basis, the jurisdictions participating in the exchange of information should be able to verify the plausibility of the tax calculations of MNE groups within the framework of the minimum tax rate. 

For more information, see the following link.

Federal Council initiates consultation on automatic exchange of information with eight more partner states

During its meeting on 13 August 2025, the Federal Council initiated the consultation on the introduction of the automatic exchange of financial account information (AEOI) with eight more states. The AEOI with these partner states is scheduled to enter into force on 1 January 2027, with the first exchange of data to take place in 2028. By expanding its AEOI network, Switzerland is reaffirming its commitment to compliance with international standards. The consultation will run until 14 November 2025. 

For more information, see the following link.

Pillar Two Country Tracker 

Stay ahead of latest developments on Pillar Two implementation. Our Country Tracker provides the status of Pillar Two implementation in different countries and regions as well as a comprehensive summary of compliance and registration deadlines. 

You can access the tool at the following link.

International Tax News

For ongoing updates from the international tax world, we recommend our international Tax News, which you can access at this link.

Swiss Federal Tax Administration Q&A on Transfer Pricing Guidance. 2025 Update: Withholding Tax and Transfer Pricing Adjustments

In June 2025, the Swiss Federal Tax Administration (SFTA) has updated its transfer pricing website page structured in the form of a Q&A. The website builds on previous guidance and provides further clarification on withholding tax (WHT) in connection with primary, corresponding and secondary adjustments. With no dedicated Swiss legislation on transfer pricing, these Q&As continue to be a key source for understanding how transfer pricing related matters are applied by the SFTA in practice.

You can find the Q&A publication on the following link.

Key Points in the 2025 Update

The updated Q&A introduces several important procedural clarifications, with a particular focus on the treatment of repatriations and the conditions under which secondary adjustments and Swiss WHT may arise.

• Sixty-day deadline for repatriation
  Where a MAP results in a repatriation to a Swiss group entity, taxpayers must execute repatriation within 60 days from the date the MAP is transmitted to the relevant cantonal tax authority. The SFTA may grant an extension in exceptional, duly justified cases upon request. This formal deadline adds a clear time horizon for compliance and may affect cash planning in affected structures.
• Mandatory use of historic exchange rate
  The amount to be repatriated must be calculated using the exchange rate that was applicable at the time the hidden profit distribution was originally made. This rule aims to ensure consistency and remove potential for exchange-rate manipulation in determining the Swiss-franc amount subject to repatriation.
• Restriction to actual cash payments
  The SFTA requires that repatriation be carried out through an actual payment. Netting of mutual receivables, credit notes, reclassification of prior contributions, or dividend requalifications are not accepted. The only exception is if netting arrangements are clearly formalized within the same MAP or APA (or both simultaneously) and relate to the same transaction or issue.
• No repatriation required for downstream corrections
  When a Swiss parent’s payment to a wholly owned foreign subsidiary is adjusted by the canton, the SFTA will generally not impose a secondary adjustment, and no WHT will arise. Even if a primary adjustment is confirmed by a MAP, no repatriation is required in principle.
• Clarified treatment of APAs with retroactive effect
  If a bilateral or multilateral APA has retroactive effect and covers years already closed for accounting purposes, it may include a repatriation clause to prevent a secondary adjustment. However, if the foreign competent authority refuses to include such a clause, Swiss WHT may be levied on the amount of the hidden profit distribution. For open years (not yet closed for accounting purposes), the APA can be implemented through direct accounting adjustments, and no repatriation is required. A repatriation clause cannot be included if the APA was opened after a secondary adjustment by the SFTA.
• MAP-confirmed secondary adjustments remain taxable
  If a taxpayer initiates a MAP following a WHT adjustment by the SFTA and the adjustment is confirmed (in full or in part), the associated WHT remains due. Where WHT is levied solely under Swiss domestic rules—outside of a MAP or bilateral agreement—no MAP relief can be granted.

Practical Implications for Swiss Taxpayers

Groups with open MAPs, pending APAs, or legacy transfer-pricing exposures should:

1. Verify that they can meet the 60-day cash-payment requirement.
2. Confirm that their documentation captures the correct historic exchange rate.
3. Review intra-group agreements to ensure they accommodate the cash-only rule.

Taking action now will reduce the risk of unplanned secondary adjustments and the cash-flow impact of Swiss WHT.

Tax policy proposals and initiatives 

On July 30, 2025 the Swiss Federal Tax Administration has updated the table overview of tax policy proposals and initiatives for the tax periods 2026 to 2028. The overviews can be found under the following link.

Price lists (ICTax)

The Swiss Federal Tax Administration has updated the price lists and the bonus share lists for 2023 to 2025. The lists can be found at the following link.

New Interest Rates on Pre- and Late Payments for Federal Taxes Duties and Penalties effective from 2026

On September 11, 2025, the Swiss Federal Department of Finance announced that from 2026 the interest rates on pre-payments as well as late payment interests for federal taxes, duties, and penalties will generally be reduced to 4.0 percent due to the lower interest rate environment. The only exception is the compensation interest rate on voluntary pre-payments for direct federal tax, which will be set at 0.0 percent. This revision is expected to reduce revenues by CHF 15.5 million for the federal government and CHF 2 million for the cantons. Additionally, the interest rate regulation has been fully revised and expanded, notably including sanctions under the CO2 legislation. Multiple tax types are affected, including VAT, direct federal tax, tobacco tax, and others. Further information can be found under the following link.

Federal Department of Finance Adjusts Tax Rates to Reflect Inflation

On September 11, 2025, the Federal Department of Finance (FDF) announced adjustments to the rates and deductions for direct federal tax to counteract the effects of bracket creep. These changes will apply for the 2026 tax period. Since the last adjustment for bracket creep one year ago, inflation measured by the Swiss Consumer Price Index (LIK) has been 0.1%. The changes take effect for the 2026 tax year and will first apply to tax returns submitted in 2027. This legally mandated adjustment ensures taxpayers do not face higher taxes due to inflation if their purchasing power remains unchanged, mainly affecting higher tax brackets. Further information can be found under the following link.

Circular letter “Compensation for the Effects of Bracket Creep and Interest Rates for Direct Federal Tax for the 2026 Tax Period”

On September 11, 2025, the Federal Tax Administration has published the circular letter “Compensation for the Effects of Bracket Creep and Interest Rates for Direct Federal Tax for the 2026 Tax Period”. Further information can be found under the following link.

Report on Issuance stamp tax

The Federal Council approved the report fulfilling Postulate 23.3262 Silberschmidt of March 16, 2023, titled "Making the Issuance Stamp Tax More Startup-Friendly," at its meeting on September 19, 2025. The report can be found on the following link. 

Cantonal Gazettes 

On September 22, 2025, the Swiss Federal Tax Administration has adjusted the cantonal gazettes with regard to the taxation based on expenses. The cantonal gazettes can be found at the following link.

Top-up tax: consideration of residual tax on distributions from qualifying participations from January 1, 2024

On July 24, 2025, the Swiss federal tax authority published details on consideration of residual tax on distributions from qualifying participations from January 1, 2024. 

1. Background
   Swiss top-up tax follows OECD/G20 GloBE Rules via the Minimum Taxation Ordinance. Covered taxes, including Swiss withholding tax, are key and usually allocated to the entity where recorded, with some reallocation allowed for taxes on distributions.
2. Exclusion of certain provisions of the GloBE Rules for Swiss top-up tax
   The rule reallocating taxes on distributions (Art. 4.3.2(e)) is excluded for Swiss top-up tax. This keeps taxes on qualifying participations with the Swiss distributing entity, preserving local taxing rights and simplifying foreign tax rules. Withholding taxes by the distributing country may still count.
3. Consideration of the residual tax on distributions from Swiss constituent entities (outbound)
   Swiss residual withholding tax on distributions counts as covered tax at the Swiss distributing entity.
4. Consideration of the residual tax on distributions from foreign constituent entities (inbound)
   Excluded foreign dividends and related withholding taxes aren’t included in Swiss top-up tax; these taxes stay with the foreign distributing entity.

Swiss Tax Conference supports this practice.

Further information can be found under the following link.

Top-up tax: Details on the application of chapter 2.6 of the administrative guidance dated December 18, 2023

On August 12, 2025, the Swiss federal tax authority announced that Chapter 2.6 of the administrative guidelines of the Inclusive Framework on BEPS dated December 18, 2023, addressing hybrid mismatch arrangements under the temporary CbCR safe harbour, will apply to Swiss transactions only from December 18, 2023 onwards. This deferral is due to constitutional or other overriding legal reasons, as stated in paragraph 74.31 of the guidelines. The provision supplements the Safe Harbour document published on December 20, 2022. Thus, the effective date for the application of these rules in Switzerland has been clearly established, primarily impacting the additional tax framework. More information can be found at the following link. 

Canton of Thurgau: Interest Rate for the Valuation of Non-Listed Securities

On August 20, 2025, the Thurgau Cantonal Tax administration announced that the applicable capitalization rate for the 2025 tax period has been increased to 12.5%, due to a rise in the risk premium for publicly traded companies over the past year. The publication can be accessed at the following link.

Geneva Updated 2023 Strategy

On August 21, Geneva announced its economic strategy 2035 (link).One of the important items from a tax perspective is the confirmation that Geneva is actively looking at QRTCs, even though no details are provided at this stage. As clients will become aware of the press release, it is important to inform them which provides a further opportunity for continued discussions. 

Geneva's economic strategy is centered on positioning itself as a hub for digital trust, innovation in digital governance, and high-value-added technology companies. Key objectives include strengthening the "Trust Valley" for cybersecurity and digital trust, completing the digital cluster by attracting strategic tech companies, and enhancing the competitiveness of established clusters. The strategy also aims to accelerate the development of emerging sectors such as life sciences, creative industries, and the digital economy, while adapting framework conditions, boosting Geneva's attractiveness and visibility, stimulating innovation, and supporting businesses through transitions. 

The strategy considers evaluating the opportunity to introduce Qualified Refundable Tax Credits (QRTCs). These credits are viewed as a tool to maintain and strengthen the canton's competitiveness. QRTCs are recognized by international standards, such as those from the OECD, and are considered effective for supporting investments in research, innovation, and digital or ecological transitions. The goal of introducing QRTCs is to reinforce Geneva's attractiveness and competitiveness while ensuring compliance with international tax reform requirements (BEPS 2.0).

Current case law

Enclosed you will find a selection of the Swiss Federal Court (SFC) and Swiss Federal Administrative Court (SFAC), that may be of interest to you: 

• SFAC dated July 2, 2025: The Federal Administrative Court ruled that the exemption from the issuance tax should not depend on differing conditions across industries for what qualifies as a tax-neutral restructuring. The transfer of assets within a group is purely a tax concept and must not be linked to external requirements unrelated to the restructuring itself. The fact that the contested contribution was needed solely due to financial market regulations is irrelevant. This applies even if, as in this case, the asset transfer’s registration and thus the completion of the restructuring could only occur after industry-specific rules were met. Therefore, the contribution cannot be economically seen as part of a tax-exempt restructuring that includes both the asset transfer and the contribution.
• SFC dated July 3, 2025: The Federal Supreme Court has determined that the company lacks a protectable interest in appealing the cancellation or modification of its assessment related to the establishment of a negative reserve in the tax balance sheet. The company’s attempt to capitalize part of the production costs linked to acquiring shares from the sole shareholder was rejected, as this included a non-cash benefit (overvalued acquisition price). As a result, a negative reserve was recognized for this portion. This reserve has no effect on direct federal tax, which taxes only profits. Furthermore, regarding cantonal and municipal taxes, the company has no standing since the negative reserve does not influence commercial law nor enforcement and insolvency proceedings.
• SFC dated July 10, 2025: The Federal Supreme Court has ruled that the real estate transfer tax can also be triggered by barter transactions, as the generation of a profit is not a prerequisite. Furthermore, the Court emphasised that even a transaction conducted merely through an amendment of documents—unlike the present case involving the cancellation of an old servitude and registration of a new one—may constitute a taxable transfer of ownership.
• SFC dated July 10, 2025: The Federal Supreme Court has ruled that the (abolished as of 2024) communal professional tax (“taxe professionelle communale”) remains moderate and is therefore consistent with the constitution.
• SFC dated July 15, 2025: The Federal Supreme Court has ruled on the circumstances under which a provision is commercially justified for ongoing litigation that adversely affects a project.
• SFC dated July 16, 2025: The Federal Supreme Court has ruled that if, after considering all circumstances, it cannot be established with the required standard of proof that the essential corporate decisions are predominantly made and the business is actually managed at a specific location, then no effective management exists at that location (outside the canton of statutory seat). Consequently, an unlimited tax liability outside the canton of statutory seat is excluded. The burden of proof regarding management activities outside the canton of statutory seat lies with the canton seeking to impose taxation based on substantial business activities, and it must bear the consequences if such proof is lacking.

PwC newsletter 

We hope that this newsletter contains some topics of interest to you. If you have any questions, please do not hesitate to contact us. For ongoing updates from the world of tax, we also recommend our personalized newsletter, for which you can register using the following link.

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VAT

Switzerland – New digital transfer procedure declaration

Swiss VAT-registered businesses using the transfer procedure (= Verlagerungsverfahren; importer does not pay the import VAT owed at the import to the FOCBS but declares in VAT return) must now declare import VAT digitally via the FTA ePortal. The separate submission of paper forms is no longer required.

This update streamlines and simplifies the import tax declaration process, reducing administrative burden and aligning with Switzerland's broader digitalization efforts.

Recommendation: We recommend preparing for the changed declaration process.

Switzerland – Federal Administrative Court decision A-1477/2024: Clarification on input VAT deduction rules for mixed and holding companies

The Federal Administrative Court clarified in decision A-1477/2024 the rules on input VAT deduction related to participation transactions. Mixed companies may only deduct such input VAT within the scope of their overall entrepreneurial activity. The Court confirmed the restrictive approach of the Swiss Federal Tax Administration (FTA), which does not allow a separate input VAT deduction for holding activities. However, it also stated that the turnover-based allocation key used by the FTA is not appropriate. Instead, companies should apply an economically reasonable allocation method, such as for example one based on balance sheet ratios.

Please note that the decision is not yet in effect, as an appeal has been filed.

Switzerland - Online Language Courses (Case 9C_671/2024, 4 August 2025) 

The Swiss Federal Tribunal ruled that the place of supply for online language courses is determined by the location of the service provider’s headquarters (in this case, Switzerland), not where the teachers or students are located. As a result, these courses are considered supplied in Switzerland and are VAT-exempt unless the provider opts for taxation. Consequently, the company cannot deduct input VAT for services provided to Swiss clients but can do so for services to foreign clients.

This decision reflects the FTA's previous practice, which has since undergone slight changes. We recommend reviewing such transactions under the current guidelines and principles. If you have any questions, please feel free to contact us.

Customs

EFTA Free Trade Agreement with India enters into force

Following the Federal Council’s adoption of necessary ordinance amendments to implement tariff concessions, the Trade and Economic Partnership Agreement (TEPA) between the European Free Trade Association (EFTA) states and India entered into force on October 1, 2025. TEPA covers tariff reductions, market access, and cooperation in services and investment. 

This agreement enhances legal certainty and simplifies market access for Swiss goods and services—such as pharmaceuticals, machinery, watches, and processed agricultural products—covering 94.7% of current exports (excluding gold). A major innovation of the TEPA is the inclusion of legally binding provisions on trade and sustainable development, marking the first time India has agreed to such commitments in a free trade agreement. The agreement reaffirms both parties’ adherence to their rights and obligations under international agreements related to trade, environmental protection, social standards, and human rights, ensuring that neither side’s environmental or labour laws, nor international standards, are undermined. Furthermore, TEPA features a dedicated chapter on investment promotion and cooperation, with the EFTA states committing to various initiatives aimed at boosting investment in India and fostering job creation, while India pledges to maintain a favourable investment climate. The agreement supports Switzerland’s strategy to diversify export markets, strengthen its economy, and maintain jobs, concluding over 16 years of negotiations.

Switzerland signs Free Trade Agreement with Mercosur 

Switzerland and the other EFTA states (Iceland, Liechtenstein, and Norway) have signed a landmark free trade agreement with the Mercosur bloc (Argentina, Brazil, Paraguay, and Uruguay) in Rio de Janeiro on September 16, 2025, following 14 rounds of negotiations. This agreement is a significant achievement in Swiss trade policy, as it opens the large and growing Mercosur market of 270 million consumers to Swiss exporters. In 2024, Swiss exports to Mercosur exceeded CHF4 billion, representing a substantial increase over the past decade. Once the agreement is fully implemented, approximately 96% of Swiss exports to Mercosur will be exempt from customs duties, resulting in estimated annual tariff savings of more than CHF155 million for Swiss companies—making it one of Switzerland’s most valuable free trade agreements alongside those with the EU, China, and India. The deal also includes measures to remove technical barriers to trade, protect intellectual property (including Swiss designations of origin like “Gruyère”), and improve access for Swiss service providers and investors. While Switzerland will introduce 25 bilateral import quotas for sensitive agricultural products such as meat, these quotas are limited in size and are designed to have minimal impact on Swiss agriculture. Additionally, the agreement features a comprehensive, legally binding chapter on trade and sustainable development, further strengthening economic ties and cooperation between Switzerland and the Mercosur countries.

VAT

Italy – Is import VAT deductible when goods are owned by third party?

With ruling reply no. 213/2025 of 19 August 2025, the Italian tax authorities confirmed that the importer may deduct the VAT paid at customs on goods owned by third parties, reiterating requirements already indicated in previously issued guidelines. In this case, the tax authorities seem to allow this possibility even when the importer carries out processing on behalf of third parties. 

However, the facts outlined in the reply to the ruling request are peculiar and the clarifications provided may not be entirely sufficient to resolve all outstanding uncertainties regarding the subject. If you would like to discuss a scenario involving the deduction of import VAT without owning the goods, please feel free to contact us.

Germany – MoF update on the implementation of e-invoicing

On 15 October 2025, the Federal Ministry of Finance (BMF or MoF) published a letter including updates on the introduction of mandatory electronic invoicing for transactions between domestic entrepreneurs, which has already started from 1 January 2025.

The updates concern the Federal Ministry of Finance letter of 15 October 2024, on the introduction of mandatory electronic invoicing for transactions between domestic entrepreneurs from 1 January 2025.

The principles of this circular apply to all transactions carried out after 31 December 2024, subject to the transitional provisions until 31 December 2027. For transactions carried out before that date, the VAT Implementation Decree in its version valid on 31 December 2024, applies.

If you need any clarification about the implementation of e-invoicing in Germany, please reach out to us.

European Union – Important new CJEU cases concerning Transfer Pricing and VAT 

The Court of Justice of the European Union ('CJEU') recently released the judgment in the case of SC Arcomet Towercranes SRL (C-726/23). This case concerns the VAT treatment of transfer pricing (‘TP’) corrections. The CJEU ruled that the remuneration for intragroup services based on contractual TP-arrangements with reciprocal performance obligations, is subject to VAT. The CJEU also confirmed that tax authorities may require additional documentation beyond invoices to verify VAT deduction claims.

The CJEU also delivered its judgment in case Högkullen (C-808/23), clarifying how to determine the taxable amount for intra-group services. The Court ruled that tax authorities cannot automatically treat all management services from a parent to subsidiaries as a single, indivisible supply and must assess whether comparable market transactions exist. The open-market-value method therefore takes precedence over the cost-based approach, which applies only if no comparables exist. The judgment reinforces the importance of proper documentation and comparability analyses for intra-group VAT valuations.

The Stellantis Portugal (C-603/24) case, pending before the CJEU, concerns whether intragroup transfer-pricing adjustments made through credit or debit notes between a distributor and its parent company qualify as taxable supplies for VAT purposes. The Portuguese Supreme Administrative Court asked whether such post-transaction price adjustments—intended to secure a minimum profit margin—should affect the VAT base under Article 2 of the VAT Directive. The outcome will clarify the interaction between VAT and transfer pricing, particularly in cases where transfer-pricing corrections occur after the initial transaction. The judgment is expected to provide further guidance following Högkullen (C-808/23) on how economic adjustments within a group should be treated for VAT. 

We will provide updates on the CJEU developments in our next newsletters. 

European Union – ViDA update

The ViDA Implementation Strategy was published recently by the European Commission. 

This strategy document focuses on how the Commission will support businesses and Member States through the complex implementation process. It also clarifies the staggered application dates for different elements of the ViDA package, with milestones spanning from April 2025 to 2035, and highlighting optional delays for Member States. 

We will continue to monitor these developments and provide further guidance. Do feel free to let us know if you are interested in more detailed information on this topic.

European Union - Consultation for the Tour Operator Margin Scheme (TOMS)

In July 2025, the European Commission published a general consultation to examine the need for a reform of VAT in the tourism sector. The reform is planned as part of the Fair and Simple Taxation Package published in 2020 and will affect travel agency and travel-related passenger transport services. The aim of the reform is not only to simplify and standardise taxation, but also to create a fairer business environment for tourism operators.

The consultation closes on 16 October 2025. Indicative planning suggests the outcome could be a legislative proposal in Q4 2026.

European Union - VAT: Council formally adopts new rules simplifying tax collection for imports

The Council of the EU formally adopted on 18 July 2025 new value added tax (VAT) rules for distance sales of imported goods. The directive was published in the Official Journal of the EU and entered into force twenty days later. The rules will apply from 1 July 2028.

The directive will improve collection of VAT on imported goods by ensuring suppliers are always liable for VAT paid on imports, rather than the EU consumer as is currently usual practice. This should encourage suppliers outside the EU to use the VAT import one-stop-shop (IOSS) for VAT reporting and collection.

Do feel free to let us know if you are interested in more detailed information on this topic.

Customs

Further changes in the US Trade and Tariff Policy

Similarly to two previous quarters of 2025 US administration announced new trade measures targeting certain countries and products. End of July 2025 President Trump has declared a national emergency in response to actions taken by the Government of Brazil and introduced an additional 40% ad valorem tariffs on certain Brazilian imports, which entered into force on August 6, 2025. Goods, which are exempted from those measures are some metals, civil aircrafts, energy products or fertilizers.  This new tariff is in addition to other applicable duties, except for those covered by Section 232 of the Trade Expansion Act of 1962 and may be further increased if Brazil retaliates against U.S. measures. 

On the same date, President Trump published a new presidential proclamation, which imposed a 50% tariff on all imports of semi-finished copper products and intensive copper derivative products, effective as of August 1, 2025, with certain exceptions and subject to additional existing duties. Furthermore, it was introduced that as of August 29, 2025, the duty-free de minimis exemption under 19 U.S.C. 1321(a)(2)(C) will no longer apply to most shipments entering the United States, regardless of value, except for those sent through the international postal network. All non-postal shipments previously eligible for de minimis must now be entered in the Automated Commercial Environment (ACE) and are subject to all applicable duties, taxes, and fees. For international postal shipments, a new duty regime applies, and carriers must collect, and remit duties based either on the effective IEEPA tariff rate (ad valorem) or, for a six-month transition period, a specific per-item duty based on the country of origin’s tariff rate. After this period, only the ad valorem method will be allowed. The order also authorizes Customs and Border Protection (CBP) to require importation and carrier bonds to ensure compliance and payment of duties and empowers the Secretary of Homeland Security to implement necessary regulatory changes.

On July 31, 2025, President Trump announced a “second liberation day” and issued an executive order adjusting reciprocal tariff rates for certain countries. Under this order, imports from Switzerland face a 39% ad valorem duty; Liechtenstein 15%; India 25%; Indonesia 19%; Japan 15%; Norway 15%; Thailand 19%; the United Kingdom 10%; Sri Lanka 20% and South Korea 15%. However, these countries are just examples and list of countries affected by reciprocal tariffs is significantly longer. These reciprocal tariffs took effect on August 7, 2025.

On September 4, 2025, US administration released executive order implementing the US-Japan agreement. The order establishes a new tariff framework for products of Japan, setting a combined ad valorem cap duty rate of 15% for products with a current Harmonized Tariff Schedule of the United States (HTSUS) Column 1 rate below 15%, and zero additional duty for those at or above 15%. Furthermore, special provisions remove certain tariffs on Japanese civil aircraft products (excluding unmanned aircraft) and adjust section 232 tariffs on Japanese automobiles and parts to the same 15% cap duties system. The Secretary of Commerce is authorized to modify tariffs to zero for specific products such as unavailable natural resources and generic pharmaceuticals, based on national interest and implementation of the U.S.-Japan Agreement. 

On September 5, 2025, President Trump introduced changes to the reciprocal tariffs executive order. The order introduces changes to Annex I and II, through including and removing certain HS codes from the list of goods that are exempted from reciprocal tariffs (Annex I) and that might be exempt based on the agreement between parties to trade deal. The order entered into force on September 8, 2025. 

On September 29, 2025, President Trump issued a proclamation, which imposes new tariffs on imports of certain wood products, including a 10% ad valorem duty on softwood timber and lumber, and a 25% duty (rising to 30% or 50% in 2026) on specified upholstered wooden products, kitchen cabinets, and vanities, with exceptions for certain countries and overlapping tariff regimes. The tariffs take effect October 14, 2025, and are in addition to other applicable duties, except where specified. Furthermore, end of September investigations into imports of personal protective equipment, medical devices, robotics, and industrial machinery were formally opened, with a submissions due October 17, 2025. 

EU and the US reach a trade deal 

On July 27, 2025, the United States and the European Union have announced a comprehensive Framework Agreement on Reciprocal, Fair, and Balanced Trade, designed to reinforce and expand their already substantial economic partnership. This agreement aims to eliminate EU tariffs on all US industrial goods and grant preferential market access for a broad array of US seafood and agricultural products, such as dairy, tree nuts, pork, and processed foods. In return, the United States will cap tariffs on EU-originating goods at 15%, including those subject to Section 232 actions, and will apply only the Most Favoured Nation (MFN) tariff to specific EU products like aircraft, aircraft parts, generic pharmaceuticals, and certain natural resources. The agreement also addresses broader economic cooperation, including commitments to mutual recognition of standards, streamlined conformity assessments, enhanced energy trade (with the EU planning to procure significant volumes of US LNG, oil, and AI chips), and increased European investment in US strategic sectors. Both parties have pledged to work together on regulatory alignment, digital trade, sustainability, and the reduction of non-tariff barriers, while also addressing concerns related to the EU Deforestation Regulation, the Carbon Border Adjustment Mechanism, and corporate sustainability directives.

To operationalize the Framework Agreement, the European Commission has put forward two legislative proposals: one to eliminate tariffs on US industrial goods and provide preferential access for certain US seafood and non-sensitive agricultural products, and another to extend and expand tariff-free treatment for lobster, now including processed lobster. These proposals represent the initial legislative steps required for the EU to enact its tariff reductions and must be approved by both the European Parliament and the Council under the ordinary legislative procedure. Once adopted, these measures are expected to take effect retroactively from August 1, 2025, triggering the US commitment to reduce tariffs on EU automobiles and parts from 27.5% to 15%. Additionally, starting September 1, 2025, the US will apply only MFN tariffs to certain EU products, with both sides agreeing to consider expanding this list. The agreement also sets the stage for ongoing negotiations to further lower tariffs, deepen regulatory cooperation, and address outstanding issues in areas such as digital trade, sustainability, and supply chain security, ensuring a stable and predictable transatlantic trade environment for businesses, workers, and consumers.

European Commission presents an EU - MERCOSUR Free Trade Agreement and EU – Mexico Modernized Global Agreement to the Council  

The European Commission has advanced two landmark trade agreements: the EU-Mercosur Partnership Agreement (EMPA) and the EU-Mexico Modernised Global Agreement (MGA). These agreements are designed to diversify the EU’s trade relations, strengthen economic and political ties between countries, and secure access to critical raw materials. The EMPA will establish the world’s largest free trade zone, connecting the EU with Argentina, Brazil, Paraguay, and Uruguay, and opening a market of over 700 million consumers. EU companies will benefit from significant tariff reductions on industrial goods such as cars, machinery, and pharmaceuticals, as well as expanded opportunities in key supply chains and critical raw materials. The agreement is expected to boost EU exports to Mercosur by up to 39% and support over 440,000 jobs. In the agri-food sector, EU exports to Mercosur are projected to grow by nearly 50%, with strong protections in place for sensitive EU agricultural products, including limits on preferential imports, robust safeguard mechanisms, and the protection of 344 EU Geographical Indications. The Commission also plans to align production standards and strengthen food safety controls to ensure high standards for all products entering the EU market.

The MGA will remove the remaining high tariffs on EU agri-food exports to Mexico, making products like cheese, poultry, pork, pasta, apples, chocolate, and wine more competitive, and will extend protection to 568 iconic European food and drink products. The agreement will also facilitate EU access to critical raw materials such as fluorspar, bismuth, and antimony, which are essential for strategic industries. 

These deals are expected to create billions of euros in export opportunities, support hundreds of thousands of jobs, and reinforce the EU’s position as the world’s largest trading bloc. Before entering into force, both the EMPA and MGA must be approved by the European Parliament and all EU Member States. 

HMRC has published a new chapter of its Customs Technical Handbook on Authorized Economic Operators  

The new chapter of HMRC’s Customs Technical Handbook consolidates and formalizes guidance on eligibility and requirements for obtaining Authorised Economic Operator (AEO) status in the UK. It outlines that applicants must be legal entities established in Great Britain or Northern Ireland, actively involved in customs operations and international trade, and possess an EORI number, with additional requirements for Northern Ireland. The chapter clarifies that AEO status applies to entire legal entities, not specific sites or branches, and details the responsibilities of various roles in the international supply chain—such as manufacturers, exporters, freight forwarders, warehouse keepers, customs agents, carriers, and importers. It also specifies that only businesses directly involved in customs-related activities are eligible, excluding banks, insurance companies, consultants, and others not engaged in the international supply chain. The guidance further defines what constitutes establishment in the UK and the criteria for permanent business establishments, emphasizing the need for robust compliance, record-keeping, and security standards across all relevant activities and locations.

EU Council approved CBAM simplification 

On September 29, 2025, the EU Council adopted a simplification of the Carbon Border Adjustment Mechanism (CBAM), introducing a new ‘de minimis’ mass threshold that exempts imports of up to 50 tonnes per importer per year from CBAM requirements—primarily benefiting SMEs and small importers. The revised regulation also allows importers awaiting CBAM registration to continue importing under certain conditions from early 2026. Additional measures streamline authorisation, data collection, emissions calculation, verification, and financial liability processes, while reducing the quarterly obligation for CBAM certificates from 80% to 50% of embedded emissions. The changes also address penalties and rules for indirect customs representatives. Meanwhile, the UK plans to launch its own CBAM in 2027, using direct payments rather than certificates, and is working to align its system with the EUs for smoother business compliance. To see how this may impact Switzerland, see our latest article here.

Environment – Social – Government (ESG)

Environment – Social – Government («ESG») levies

In the EU, we are currently facing significant updates in the ESG (Environmental, Social and Governance) tax landscape. In terms of packaging, the EU published in January 2025 the new Regulation of Packaging and Packaging Waste (PPWR) in order to reduce packaging waste, promote reuse and recycling, and enhance resource efficiency. It aims to create a circular economy by reducing dependency on primary resources and encouraging sustainable packaging solutions.  The regulation will be fully operational in August 2026 and include among others, restrictions on hazardous substances in packaging (per- and polyfluorinated alkyl substances or PFASs) to protect consumer health and the environment, implementation of Extended Producer Responsibility (EPRs).  The Regulation focuses on packaging waste reduction by encouraging reusable and refillable packaging solutions. In terms of requirements, based on the new regulations, all packaging placed on the EU market should be designed for recycling by 2030 and recycled at scale by 2035 according to recycling performance grades (A (95%), B (80%), C (70%) & Non-Recyclable) and recycled at the scale score. Companies will be required to optimize the packaging flow as well as to redesign their packaging and comply with the new requirements.

In terms of Carbon Border Adjustment Mechanism (based on the latest updates due to the Omnibus proposal) a de minimis threshold of 50 tonnes mass and simplifying compliance for small importers which are below the threshold are noted. Importers who are in scope of CBAM will need to apply for authorized CBAM declarant status to continue importing CBAM goods from 1 January 2026. The application process for authorized CBAM declarants began in March 2025. 

The European Union Carbon Border Adjustment Mechanism (CBAM)

After two years of transitional period, the CBAM definitive period will start on 1 January 2026. Less than six months before, the European Commission, the European Council, and the European Parliament are still in the process of finalising important details as part of the Omnibus package.

These details under review relate to a de minimis exemption as well as the authorisation procedure, the data collection processes, the calculation of embedded emissions, the emission verification rules, the calculation of the CBAM declarants’ financial liability during the year of imports, and the claim by CBAM declarants for carbon prices paid in third countries where goods are produced.

What is clear at this point is that:

1. Companies need to apply for the status of authorised CBAM declarant by the end of 2025 to be able to import CBAM goods from 1 January 2026.
2. Companies will need to collect the required trade and emissions data in 2026 to be able to file their CBAM declaration in 2027.
3. In 2027 companies will need to buy CBAM certificates to offset their 2026 imports (backward-looking) as well as their ongoing imports (forward-looking).

Please do reach out to us to discuss these topics and in particular the establishment of governance processes, technology-enabled data collection procedures, and the creation of a strategic financial plan for 2026.

The European Union Deforestation Regulation (EUDR)

On 15 April 2025, the European Commission released updated guidance, FAQ documents, and a draft Delegated Act addressing open questions and clarifications regarding the EUDR. Through these simplifications, the Commission anticipates a 30% reduction in administrative requirements for businesses before the EUDR applies to large operators and traders on 30 December 2025, and to SMEs by mid-2026.

This move is aligned with the EU’s broader harmonization and simplification strategy. The updates cover exemptions and product scope for certain commodities, clarify downstream operators’ obligations, and offer detailed guidance on Due Diligence Statement (DDS) submissions.

Key points of the updates include:

• Clarification that the definition of SME under EUDR is based on entity level rather than on group level.
• Re-imported products can reuse prior DDS during the transition period, and a single DDS can cover multiple shipments with an annual submission required.
• Non-SME companies must collect and verify suppliers' DDS reference numbers as additional steps to ascertain that relevant products have been subject to proper due diligence.
• Exemptions from EUDR obligations apply to items of correspondence, second-hand products intended for waste, specific packaging materials, and product samples used exclusively for testing purposes.

The European Commission has also released the country benchmarking list under the EUDR on 22 May 2025. This list classifies countries into low, standard, and high-risk categories, which aims to streamline due diligence processes for operators importing these EUDR commodities into the EU. On 9 July 2025, the EU Parliament has rejected the country benchmarking, consequently, the EU Commission needs to re-work the classification.

Starting June 30, 2025, the EU's International Procurement Instrument will change the medical device market. All EU public tenders worth €5 million or more will completely ban Chinese companies while limiting other bidders—including Swiss, US, UK, and EU firms—to maximum 50% Chinese content in their supply chains.

This change is expected to redirect €1-1.2 billion in annual public spending away from Chinese suppliers. Swiss companies are well-positioned to capitalize, remaining fully eligible provided their devices carry valid CE marks and meet supply chain requirements.

The opportunity is substantial: freed market share from excluded competitors, competitive differentiation through resilient supply chains, and first-mover advantages for early adopters. However, penalties for non-compliance are severe, including bid rejection and fines up to 30% of contract value.

Swiss manufacturers must act now: map Chinese content at the bill-of-materials level, diversify supply chains, prepare auditable documentation, and train tender teams. Companies that prepare today will be best positioned to capture significant market share as the procurement landscape transforms.

Read our full publication here.

Summary: In August 2025, the ATO released its final Practical Compliance Guideline PCG 2025/2, which provides clarity on how Australia’s new thin capitalization rules and the Debt Deduction Creation Rules (DDCR) apply to restructures (i.e., any restructure or refinancing, including any change or reorganization of group structures, business affairs, or financial arrangements). These reforms were part of the government’s broader initiative to tighten base erosion rules and align debt-related deductions more closely with genuine commercial activity. Regarding this, it is important to note that the August 2025 guidance (PCG 2025/2) is a separate, final document and not a continuation of the May 2025 draft (PCG 2025/D2). While the May draft deals specifically with inbound related-party loans, requiring proof of both arm’s-length pricing and debt capacity, PCG 2025/2 instead focuses on restructurings that create or increase intragroup debt deductions. It warns against “debt creation” without genuine commercial substance and makes clear that such restructurings will be reviewed under both transfer pricing and thin-capitalisation rules, even if individual loan terms appear arm’s length.

Key clarifications include:

• Application of anti-avoidance rules: The PCG explains how Part IVA (Australia’s general anti-avoidance rule) and the new targeted DDCR provision will be applied to common restructuring scenarios.
• Low-risk scenarios: The guideline identifies transactions the ATO views as low-risk (e.g., debt restructures where there is a clear commercial rationale and the overall economic substance remains unchanged).
• Integration with third-party debt test (TDPT): The PCG links with draft ruling TR 2024/D3 (to be finalized later in 2025), which addresses when intragroup financing can be benchmarked against genuine third-party borrowing.
• Holistic compliance approach: The ATO signals that thin cap, DDCR, and anti-avoidance rules will be assessed together, meaning taxpayers cannot rely on meeting just one test; the entire arrangement must demonstrate commercial purpose.

Implications for practice: Any restructuring involving debt or capital must now be supported by robust documentation, including evidence of commercial drivers. Multinationals should expect heightened scrutiny if restructures appear tax-driven or artificially inflate deductions.

Summary: In July 2025, the German Federal Central Tax Office (BZSt) announced that it will no longer initiate new bilateral APA negotiations with China, including renewals. While existing APAs remain unaffected, this marks a shift in Germany’s approach to cross-border tax certainty with China.

The decision appears to be driven by challenges in reaching mutually acceptable outcomes. Given the importance of APAs in providing predictability for complex TP arrangements, this suspension could have significant practical consequences.

Implications for practice: For German MNEs with Chinese operations, MAPs may become the default dispute resolution route. This could mean longer resolution timelines, less certainty upfront, and potentially more double taxation risk in the interim. Companies with pending APA applications may need to revisit their risk management strategies.

Summary: On July 22, 2025, the OECD published a second batch of updated transfer pricing country profiles, reflecting the current legislations and practices of 12 jurisdictions, including Austria, Belgium, Canada, Ireland, Latvia, Lithuania, Mexico, the Netherlands, New Zealand, Singapore, South Africa, and Spain

According to the OECD release:

• These latest country profiles present new information on country-specific legislation and practice regarding the transfer pricing treatment of hard-to-value intangibles and the simplified and streamlined approach for baseline marketing and distribution activities.
• The profiles focus on the key transfer pricing aspects of each country domestic tax legislation including: the arm's length principle; methods, comparability analysis; intangible property; intra-group services; cost contribution agreements; documentation; administrative approaches to avoiding and resolving disputes; safe harbors and other implementation measures.
• Updates to the transfer pricing country profiles are being released in batches throughout 2025. With this second batch, following the first update in May, the total number of countries and jurisdictions covered now stands at 78. 
• The information in the profiles was provided by countries themselves in response to a transfer pricing questionnaire, which ensures the highest degree of accuracy.

Implications for practice: These updates provide a valuable comparative reference for benchmarking and structuring TP policies. In particular, the stance on the national implementation of Amount B highlights an area where countries may diverge in interpretation. Hence, this is especially important for groups operating in multiple jurisdictions.

Summary

• Issue:
  How to determine arm’s-length royalties for intercompany licenses of intangibles used to make medical devices and leads.

• Background: 
  • Medtronic used the CUT method on its 2002 return to set royalties paid by its Puerto Rico manufacturer.
  • By claiming profit shifting the IRS applied a modified comparable profits method to allocate 90% of profit to the U.S. and 10% to Puerto Rico.
  • The taxpayer (Medtronic) and the IRS later signed a compromise memorandum of understanding with royalty rates of 44% (devices) and 26% (leads). Neither party considered these rates to be at an arm’s length price, but only as a compromise to resolve the audit.
  • The IRS and the taxpayer could not agree on how the memorandum applied to the royalty income for 2005 and 2006 tax years. Disputes for 2005–2006 led the IRS to propose a $455 million royalty increase and large tax deficiencies. As a result of this, Medtronic petitioned the Tax Court.
• Previous Court Decisions (since Medtronic petitioned):
  • The Tax Court (in 2016) used an adjusted CUT, setting 44% (for device licenses) and 22% (for lead licenses); the Eighth Circuit (2018, “Medtronic II”) vacated and remanded for better factual support and method selection.
  • On remand: The Tax Court rejected both Medtronic’s CUT/unspecified methods and the IRS’s modified CPM (comparable profit method).
  • It then crafted an “unspecified” three-step hybrid: modified CUT for R&D, modified CPM for Puerto Rico manufacturing, and a residual profit split, yielding a 48.8% royalty rate for both products and an overall split of 68.7% (U.S.) / 31.3% (Puerto Rico).
• Current Eighth Circuit decision (2025):
  • Holds the Tax Court erred by adopting an unspecified hybrid method and by applying the wrong legal standard in rejecting CPM.
  • Remands for the Tax Court to apply the correct standard in evaluating CPM and, if appropriate, to make the necessary factual findings to implement CPM.
  • Bottom line: The Eighth Circuit directed the Tax Court to reconsider using CPM under the correct legal framework, rejecting the Tax Court’s bespoke unspecified method.

Implications for practice:

• The decision signals that courts are increasingly skeptical of customized, non-standard approaches to pricing intangibles. Instead, they are steering towards recognized methods, such as CPM in the US.
• For companies, this means that defending unique, tailor-made pricing arrangements will become more difficult. Businesses with significant intangible assets should anticipate heightened IRS scrutiny.

Summary: The Spanish Supreme Court, in a judgment (Already dated 15 July 2025, but only now being properly addressed in English “publications”), imposed stricter requirements for intercompany cash pooling arrangements. The Court held that interest rates must be symmetric for both depositors and borrowers, that the pool leader’s remuneration should be limited to its coordination function, that balances should be considered short-term intercompany loans, and that the group’s consolidated credit rating should be used for pricing.

Implications for practice: 

• This decision substantially limits the flexibility multinationals have traditionally enjoyed in cash pooling structures. It increases the risk of adjustments if arrangements are seen as shifting profits inappropriately to the pool leader.
• Groups with Spanish operations should review existing cash pool agreements and ensure that both pricing and documentation comply with these stricter standards.

Summary:

• Switzerland updated the list of jurisdictions with which it exchanges Country-by-Country (CbC) reports, following Decision No. RO 2025 380. The update adds Cameroon and Mongolia, effective retroactively from 1 January 2024.
• Afterwards, in No. RO 2025 492 Tunesia has additionally be included.

Implications for practice: 

• The expansion means that more tax authorities will receive detailed group information for Swiss-headquartered multinationals. This increases transparency and provides tax administrations with greater ability to challenge inconsistencies.
• Companies should ensure that CbC reports are consistent with local transfer pricing documentation and financial statements, as discrepancies could prompt inquiries.

Summary: On 3 September 2025, the General Court of the European Union ruled in the Huhtamaki case (T-225/24) that the European Commission was entitled to refuse access to documents related to its state aid investigations into Luxembourg advance tax agreements (ATAs).

Implications for practice: The judgment reinforces the principle that such investigations remain confidential, despite calls for greater transparency. It limits the ability of companies under review to gain insight into the Commission’s files.

Summary:

• The Canada Revenue Agency (CRA) published its annual Advance Pricing Agreement (APA) report for 2024 on September 4, 2025. The report shows that 32 new APAs were filed, 16 were completed, and that the average completion time for bilateral APAs was over 40 months.
• The report also highlights the distribution of transactions covered: tangible property (53.5%), services (22.8%), intangibles (18.8%), and financing (5.0%). This illustrates where Canadian taxpayers are seeking certainty most frequently.

Implications for practice: For multinationals, the key takeaway is that APAs remain a valuable tool for reducing uncertainty, but the timelines are long.

• The ECOFIN report provides a status update on the Transfer Pricing Directive proposal released by the European Commission in September 2023. The proposal aims to introduce common EU transfer pricing rules, including codifying the OECD arm’s length principle and referencing the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.
• The report notes that a large majority of Member States previously saw no possibility of further progress on the proposal in its current form.
• The Polish Presidency sounded out whether Member States’ positions had changed. While a few Member States consider that certain procedural aspects of transfer pricing could potentially be set out in a Directive, reaching a compromise on that basis does not appear feasible.
• At the same time, Member States fully support the overarching objective of reducing complexity, costs, and administrative burdens for both taxpayers and tax authorities in the area of transfer pricing.
• In parallel, Member States discussed the option of establishing a new EU Transfer Pricing Platform (comparable to the previous EU TP Forum) to develop consensus-based, non-legally binding solutions to practical transfer pricing issues.
• Views diverged on key parameters of the platform including its mandate and structure, the form of its outputs, and the possibility of political commitment to implement and review agreed solutions—and no agreement was reached.
• Nevertheless, Member States are positively disposed toward a consensus-based, non-legally binding platform aimed at reducing complexity and administrative burdens in transfer pricing.

• The Court of Justice of the EU confirmed that transfer pricing compensating adjustments can qualify as consideration and thus fall within the scope of VAT (e.g. when TNMM-based margin adjustments are made). 
• Practical implication: companies should review TP clauses, evidence of reciprocal obligations, and supporting documentation to avoid unintended VAT exposure.