Tax Newsletter Switzerland

On 11 September 2026, the OECD/G20 Inclusive Framework released a new package of Pillar Two materials aimed at the consistent implementation and application of the Global Minimum Tax. The package comprises of three items:

• Revised GloBE Information Return (GIR), which incorporates the Side-by-Side (SbS) Package released in January 2026 and shall only be used for filings in respect of Fiscal Years commencing on or after 31 December 2025 (link).

• Terms of Reference and Assessment Methodology for the Full Legislative Review, a framework for the full legislative review and monitoring process (link).

• Administrative Guidance on Explicitly Conditional Taxes and on use of local financial accounting standard under a QDMTT in case of mismatching fiscal periods (link).

You can also find a summary of this development as part of our global newsletter.

On 30 July 2026 in Vienna, Switzerland and Austria signed a protocol amending the agreement for the avoidance of double taxation (DTA) with respect to taxes on income and capital. The protocol implements the minimum standards set out in the agreement for double taxation and makes specific adjustments to the DTA to bring it into line with the changing needs of the contracting states since the last revision, which was carried out under the 2009 protocol of amendment.

Further information is available at the following link.

The State Secretariat for International Financial Matters (SIF) has published an overview of the impact of the agreement (extent of the reliefs) concerning Jordan. Further information is available at the following link.

The Swiss Federal Tax Administration has updated the technical guide for the Common Reporting Standard («CRS») in order to reflect the new reporting requirements resulting from the revision of the CRS, which has been effective in Switzerland since 1 January 2026. The new version clarifies, in particular, the technical requirements related to the use of the OECD CRS XML Schema 3.0. The CRS XML Schema 3.0 must be used as of 1 January 2027. Further information is available at the following link.

The Federal Tax Administration has published FATCA group requests pursuant to Article 12 paragraph 1 FATCA Act. Further information is available at the following link.

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.

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

The Federal Council has enacted the extension of Switzerland’s tax loss carry forward period from seven to ten years, effective 1 January 2028 and applicable to losses incurred from the 2020 tax period onwards. The longer period also applies to the provisional deduction for direct federal tax of foreign permanent establishment losses, which Switzerland can reverse if the permanent establishment offsets the loss against profits abroad within ten years. The cantons still have room to set their own rules on these losses of permanent establishments. Further information is available at the following link.

Federal interest rates will remain unchanged in 2027: late-payment interest and interest on refunds will stay at 4.00%, while interest on voluntary advance payments of direct federal tax will remain at 0.00%. Further information is available at the following link.

The Swiss Federal Tax Administration updated its CRS technical guidance. The CRS XML Schema 3.0 must be used for the Automatic Exchange of Information from 1 January 2027. Further information is available at the following link.

The Federal Tax Administration has updated the course listings and bonus shares 2024, 2025 and 2026. The lists can be found at the following link.

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 2027 tax year”. Further information is available at the following link.

The Swiss Federal Tax Administration updated its lists of legislative and regulatory changes concerning federal direct tax, VAT, withholding tax, and stamp duties, including ongoing projects. Further information is available at the following link.

The Swiss tax information article explaining the distinction between taxes and other public charges has been updated. Further information is available at the following link.

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

• SFC dated 30 June 2026: The SFC partially upheld an appeal against the lower court’s decision which did not consider a CHF 7 million warranty provision relating to a complex large-scale construction project to be commercially justified, because the probability for the occurrence of each individual potential defect was too low to justify a provision. The SFC generally affirmed the rule that no provision may be recognised where the probability of occurrence is below 20–25%. However, it held that for such complex large-scale projects the probability of each potential defect must not be assessed solely in isolation, as individually they would not be sufficiently likely to justify a provision. Instead, the aggregate risk that at least one of the identified warranty risks will materialise must first be determined. The SFC noted that if such an aggregate risk is identified as sufficiently likely to justify a provision, in a second step, the amount of the provision must be determined considering that each individual risk has a lower probability of materialising. The Court explicitly left open the question of how this calculation must be made. As the lower court had failed to assess the aggregate risk, the case was remanded for further fact-finding and reassessment of whether the provision was commercially justified and tax-deductible.
• SFC dated 30 July 2026: The SFC upheld the dismissal of a taxpayer’s objection against her 2023 federal and Ticino cantonal tax assessments as late. Although the assessment had been served directly on the taxpayer despite a valid power of attorney in favour of her fiduciary, making service irregular, the principle of good faith required both the taxpayer and her representative to make timely inquiries once they became aware, or should have become aware, of the assessment. In particular, receipt and payment of the federal tax balance by 17 September 2025 should have prompted action. The objection filed only on 8 January 2026 was therefore untimely.
• SFC dated 20 August 2026: The SFC ruled on the taxation of a CHF 7.842 million lump-sum payment received by a shopping-centre owner for the early termination of a long-term lease. The Court held that the payment constituted a new, independent claim under the termination agreement and could not be treated as advance rent spread over the remaining lease term until 2027. However, although the agreement was signed on 28 December 2020, the claim became enforceable only 30 days later and was paid in January 2021. The entire amount was therefore taxable in 2021, rather than in 2020 or on a staggered basis through 2027.

Effective 1 October 2026, the Canton of Lucerne will offer cost-based funding for eligible R&D and innovation activities across all industries, including services. Companies must be registered in the Lucerne commercial register, have a substantive presence in Lucerne, reliable accounting records and evidence of sustainable business conduct. Both profitable and loss-making companies may apply.

Eligible activities include research and experimental development, significant organisational and process innovation, clinical studies, and related management or support functions. The gross contribution amounts to 10%-30% of qualifying expenses (depending on type of expense). Patent-box tax savings and other subsidies for the same activities are deducted. If total applications exceed the available budget, all contributions are reduced proportionally.

The contribution may take the form of a cash payment, a qualified refundable tax credit (QRTC), or a non-refundable tax credit. The contribution for a given year is based on the financial year that ends two calendar years earlier (transitional rules apply for 2026). Companies should identify qualifying activities and the supporting documentation early, assess the expected net benefit, and select the most suitable form of funding, particularly considering Pillar Two implications.

The Zurich Tax Appeals Court ruled that the 90% capital tax reduction for equity attributable to loans to group companies cannot be restricted to loans with a minimum term of 12 months. In the corresponding case, the Court held that short-term cash deposits with a maximum term of three-months also qualified for the capital tax reduction.

Following the final decision, the Zurich Cantonal Tax Office has extended the relief to all loan-like group receivables (including cash-pool balances and vendor loans) for all open tax periods. Trade receivables remain excluded.

As part of a broader revision aligning cantonal tax law with federal rules, the government proposes extending the tax loss carry forward period from seven to ten years for losses incurred from 2020 onward.

A provision published by the Italian Revenue Agency on 28 August 2026 outlines the automated assessment of VAT liabilities when an annual VAT return has not been filed. The calculation uses existing data from e-invoices, periodic VAT reports (LIPE), and payments already made. 

Taxpayers have 60 days after notification to provide additional information or pay the assessed amount. Payment within this period reduces the penalty to one-third.

Businesses should therefore file annual returns on time, regularly reconcile their VAT data, and strengthen internal compliance controls.

On 10 September 2026, Germany's Conference of Finance Ministers resolved to introduce a set-off model (Verrechnungsmodell) for import VAT, intended to be available from 1 January 2030. Import VAT would no longer be paid at customs but reported in the preliminary VAT return and deducted as input VAT at the same time, making the procedure leaner and liquidity-neutral.

No immediate action is required, but businesses active in Germany should monitor both developments closely as they move towards legislation.

In case T-773/25, the General Court ruled that the EU simplification scheme for triangular transactions cannot be invoked by issuing invoices marked "reverse charge" years after the supplies. The case concerned an Austrian wholesaler that had corrected its 2011 to 2014 invoices only in 2015, following a tax audit. Such invoices have neither retroactive nor prospective effect, so the related VAT adjustment cannot be claimed in the current or a future period. Arguments of good faith and no loss of tax were rejected. Businesses acting as intermediate acquirers in EU chain transactions, including Swiss companies with EU VAT registrations, should ensure that their invoices meet the requirements at the time of supply.

The EU's biggest customs overhaul since 1968 entered into force in September 2026 and will be phased in through 2034. Published in the Official Journal on 19 September 2026, the new Union Customs Code entered into force on 20 September 2026 and will be fully applied across all Member States within 12 months.

• The €150 duty-free limit is gone, and a €3 handling fee comes next. Since 1 July 2026, online purchases shipped from outside the EU pay a flat €3 customs duty per item in parcels worth up to €150. From 1 November 2026, a €3 handling fee per item is expected to be added, whatever the parcel's value. The fee is not refunded, even on returned goods. If you sell to EU consumers from abroad, update your pricing and checkout now.
• Online platforms and sellers become responsible for imports. Non-EU platforms and sellers will be treated as importers, so they must handle customs formalities, pay duties and make sure products meet EU rules. Breaking the rules can lead to fines, loss of customs benefits or restricted access to the EU market. Check your contracts with platforms and logistics partners to confirm who pays and who is accountable.
• One digital platform will replace 27 national systems. The new EU Customs Data Hub will let traders submit data once through a single online portal, instead of dealing with more than 111 national IT systems. It becomes mandatory for e-commerce in July 2028, when normal duty rates replace the €3 flat duty. Other businesses can join voluntarily from 2031, and it becomes mandatory for everyone in 2034.
• Reliable traders get a fast lane. "Trust & Check" traders with fully transparent supply chains will face fewer checks, can clear all imports in their home country, and can pay duties periodically. Under certain conditions, they can even release goods themselves without waiting for customs. If your compliance record is strong, start preparing to apply.
• Customs will see more and catch more. A new EU Customs Authority in Lille will pool real-time data and use AI-supported risk analysis across all Member States. Customs can step in at any point in the journey and can stop non-compliant goods from being shipped at all. Compliant businesses should benefit: the Commission expects €2.7 billion in yearly compliance savings, with more resources aimed at rule-breaking competitors.
• New importer definition. Under the new Union Customs Code, the importer is the single person deciding that goods from a third country will enter the EU; for online sales, this is the seller or platform facilitating the sale. The importer must be established in the EU for customs purposes, apart from a narrow exception for neighbouring-country businesses presenting goods at an adjacent EU border office. Foreign companies without an EU registered office, headquarters or permanent business presence will therefore generally need either to establish an EU customs presence or appoint an EU-based indirect customs representative, which assumes the importer's obligations for data, duties and product compliance. Swiss businesses importing regularly into the EU should review their operating models now and formalise a suitable arrangement to maintain smooth market access.

• Since 1 July 2026, two changes made by Commission Implementing Regulation (EU) 2026/1422 have changed how importers prove where their goods come from ("non‑preferential origin").

• For goods under special non‑preferential import arrangements, such as certain agricultural products, electronic certificates of origin issued through the EU's ELAN system can now be used, with some flexibility during the transition.

• ELAN became available on a voluntary basis in January 2026. It will be mandatory for issuing authorities from January 2028 and for customs from October 2028.

• To get the adjusted duties and tariff quotas for US goods under Regulation (EU) 2026/1455, importers must show the goods were shipped directly to the EU or stayed unaltered under customs supervision if routed through another country. 

• On 11 September 2026, the European Commission asked the Council to approve signing and concluding a free trade agreement between the EU and India - potentially the largest trade deal either side has ever concluded.

• The deal would remove or cut tariffs on 96% of EU goods exported to India, saving an estimated €4 billion in duties annually.

• The deal requires Council approval, European Parliament consent, and completion of India's own ratification process. No entry-into-force date has been set, so the new tariff rates do not yet apply.

• A Belgian company imported electric bicycle parts from China across 27 separate shipments over roughly two years (2019–2021), classifying each as individual "parts and accessories" to benefit from lower tariffs. Authorities determined the parts constituted complete e-bikes, and the company had avoided more than EUR 2.9 million in anti-dumping and countervailing duties.

• The EU General Court upheld this reclassification, ruling that parts do not need to arrive simultaneously to be treated as a single complete product. What matters is the objective evidence - matching invoice references, the same buyer and customs office, and the fact that the parts together form a whole product.

• Customs authorities can connect the dots across shipments to determine the true nature of imported goods. The way you split shipments does not determine how they are classified. If components are intended to be assembled into a finished product, authorities can reclassify parts as a complete product - triggering higher duties and potentially criminal liability.

• Companies importing goods into the EU should review their supply chains and customs declarations to ensure that staggered component shipments are not structured in a way that avoids the correct tariff classification.

• From 1 October 2026, EU Regulation 2026/1384 applies to importers of certain steel products - including sheets, plates, wire, tubes, pipes, and railway material listed in Annex I.

• Importers must certify the country where the steel was originally melted and poured, together with the heat number, at the time of customs declaration. A mill test certificate is the primary evidence. Supplementary documents (invoices, delivery notes, quality certificates) may fill gaps.

• Importers must apply the relevant TARIC document codes on their customs declaration. Goods without proper documentation will be refused entry into free circulation.

• Until 30 September 2027, alternative documents may serve as standalone evidence where no mill test certificate is available, provided they contain the required information.

1. New US tariffs on 60 economies over forced-labour import rules

• What it does: A July 23, 2026, Presidential Memorandum orders the US Trade Representative (USTR) to impose tariffs on all goods from 60 trading partners that the US considers do not ban, or do not properly enforce bans on, imports made with forced labour. Some products listed in an annex are exempt.
• Who is affected: Importers of goods from economies such as Canada, Mexico, the UK and India pay 10%. Importers from most others, including China, pay 12.5%. EU and Taiwan goods are topped up to 10% in total, counting normal duties, and Japan, Korea and Switzerland goods to 12.5%.
• Key dates and next steps: Textile makers in Bangladesh, Cambodia, Indonesia and Malaysia will get duty-free quotas linked to their purchases of US cotton and textiles. Until those quotas exist, the 10% rate applies. Businesses should check the annex for exemptions and watch USTR notices for start dates.

2. Customs guidance on tariffs for patented medicines

• What it does: On July 30, 2026, US Customs and Border Protection (CBP) issued guidance on the imposition of new duties on patented medicines and their ingredients, including active pharmaceutical ingredients (APIs) and key starting materials. These additional duties were introduced pursuant to Presidential Proclamation 11020, published on April 2, 2026. Generic pharmaceuticals and their associated ingredients, as well as pharmaceuticals manufactured in the United States, fall outside the scope of the proclamation.
• Who is affected: Importers of patented medicines and their ingredients to the US now face a general import duty rate of 100%. Products from the EU, Japan, Korea, Switzerland and Liechtenstein pay 15% in total, and UK products pay an extra 10%. Companies with approved US manufacturing and drug-pricing agreements pay 0% until January 20, 2029.
• Key dates and practical points: As of July 31, 2026, the additional duties are applicable to the imported patented pharmaceuticals and ingredients of companies listed in Annex III of the Proclamation 11020. As of September 29, 2026, additional duties are applicable to the imported patented pharmaceuticals and ingredients of all other companies. Please note that free-trade-agreement status does not remove the duty, but duty refunds on re-exported goods ("drawback") are available.

3. Lower aluminium tariffs for companies investing in US smelting

• What it does: On July 20, 2026, President Trump signed the 11045 Proclamation which creates an investment incentive. Approved companies can import primary aluminium each year at half the normal Section 232 tariff, up to the expected yearly output of their new or upgraded US plant.
• Who is affected: Aluminium producers, investors and metal traders that send the Commerce Department a plan to build, expand or upgrade a US primary aluminium plant.
• Key dates and practical points: Construction must start by January 20, 2029. Companies may have to file audited reports. Benefits can be withdrawn if commitments are not met, and in cases of fraud Commerce can collect back tariffs and impose penalties.

4. Minimum prices and a 15% tariff on polysilicon and solar imports

• What it does: The Proclamation 11052 sets minimum import prices: $21/kg for polysilicon, $100/kg for ingots and wafers, $0.22 per watt for solar cells and $0.38 per watt for modules. It also adds a 15% tariff. For the EU, Japan, Korea, Taiwan and Switzerland, the 15% is an all-in total, and for the UK the rate is 10%.
• Who is affected: Importers in the solar and semiconductor supply chains. They must document that the first US sale will be at or above the minimum price, or else pay a matching duty. Materially inaccurate filings can lead to a permanent import ban.
• Key date: The rules start December 4, 2026. Stockpiling before then may lead to import restrictions.

5. US-China "Board of Trade" proposes reciprocal tariff cuts

• What it does: On September 27, 2026, the US and China set up a Board of Trade. Its "30-for-30" lists cover about $30 billion of goods each way, based on 2024 trade, that are being considered for reciprocal tariff cuts.
• Who is affected: US exporters of farm goods, seafood, wood products, cosmetics and medical devices. Also affected are importers of Chinese small appliances, toys, holiday decorations and children's car seats.
• Practical implications: These are recommendations only. Any tariff cuts will follow each country's own legal process. The lists are unlikely to change more than once a year. Businesses should check whether their products are listed but should not count on lower tariffs until they are formally announced.

From 1 February 2027 onwards, EU-based importers of carbon-intensive goods (e.g. aluminium, iron/steel, fertilisers, hydrogen, electricity, and cement) will be required to purchase certificates to compensate for their 2026 imports and to be compliant with the EU Carbon Border Adjustment Mechanism (CBAM). While this price was at around EUR 75 for the first quarters of 2026, the quarter 3 price jumped to EUR 82.32.

For importing businesses, it is now important to monitor 2026 imports accurately, to continuously estimate the financial exposure, and to make the necessary financial provisions to be able to purchase certificates in February 2027 retrospectively. At the same time, importing business will be required to start purchasing certificates for their 2027 imports forward-looking.

On 12 August 2026, the new EU Packaging and Packaging Waste Regulation (PPWR) became generally applicable. Any company supplying packaging or packaged products into the EU will need to address the new EU PPWR sooner rather than later. Initial requirements apply since August 2026 and non-compliance may, depending on the EU Member State, result in significant penalties, product withdrawals, or even the loss of key customer relationships.

The PPWR affects companies across the value chain, including manufacturers, producers, suppliers, importers, distributors, fulfilment service providers and certain authorised representatives.​ Depending on their role, companies will face different obligations, including requirements relating to declarations of conformity, technical documentation, labelling, recyclability, packaging minimisation, and EPR registrations.​

What is mandatory since 12 August 2026?​

• Declaration of conformity for relevant packaging,​
• Technical documentation and regulatory evidence,​
• PFAS ban for food-contact packaging,​
• Compliance with heavy metal limit values,​
• Availability and structured digital management of packaging data (e.g. material, weight, recyclability class, and recycled content).​

In its decision 9C_680/2025 of 27 August 2026, the Swiss Federal Supreme Court held that the relevant time of supply for immovable property is the date of the land register entry, rather than the signing of the purchase agreement or the transfer of benefits and risks.

The decision has important consequences for property developers and project companies. VAT registration and any option to tax must be in place by the date of the land register entry. Otherwise, input VAT recovery may be denied, while VAT openly stated in the transaction documentation may still remain due.

Businesses should therefore review the timing and VAT treatment of ongoing and planned real estate transactions

In its decision 9C_698/2024 of 4 August 2026, the Federal Supreme Court held that mortgage brokerage qualifies as VAT-exempt financial intermediation under Art. 21 para. 2 no. 19 let. a VAT Act. Ancillary advisory services, such as affordability analyses, follow the exempt main service, and volume-based commissions do not exclude the exemption. Brokers currently charging VAT on their fees should reassess their position and consider potential refund claims.

In its decision A-1618/2026 of 10 August 2026, the Federal Administrative Court confirmed that a supplier's failure to remit VAT does not, in itself, exclude the recipient's input tax deduction. However, the recipient must provide proper invoices and verifiable proof of actual payment. Bookings via shareholder current accounts and bank statements that cannot be matched to specific invoices were not sufficient. Groups should review their intercompany payment and documentation practices.

Many businesses file their Swiss VAT returns via the FTA's ePortal and have so far logged in with CH-LOGIN. The Swiss Federal Tax Administration has announced that CH-LOGIN will be replaced by AGOV, the federal government's new login service. The switch takes place on 31 October 2026, and existing accounts will be migrated automatically. Nevertheless, we recommend that businesses and their representatives log in once via AGOV before the next VAT return is due at the end of November 2026, so that any access issues can be resolved in time and delays are avoided.

• Switzerland and China concluded negotiations on a major upgrade to their 2013 Free Trade Agreement on 20 August 2026. The texts are undergoing legal review, with signing planned by year-end 2026 and ratification required before entry into force.

• The share of Swiss exports entering China duty-free will raise from roughly 54% to 99.8% over time, with 77.5% duty-free from day one. Watches, precision instruments, machinery, pharmaceuticals and chemicals will all reach full duty-free access. China also gains new market access for agricultural products such as fruit, vegetables and oilseeds.

• For the first time, the FTA includes investment commitments that also cover manufacturing. It bans requirements such as forced technology transfer or local content rules, and it simplifies approval procedures.

• Swiss firms will be able to fully own subsidiaries in China in sectors including testing, banking, insurance, securities, and air and sea transport. In return, Chinese contract service providers may stay in Switzerland up to 90 days per year.

• A new digital trade chapter addresses e-commerce consumer protection and paperless trade. Simplified rules of origin and electronic certificates of origin should ease cross-border sourcing and production.

• Enforceable provisions cover climate, biodiversity and forced labour - described as the most ambitious environmental terms China has accepted in any trade agreement. Both sides must also prohibit cartels and anti-competitive practices, including by state-owned enterprises.

• The upgraded FTA now needs to be signed (end of 2026) and then ratified by both parties (this may take up to 1-2 years). In the meantime, the existing FTA of 2013 can be applied. 

• On 14 October 2026, the Federal Council opened a consultation on a package of ordinances that will put Switzerland's fully revised customs law into practice. Businesses can comment until 28 January 2027.

• The ordinances set out how two new acts adopted by Parliament on 20 June 2025 will work in practice. These are the framework act on the tasks of the Federal Office for Customs and Border Security (FOCBS; in German, BAZG), known as the BAZG-VG, and the new Customs Duties Act (ZoG). The reform is a key part of DaziT, the FOCBS's programme to digitalise, simplify and harmonise customs and duty collection.

• The core of the package is a new framework ordinance, the BAZG-VV. It aims to reduce administrative work for businesses and to harmonise and digitalise procedures. It also simplifies how duties are collected and how cross-border movements of goods and people are handled and checked.

• A new Customs Duties Ordinance (ZoV) will replace the current Customs Ordinance (ZV). The ordinances on tobacco, beer, automobile and mineral oil tax, and the Alcohol Ordinance, will also be fully revised.

• Importers, exporters and companies that pay the excise duties listed above, such as businesses dealing in tobacco, beer, spirits, vehicles or mineral oil products. The aim is less red tape and fully digital processes. Even so, companies should expect to adjust their internal procedures, IT systems and compliance processes. No date for entry into force has been announced yet (presumably in 2028). 

The EU pharma reform has taken its biggest step yet. Review your operating model now to limit supply chain disruption and to put in place a strategy that is compliant and tax effective.

Where we are

On 28 September 2026, the Council of the EU adopted its first-reading position on the pharma package. The vote was 26 in favour, none against and one abstention. The new directive on medicinal products for human use looks set to become binding law.

Article 166 is now Article 169

Only the number has changed. Wholesale distribution authorisation holders must still buy supplies, including through financial transactions, only from entities with a valid EU/EEA wholesale distribution or manufacturing authorisation.

What happens next

The European Parliament must still adopt the directive and its companion regulation at second reading. A plenary vote could come as early as 2 October 2026, or in November 2026.

Parliament's Committee on Public Health intends to recommend approving the Council's position without amendments.

Application is expected around 2028, after a transitional period.

Why waiting is the wrong plan

Enforcement is already happening. It is based on case law from Germany, the CJEU and Sweden, and health authorities are examining wholesale arrangements during good distribution practice inspections. Waiting for the directive to apply could leave you exposed well before then.

The Swiss principal model

This is a challenge, not a dead end. Compliant options exist that route every wholesale transaction through EU/EEA authorised entities and keep the benefits of a Swiss centre. Regulatory, tax, transfer pricing and operational questions need to be treated as one design challenge. A redesign typically takes up to 12 months.

The bottom line

Parliament's approval looks like a formality, so the runway has shortened. Now is the time to design a compliant operating model.

Want to find out more? Read the full article here.

Next steps

Let’s discuss together from a cross-functional perspective which adaptations are required in order to establish a regulatory compliant, effective and tax efficient pharma operating model.

Introduction

Intra-group services remain one of the most contested areas in transfer pricing, both in documentation and in tax audits. On 1 June 2026, the OECD opened a public consultation on a revised Chapter VII of the OECD Transfer Pricing Guidelines, which governs intra-group services. While the draft substantially deepens the general framework, the simplified approach for low value-adding intra-group services (LVAS) is retained largely unchanged – with some important clarifications on its limits.

Background

The OECD frames the revision as an alignment exercise with Chapters I to III of the Guidelines, supported by 21 new practical examples. Comments were due by 22 July 2026, and a public meeting on the consultation outcomes is scheduled for 9 November 2026 in Paris. The draft does not yet represent consensus guidance and should not be relied upon as such.

The LVAS simplified approach is elective. It recognises that the arm’s length price of such services is closely related to costs: the costs of each service category are allocated to the group companies that benefit, and a single mark-up is applied to all categories, combined with a simplified benefit test. Groups that do not elect the approach must apply the general rules on the benefit test and arm’s length pricing.

Key points

• Simplified approach retained: The definition, the simplified determination of charges, the documentation and reporting requirements and the guidance on withholding taxes for LVAS remain essentially unchanged.
• No export of the 5% mark-up: A new example confirms that the 5% mark-up cannot be applied by analogy to services that do not qualify as low value-adding.
• Not a floor: The draft also clarifies that the 5% mark-up does not operate as a minimum – an arm’s length mark-up for LVAS may be lower in practice.
• Cost-plus no longer the default: Outside the LVAS safe harbour, the OECD explicitly rejects cost-plus as the default method. This increases scrutiny of higher-value or risk-bearing services, e.g. global functions (VP, Head-of, C-level) employed by Swiss principal and HQ entities.
• Stricter delineation and benefit test: Accurate delineation of the nature of services and evidence of benefit become more important, including on duplication of functions and on-call services.
• Shareholder/stewardship boundary: The clarified distinction requires Swiss parents and sub-holdings to revisit which costs they recharge and which they bear as non-deductible shareholder costs.
• Higher documentation expectations: Contemporaneous evidence of benefits, deliverables, allocation-key rationales and cost-pool reconciliations goes beyond what many Local Files currently contain.

Recommendations for Swiss groups

Swiss-headquartered groups with principal, (regional) HQ or shared service centre structures should act now

• Review service catalogues: Confirm which services genuinely qualify as LVAS and separate them clearly from higher-value services currently priced at cost plus 5%.
• Revisit recharges: Assess shareholder versus chargeable stewardship activities and the related cost allocations.
• Strengthen evidence: Build contemporaneous documentation of benefits, allocation keys and cost pools into Local Files and intercompany agreements.
• Monitor developments: Follow the outcome of the November 2026 consultation meeting and the final guidance and align policies before audits test them.

For further information please see our article here.

On 27 September 2026, Lucerne voters approved the new Lucerne Innovation Contribution (LIB) with 65.06% in favour. The new legal bases (StaReG and StaReV), in force since 1 October 2026, draw on key transfer pricing concepts – notably DEMPE functions and the arm’s length principle.

• Funding and eligibility: The canton provides around CHF 110 million for 2026, CHF 158 million for 2027 and CHF 140 million annually from 2028, paid as a financial grant or as a refundable or non-refundable tax credit. Eligible are companies and branches that are tax resident and economically present in Lucerne in the relevant tax period (n-2). A mere tax permanent establishment or pure administrative activities do not qualify.
• Qualifying expenses: Personnel costs, depreciation of assets used directly for innovation, contract research and other costs (e.g. clinical studies) qualify, provided the activities meet the Frascati criteria. Process and organisational innovation as well as related management and support tasks may also qualify.
• Transfer pricing link: Contract research only counts if the applicant funds it, bears the related risks and opportunities and performs the key DEMPE functions. Services from related parties must be remunerated at arm’s length, and the DEMPE analysis evidences substance and the nexus to Lucerne.
• Timeline: Applications for the 2026 and 2027 contribution years must be filed online by 31 January 2027, based on the 2024 and 2025 financial years; decisions and payments are expected by the end of 2027. The contribution is likely subject to profit tax, and groups within the scope of the QDMTT should review the form of payment.

Companies with robust, up-to-date transfer pricing documentation are well placed, as it can serve as the basis for the required DEMPE and arm’s length evidence. Given the tight deadline, we recommend identifying qualifying projects and expenses now and preparing the supporting documentation early. Zug, Basel-Stadt and Graubünden rely on comparable instruments, and further cantons are considering similar solutions.

• Background: Germany’s new Tax Audit Regulation was published in the Federal Tax Gazette on 9 September 2026 and entered into force on 10 September 2026, replacing the Tax Audit Regulation of 15 March 2000. The Bundesrat approved it on 10 July 2026 without significant changes.
• Legislative basis: The regulation implements the tax audit amendments introduced by the Act on the Transposition of DAC 7 and the Modernisation of the Tax Procedure Law of 20 December 2022, which sought to accelerate tax audits.
• A more process- and risk-based approach: The reform aims to make field audits more risk-based, efficient and timely. Key changes include risk-based case selection, the objective of timely audits, dedicated rules for audits of groups and related companies, the participation of the Federal Central Tax Office (BZSt) in audits conducted by the federal states, and clearer rules on meetings with the auditor.
• Legal nature: As internal administrative guidance, the regulation creates no new obligations for taxpayers, but it governs how auditors apply the statutory rules in practice.
• Interaction with the 2022 audit tools: The regulation complements the statutory instruments introduced by the 2022 reform. Through the audit order, the tax office may already request documents and set out the main focus areas of the audit, while interim discussions and a partial closing decision allow individual audit findings to be fixed in advance.

Practical implications

• Closer scrutiny of intra-group transactions: Risk-based case selection and a separate framework for group audits are likely to bring cross-border intra-group transactions under closer scrutiny – an expectation rather than an express statement in the regulation. Groups should ensure that TP policies, Local Files, financial data and intercompany agreements are consistent with one another and with the actual conduct of the transactions.
• Documentation on short notice: As focus areas and document requests may accompany the audit order itself, TP documentation should be ready for submission at short notice.
• Continuous audit readiness: Audit readiness should be treated as an ongoing process rather than a year-end documentation exercise.

For further information please see the PwC article.