The Portuguese tax authority requested the Swiss tax authority in a letter dated May 28, 2020 based on Article 25 of the DTT CH-PT to provide information regarding “A Furnishing SA” (hereinafter the Portuguese company) for the tax periods from September 1, 2015 to August 31, 2018. X Furnishing AG (hereinafter the Swiss company) was the holder of the information. The Portuguese tax authority states that it is carrying out a tax audit of the Portuguese company for the tax years 2015-2017, or the period between September 1, 2015 and August 31, 2018. The Portuguese company mainly produces wood-based furnishings in accordance with supply contracts with the Swiss company, which takes over all products. The Portuguese and Swiss companies are affiliated companies and are currently part of the C. group, from which they were taken over by the D. group on August 31, 2016. The Swiss company is the global buyer of Furnishing products. In the transfer pricing documentation submitted by the Portuguese company, the transactions with the Swiss company were determined by applying the transactional net margin method (TNMM) as it was stated there that other methods were either not applicable or could not be used with sufficient reliability. The documentation also states that the Swiss company is responsible for the storage and distribution of products and that this company also provides related, highly qualified services, such as monitoring quality control. However, the documentation does not explain how the price for these services were determined , nor does it show how some of the functions supposedly developed by the Swiss company for products manufactured by the Portuguese company were carried out. During the ongoing tax audit, the Portuguese tax authority wants to identify the overall picture of these transactions, namely the functions carried out by the Portuguese company, the Swiss company and other entities, the means used and the risks assumed by these companies. A request for administrative assistance was therefore considered necessary in order to understand the pricing mechanisms used and to determine whether the transactions comply with the arm’s length principle. After examining the request, the Swiss tax authority came to the conclusion that it should be acted upon, whereupon it requested the Swiss company to provide it with further information and to inform the Portuguese company about the ongoing administrative assistance procedure X Furnishing AG objected and called the request of the Portuguese tax authority a “fishing expedition” and the case ended up in the Federal Administrative Court. Decision of the Court The appeal of X Furnishing AG was largely dismissed by the Federal Administrative Court. However in regards of the request for transfer pricing documentation from the Swiss company the court states that none is available and, under Swiss law, does not have to be produced. See also the previous decision A-742/2022. Click here for English translation Click here for other translation ...

Based on Article 28 of the DTT CH-FR the French tax authority requested the Swiss tax authorities to answer several questions regarding A. SAS and B. GmbH. and to submit various documents to verify the “economic reality” or “real” existence and substance of G. Switzerland and to the modalities of their taxation in Switzerland and the “bond subscription agreement” between G. Switzerland and G. Belgium). After examining the request, the Swiss tax authority came to the conclusion that it should be acted upon, whereupon it requested the company to provide it with the information. The Swiss company objected to parts of the request and called it a “fishing expedition” and the case ended up in the Federal Administrative Court. Decision of the Court The appeal of the Swiss company was partly upheld by the Federal Administrative Court. Click here for English translation Click here for other translation ...

The Portuguese tax authority requested the Swiss tax authority in a letter dated May 28, 2020 based on Article 25 of the DTT CH-PT to provide information regarding “A Furnishing SA” (hereinafter the Portuguese company) for the tax periods from September 1, 2015 to August 31, 2018. X Furnishing AG (hereinafter the Swiss company) was the holder of the information. The Portuguese tax authority states that it is carrying out a tax audit of the Portuguese company for the tax years 2015-2017, or the period between September 1, 2015 and August 31, 2018. The Portuguese company mainly produces wood-based furnishings in accordance with supply contracts with the Swiss company, which takes over all products. The Portuguese and Swiss companies are affiliated companies and are currently part of the C. group, from which they were taken over by the D. group on August 31, 2016. The Swiss company is the global buyer of Furnishing products. In the transfer pricing documentation submitted by the Portuguese company, the transactions with the Swiss company were determined by applying the transactional net margin method (TNMM) as it was stated there that other methods were either not applicable or could not be used with sufficient reliability. The documentation also states that the Swiss company is responsible for the storage and distribution of products and that this company also provides related, highly qualified services, such as monitoring quality control. However, the documentation does not explain how the price for these services were determined , nor does it show how some of the functions supposedly developed by the Swiss company for products manufactured by the Portuguese company were carried out. During the ongoing tax audit, the Portuguese tax authority wants to identify the overall picture of these transactions, namely the functions carried out by the Portuguese company, the Swiss company and other entities, the means used and the risks assumed by these companies. A request for administrative assistance was therefore considered necessary in order to understand the pricing mechanisms used and to determine whether the transactions comply with the arm’s length principle. After examining the request, the Swiss tax authority came to the conclusion that it should be acted upon, whereupon it requested the Swiss company to provide it with further information and to inform the Portuguese company about the ongoing administrative assistance procedure X Furnishing AG objected and called the request of the Portuguese tax authority a “fishing expedition” and the case ended up in the Federal Administrative Court. Decision of the Court The appeal of X Furnishing AG was largely dismissed by the Federal Administrative Court. However in regards of the request for transfer pricing documentation from the Swiss company the court states that none is available and, under Swiss law, does not have to be produced. Click here for English translation Click here for other translation ...

In 2013, the French tax authorities (DGFP) submitted several requests for administrative assistance to the Swiss Federal Tax Administration (FTA) based on Art. 28 of the Agreement of 9 September 1966 between Switzerland and France. In the applications, the legal entities concerned in France are B. GmbH and C. GmbH. The legal entities concerned in Switzerland are A. GmbH, B. GmbH, C. GmbH and D. GmbH. The French tax authorities requested the administrative assistance to monitor the financial situation of the French companies in the X. Group. In 2009, the group’s activities were reorganised, particularly in France. The change in the transfer pricing policy of the X. Group led to a change in the allocation of profits within the group. The provisions of French tax law stipulate that transactions between companies in the same group must be carried out under the same conditions as if they had been carried out between independent companies. In the case of cross-border transactions between companies in the same group, it is also necessary to have information about these companies and the distribution of profits. This information was essential for the French tax authorities to determine the amount of profits derived from activities in France and to determine the taxes due in France. The Swiss tax authorities requested A. GmbH, B. GmbH, C. GmbH and D. GmbH to submit the information and documents it had specified and subsequently informed the companies that it intended to provide the DGFP with administrative assistance and informed them of the wording of the intended responses and the enclosures. A complaint was filed by the companies with the The Federal Administrative Court which set aside the request of the tax authorities and decided that the tax returns and income statements should not to be submitted to the French tax authorities. The tax authorities then lodged an appeal with the Federal Supreme Court. Decision of the Court The Federal Supreme Court essentially decided in favour of the tax authorities and (essentially) dismissed the cross appeals of the companies. Excerpt in English “…the companies argue that the information requested is not likely to be relevant because it could not provide the French tax authorities with any information to clarify the tax affairs of the companies concerned in France. This is not a tax purpose, but rather the collection of general information about the companies themselves. Insofar as the amount of profits resulting from an activity in France is to be determined, the question arises as to whether the French tax authorities are not even using the request as an opportunity to find out, in the sense of a “fishing expedition”, whether the companies concerned have any links to taxation in France or whether the information could be useful in any other way. The French tax authorities had been provided with detailed transfer price documentation, from which it could be deduced that the transfer prices stood up to a third-party comparison. In order to determine the prices, however, the tax authorities do not require a balance sheet or other business information from the recipient, but rather information on the financial and cost structure of the company or branch providing the service as an independent economic unit and independent taxable entity. This would be available in the form of the taxpayer’s financial figures and the transfer price documentation. The total profit or the respective annual result of the companies, which is a result of their entire (in some cases worldwide) business, cannot be relevant for determining transfer prices in line with third-party prices for individual companies, even less so where no transactions have taken place. The same applies to the balance sheet and the separation of permanent establishment profits. A transfer of the information in question would therefore violate the principles of administrative assistance in tax matters as well as the principle of the protection of privacy under Art. 13 BV and Art. 8 ECHR and the principle of proportionality under Art. 5 para. 2 BV. 2.4 It must therefore be examined whether – as the FTA claims – all of the information requested by the French tax authorities proves to be relevant for tax purposes or – as the companies argue – is not likely to be significant within the meaning of the DTA CH-FR. The only disputed issues are the answers to questions d) et seq. of the administrative assistance requests (see facts under A.d). (…) 4.6 In summary, the judgements of the lower court cannot be upheld for the most part. The balance sheets, the information on the annual results, the information on the existing permanent establishments and their international profit and loss distribution (company 3), the permanent establishment profit distributions (companies 2 and 3) as well as the income statements of the companies must be submitted to the DGFP. At the same time, the tax information must also be submitted, as the probable materiality with regard to the transfer pricing review is also to be affirmed in this respect. Since there is a connection between the information to be transmitted and the tax purpose and there is also a public interest in its transmission, the principle of proportionality is also satisfied in this case. Only the question of the DGFP just discussed (E. 4.5) as to whether Company 2 has taken on staff from the French branch cannot be answered. It should be noted that, as the FTA points out, the transmission of the tax returns (concerning companies 3 and 4) – contrary to the dispositive of the judgement of the lower court – was not planned at any time and would not be carried out. 5 As explained above (E. 3.2), the question of whether the request for administrative assistance affects the taxpayer depends to a large extent on the concept of probable materiality. 5.1 As far as companies 1 and 4 are concerned, they do not dispute that the transmission of certain information, such as a list of persons who have received monetary benefits, details of account transactions, ...