In general
The OECD Transfer Pricing Guidelines provide guidance on the application of the "arm’s length principle", which represents the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises.
What has changed
This latest edition consolidates in a single publication all changes made to parts of the guidelines since the publication of the 2017 edition of the Transfer Pricing Guidelines approved by the OECD/G20 Inclusive Framework on BEPS, and resulting from:
- The Report about the Guidance on the Application of theTransactional Profit Split Method which replaces the guidance in Chapter II, Section C (originally published in 2018);
- The Report Guidance for Tax Administrations on the Application of the Approach to Hard-to-Value Intangibles which has been incorporated as Annex II to Chapter VI (originally published in 2018);
- The report Transfer Pricing Guidance on Financial Transactions which has been incorporated into Chapter I and in a new Chapter X (originally published in 2020);
- Consistency changes to the remaining part of the OECD Transfer Pricing Guidelines as required due to the changes listed above.
In practice
In today’s economy where multinational enterprises play an increasingly prominent role, transfer pricing continues to be high on the agenda of tax administrations and taxpayers alike. Switzerland has committed to follow the OECD Transfer Pricing Guidelines in the international tax context, but no formal adoption into Swiss law has yet taken place. Many other countries, such as Germany, have adapted their legislation according to the transfer pricing guidelines (e.g. the documentation requirement).
Do you have questions regarding your transfer prices? You are welcome to contact our specialists.
