An implementation duty (minimum standards) exists concerning country-by-country reporting, the abolition of/amendments to harmful tax practices, the criteria for taxing intangible property (patent boxes), the spontaneous exchange of information on advance tax rulings, access to the mutual agreement procedure for resolving disputes and the inclusion of anti-abuse clauses in double taxation agreements (DTAs). The implementation of the minimum standards is monitored by the Inclusive Framework on BEPS.
BEPS action 5 (Counter harmful tax practices more effectively, taking into account transparency and substance)
- On 28 September 2018, the Parliament adopted the Federal Act on Tax Reform and AHV Financing (TRAF). With this law, the tax statuses which are no longer accepted internationally are abolished and a patent box is introduced in line with the OECD standard.
Canton Nidwalden's patent box has been amended in line with the asset requirements of the final report on BEPS action 5 (nexus approach).
- The spontaneous exchange of information on advance tax rulings entered into force on 1 January 2018.
- In the Progress Report 2018, four Swiss regimes are indicated as being in the process of being eliminated (auxiliary company regime, mixed company regime, holding company regime, commissionaire ruling regime). The regime applicable to patent income in the Canton of Nidwalden, considered not to comply with the nexus approach, has been modified and is now evaluated as not harmful.
- The first two reports which concerned 2016 and 2017 do not contain any recommendations for Switzerland. In 2016 and 2017, Switzerland had not yet begun with the spontaneous exchange of information. Switzerland will be examined on the effective exchange from examination year 2018 .
BEPS action 6 (Prevent treaty abuse)
The provisions to prevent treaty abuse and to improve the resolving of disputes will either be introduced via the multilateral agreement or in the context of the negotiation of double taxation agreements (DTAs).
The monitoring of the implementation of minimum standards in line with BEPS action 6 has been launched and an initial report is scheduled for publication in early 2019. The monitoring will be based on the Terms of Reference published in June 2017 for the review of this minimum standard.
BEPS action 13 (country-by-country reporting)
The law, the ordinance and the multilateral agreement on the exchange of country-by-country reporting entered into force in December 2017. In Switzerland, the submission of the reports for the 2016 and 2017 tax years is still optional and will become mandatory for the 2018 tax year and onwards. The first regular exchange will take place in 2020.
The monitoring of the implementation of the minimum standard in line with BEPS action 13 was launched in February 2017. The first report was published on 24 May 2018 by the OECD. It contains recommendations addressed to 65 countries and territories. Switzerland is not affected. A report on the exchange of information is to be published in 2019. A third report on confidentiality and the proper use of the country-by-country reports is planned for 2020.
BEPS action 14 (Improving effectiveness of dispute resolution mechanisms)
Within the scope of action 14, Switzerland has committed to meet 17 minimum standards aimed at improving the effectiveness of dispute resolution mechanisms. These minimum standards are organised around three areas: (i) ensuring that the mutual agreement procedure obligations under double taxation agreements (DTAs) are carried out in good faith and that disputes leading to a mutual agreement procedure are resolved in a timely manner; (ii) ensuring that administrative processes to prevent and resolve DTA disputes in a timely manner are effectively implemented; and (iii) ensuring that taxpayers are able to use the mutual agreement procedure when they are entitled to do so. Switzerland largely meets the minimum standards set out in action 14 and plans to make the necessary changes.
The monitoring of the implementation of minimum standards in line with BEPS action 14 was launched with the publication of the documents relevant for the review of the minimum standard in October 2016.
The first stage of the review started for Switzerland in December 2016 and the first review report on Switzerland was published by the OECD in September 2017. The overall results of this report are positive.
The second stage of the peer review of action 14 aims to follow up on the actions implemented by countries following the findings of the first stage of the peer review. For Switzerland, few changes are required to meet all minimum standards. The report on the second phase of the peer review of Switzerland is expected in the first half of 2019.
Last modification 08.05.2019