Issue February / March 2013

We are proud to present to you the latest edition of the Transfer Pricing Insights – Deloitte Switzerland‟s bi-monthly newsletter focusing on Transfer Pricing developments affecting MNCs in Switzerland. It covers „hot‟ topics and economic related news from around the world in transfer pricing.

Transfer Pricing Hot Topics

OECD report on Base Erosion and Profit Shifting

On 12 February 2013, the OECD released its report “Addressing Base Erosion and Profit Shifting (BEPS)”. The goal of the 91-page report is to establish the case for changes to tax regulations by showing the extent of base erosion and profit shifting, which has been earmarked as a serious risk to tax revenues, tax sovereignty and tax fairness for OECD member countries and non-members alike.

Following the presentation of the BEPS report to the G-20 meeting in Moscow in mid- February, the OECD will define six work streams to address the areas of concern. The current plan is to present the scope of those work streams to the G-20 in June 2013 and decide actions and deadlines to tackle BEPS in the near future.

Given the significance of some of the planned changes we recommend you to follow the developments of the OECD carefully.

For more detailed information and a link to the OECD report, please click here.

Greece updates its Transfer Pricing regime

Greece recently adopted a new tax bill which amends amongst others the country‟s transfer pricing rules.

While in the past Greece‟s transfer pricing rules were based on separate rules issued by the Ministry of Development and the Ministry of Finance, the new law seeks to consolidate the legislative framework. The new law focuses in particular on the following topics:

• Broadening the definition of “related entities” and the application of the arm‟s length principle which now also captures intra-group loans, transfer of real estate or shares as well as intra-group transactions with entities based in locations with “favourable tax regimes”;
• Documentation requirements which foresee submission of a summary table of intra-group transactions and the preparation of a transfer pricing documentation file for transactions with domestic and foreign affiliated entities. Details on the content of such a transfer pricing documentation file will be based on a ministerial decision to be issued in future;
• Introduction of the possibility to request advance pricing agreements (APAs) per 1 January 2014.

Taxpayers with business operations in Greece should ensure that their intra-group transactions adhere to these new requirements and should stay tuned for further guidance on the details requested in the transfer pricing documentation.

Please click here for further information.

Serbia’s new Transfer Pricing legislation

Serbia has introduced a new transfer pricing legislation which is applicable as per 1 January 2013. The new law passed by the Serbian Parliament primarily refers to the OECD Guidelines but also refers to other international Transfer Pricing references such as that of the United Nations.

Highlights of the new legislation include:

• Related party status is now applicable if 25% or more of shares or votes is owned by a single shareholder;
• Transfer pricing regulations apply to all intra-group transactions with legal entities located in jurisdictions which are deemed to be preferential tax regimes under Serbian regulations;
• Serbia now recognises the “best method” and allows newly for the Transactional Net Margin Method and the Profit Split Method in addition to the traditional methods;
• Taxpayers are obliged to declare the total amount of purchases and sales from related parties;
• Documentation must be prepared on a single transaction basis.

Additional information on Serbia‟s new transfer pricing law can be found here.

The new law provides taxpayers with clearer guidance on the application of transfer pricing rules and methods in Serbia. However, taxpayers with intragroup transactions involving Serbian entities should pay particular attention to the amended related party status rules and the introduction of the obligation to prepare transfer pricing documentation on a per- transaction basis.

Australia and Brazil transfer pricing law developments

As covered in previous editions of our newsletter, there have been significant changes and guidance issued in relation to the Brazilian and Australian transfer pricing regimes during 2012. Additional guidance on these changes can be obtained by clicking here.

The Arm’s Length Standard

The recent issue of Deloitte‟s global Transfer Pricing newsletter concentrates particularly on:

• Brazil issues New Transfer Pricing Regulations
• Canada Updates Administrative Guidance with Two New Transfer Pricing Memoranda
• Australia‟s Evolving Transfer Pricing Landscape

These and further topics can be accessed by downloading your copy of the Arm‟s Length Standard here.

We hope you have enjoyed this edition of Transfer Pricing Switzerland Insights. If you have questions in relation to one of the above topics or you would like to discuss your situation and receive a professional opinion on any Transfer Pricing related topics, please feel free to contact us directly via phone or email.