Tax Newsletter Central Switzerland

Brazil: Implementation of Pillar Two rules establishes qualified domestic minimum top-up tax 

Provisional Measure (MP) No. 1,262/2024, which seeks to introduce a QDMTT in Brazil's through the "Additional Social Contribution on Net Profits" (CSLL), along with Normative Instruction (IN) RFB No. 2,228/2024, which regulates the MP, were published in October 2024 by the Federal Government, representing Brazil's partial and selective adoption of the Pillar Two rules as from 1 January 2025. Provisional Measures have the immediate force of federal laws but need to be ratified (or modified or rejected) and "converted" into standard federal law by Congress within up to 120 days.

According to the explanatory memorandum, if Brazil does not immediately implement a local mechanism to collect this supplementary tax by January 1, 2025, other jurisdictions where investors or other Constituent Entities of the multinational group are based will collect the supplementary tax on profits generated in Brazil via IIR or UTPR. The Brazilian Federal Revenue Service (RFB) has also opened a public consultation on the text of IN No. 2,228/2024, inviting taxpayers and other stakeholders to submit comments and suggestions for improvement by November 10, 2024.

Additional information can be found here.

Italian hybrid mismatch rules 

On December 6, 2024, the Italian Government approved the Decree implementing the penalty protection regime for hybrid mismatch arrangements based on anti-hybrid documentation as set forth by Decree no. 209 published in December 2023. 

Proper preparation of the anti-hybrid documentation is of critical importance for Italian taxpayers part of multinational groups, as the penalty-protection regime:

• protects them against the application of administrative penalties;
• ensures that they have ready-to-exhibit and adequate supporting documentation against the application of anti-hybrid rules (“AHR”) in case of a tax audit;
• proves to be beneficial in the context of a due diligence process
• demonstrate that they are properly managing internal tax risks, also in connection with the cooperative compliance regime.

Relevant hybrid cases do not always follow aggressive tax planning strategies but, instead, can be created from unintended behaviours monitored only upon a detailed analysis is carried out. Consequently, this provides an opportunity to control tax and penalty risks connected to previous fiscal years that were not duly mapped. 

See Tax Insight PwC Italy for further information.

Germany published final anti-hybrid rules guidance 

The German Federal Ministry of Finance published on December 9 the final decree on its interpretation of the German anti-hybrid rules, which apply generally to all expenses incurred after December 31, 2019. The decree includes some changes to the draft version, which was published in July 2023.  

The decree includes statements regarding the impact of foreign controlled foreign corporation (CFC) as well as Pillar Two regimes on the German anti-hybrid rules. Actions to consider Multinational companies with German subsidiaries should analyse the decree’s impact on the deductibility of expenses in Germany. Businesses also should comply with the documentation requirements for the treatment of transactions under foreign law, as required by the decree.  

The anti-hybrid rules should by carefully considered in connection with the Swiss STAF step ups (especially the principal (circular 8) step up may be considered harmful) according to the current practice.

Mutual agreement between Switzerland and France 

The State Secretariat for International Financial Matters announced that a new mutual agreement between Switzerland and France on the taxation of cross-border teleworking was concluded on December 17, 2024. This agreement extends the transitional arrangement of December 22, 2022, according to which cross-border teleworking is possible for up to 40% of annual working hours without triggering international tax allocation consequences, until December 31, 2025. The supplementary agreement of June 27, 2023 to the double taxation treaty, which contains permanent rules for the taxation of cross-border teleworking, has not yet entered into force. This supplementary agreement was approved by the Federal Assembly on June 14, 2024. In France, the procedure for approving the supplementary agreement has not yet been completed. 

For more information, see the following link.

Suspension of the application of the Most Favoured Nation Clause in the India-Switzerland Tax Treaty effective 1 January 2025

The State Secretariat for International Financial Matters has announced an update regarding the application of the Most Favoured Nation (MFN) Clause under the India-Switzerland Double Taxation Treaty (DTT), as amended by the 2010 protocol. Effective 1 January 2025, the MFN Clause will be unilaterally suspended by Switzerland. As a result, the residual withholding tax (WHT) rate on dividends will revert to 10%, as per the treaty.

The MFN Clause in the 2010 protocol allowed for a reduced WHT rate of 5% if India concluded treaties with third states that were OECD members and provided lower rates. Based on this provision and in accordance with a statement published by the SFTA on 13 August 2021, Switzerland applied a 5% rate following India’s treaties with Lithuania in 2018 and Colombia in 2020, both of which became OECD members. 

However, in its ruling of 19 October 2023, the Indian Supreme Court concluded that the MFN Clause does not apply to OECD accessions after the protocol’s signing date of 30 August 2010. The Court held that the clause only applies to OECD member states as of the protocol's signing and further ruled that the clause is not directly applicable in the absence of a formal “notification” under Section 90 of India’s Income Tax Act. On the basis of this ruling, the Swiss competent authority has acknowledged that its interpretation of the MFN Clause is not shared by the Indian authorities. In light of the lack of reciprocity, Switzerland will suspend the unilateral application of the MFN Clause, effective 1 January 2025. From this date onwards, dividends will be subject to a WHT rate of 10% in the source state.

For income arising between 2018 and 2024, the position adopted by the SFTA on 13 August 2021 remains applicable.

For more information, see the following link.

Federal Council adopts dispatch on amendment of DTA with Hungary 

During its meeting on 20 November 2024, the Federal Council adopted the dispatch on the protocol of amendment to the double taxation agreement (DTA) with Hungary. The protocol implements the OECD's minimum standards from the base erosion and profit shifting (BEPS) project with regard to double taxation agreements.

For more information, see the following link.

Entry into force of the amending protocol to DTA with Kuwait

The amending protocol to the double taxation agreement (DTA) between Switzerland and Kuwait has entered into force. The amending protocol contains, among other things, new rules for the taxation of dividends, interest and capital gains. With a few exceptions, most of the changes will apply from 1 January 2025.

For more information, see the following link.

Administrative assistance in accordance with FATCA: publication of final decrees pursuant to Article 5 paragraph 3 letter b of the FATCA Agreement

The Federal Tax Administration has published final decrees pursuant to Article 5 paragraph 3 letter b of the FATCA Agreement.

For more information, see the following link.

International Tax News

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

Hidden Equity - Circular letter No. 6a 

The Swiss Federal Tax Administration has published the circular letter "Hidden equity (Art. 65 DBG) for corporations and cooperatives". The circular letter can be found at the following link.

Regulation on the implementation of the OECD minimum taxation is being adjusted 

On November 20, 2024, the Federal Council decided to adjust the regulation on the Minimum Taxation of Large Corporate Groups (Minimum Taxation Ordinance). The change is due to the entry into force of the international supplementary tax (Income Inclusion Rule, IIR). Further information can be found under the following link (in German).

Proposal for the introduction of a cantonal top-up tax in Zug

On December 19, 2024, in response to the recent discussions on the allocation of future Top-up Tax funds between the Swiss Federation and the cantons, the Zug government published its intention to tax corporate profits in excess of CHF 20m with an additional cantonal corporate income tax of 3%. The full press release (in German) can be found here.

While there have been certain discussions in the last few weeks in this regard, this proposal came surprisingly fast. The main elements are as follows:

• Level 1: taxable profit up to CHF 20m: no change, i.e. would still be taxed with an effective tax rate (ETR) of roughly 11.8%. This is particularly relevant for SME clients.
• Level 2 (new proposal): taxable profit exceeding CHF 20m: taxation with an additional corporate income tax at a rate of 3%. No communal multiplier should apply on this part. As such, profits exceeding CHF 20m would be subject to a an ETR of some 14.1%.
• For Pillar 2-impacted clients, the above means that the Swiss QDMTT charge may be reduced materially, also considering annual capital tax and potential GloBE base differences.
• The calculation / assessment would still be done entity-by-entity, i.e., no group taxation would apply.
• No enactment yet for 2024: the proposal forms part of the already existing draft cantonal tax law reform package, which will be subject to the cantonal parliamentary discussions in 2025. Enactment (if the entire political process, including cantonal popular vote is successful) is foreseen as per Jan. 1, 2026. During the same process, the Zug parliament will be debating about the proposed Location Development Act (for cantonal subsidies). The dispatch and the draft law are to be published in the coming days.

With this proposal, Zug follows the lead of other cantons (like VD, GE, BS, SH). It could well be that additional cantons (in particular incl. LU) may propose similar plans in 2025. 

Information on the OECD minimum taxation in the canton of Zurich

The regulation on the minimum taxation of large corporate groups came into force on January 1, 2024. Further information on the implementation of the OECD minimum taxation in the canton of Zurich can be found on the website of the cantonal tax office of Zurich. Further information can be found here.

Information sheet from the Canton of Schwyz “Time of taxation when selling business real estate owned by self-employed persons”

The Canton of Schwyz has published a new information sheet "Time of taxation when selling business properties owned by self-employed persons". You can find the information sheet here (in German)

Adjustment of the interest rates for cantonal and communal taxes in the Canton of Lucerne 

The interest rates for cantonal and communal taxes in the canton of Lucerne have been adjusted for 2025. The positive and negative compensation interest rate is 0.75% from 1 January 2025. The late payment interest rate is 4.5%. Further information can be found under the following link (in German).

Adjusted guidelines on lump-sum provisions and lump-sum expenses in the Canton of Nidwalden 

In the canton of Nidwalden, guideline no. 81 for lump-sum provisions has been revised. Furthermore, guideline no. 20 lump-sum expenses has been adapted to the new model expense regulations. The relevant guidelines can be found here.

Proposal for the extension of the loss carry-forward period to 10 years 

At the request of the Parliament, the Federal Council has prepared the necessary legal bases and issued a dispatch to extend the period for offsetting business losses from the current seven years to ten years (amendments to the FDTA and FTHA). The aim of the bill is to reduce the general tax burden on companies that have suffered significant or multi-year losses as a result of the Covid-19 crisis (from tax year 2020). This bill is a response to motion No. 21.3001.

Given the state of public finances and the increased focus on the efficiency of (tax) expenditure, the Federal Council does not recommend that the Parliament adopts the bill. The proposed measure would lead to an unquantifiable reduction in tax revenues at all three levels of government. The impact on Switzerland's attractiveness as a business location would be small (although positive).

The Federal Council states that the extension of the loss carry forward is compatible with both Swiss national law and international obligations (including the BEPS reform), which is rather positive news for the proponents of the reform.

During the consultation, two-thirds of the cantons (e.g. ZH) opposed the extension of the loss-carryforward period.

The legislative process for the draft law has just begun and any outcome (such as its adoption) is possible. 

Concerning the position of the Federal Council, it has not shelved the issue of extending the loss carry-forward period and it indicates that it is in principle favorable to the demand. Independently from the procedures concerning the present draft law, it will address the loss-carryforward in its forthcoming report on postulate 23.3752 "Maintaining attractiveness, securing finances". Switzerland needs a long-term tax and economic development strategy', which will provide a comprehensive overview of the issue.

Transfer tax on brokerage activities within a group – Practical clarification 

Due to the most recent case law in the area of turnover tax on intermediation in a group relationship, the Federal Tax Administration has decided to make clarifications in its administrative practice regarding Article 13 paragraph 1 and Article 13 paragraph 3 letter b number 2 of the Federal Law of 27 June 1973 on stamp duties. The clarifications can be found at the following link (in German).

Treasury shares – News from tax practice 

In its decision of June 6, 2024, the Federal Court ruled that for the purposes of income tax, the repurchase of treasury shares is considered a capital reduction transaction. Based on this case law, the SFTA, after consultation with the Corporate Tax Working Group, determines the tax consequences regarding transactions with own shares. The SFTA's communication (in German) can be found at the following link.

Change in the law as of 1 January 2025 – bankruptcy enforcement

Until 31 December 2024 the collection of taxes and duties was only possible through enforcement by attachment. The regulation (Art. 43 No. 1 of the Debt Collection Act) has been repealed and since January 1, 2025, the bankruptcy enforcement proceedings initiated will be continued for every debtor registered in the commercial register (Art. 39 of the Debt Collection Act).

Price lists (ICTax)

The Swiss Federal Tax Administration has updated the price lists and the bonus share lists for 2022, 2023 and 2024. The lists can be found at the following link (in German).

Tax folders 2024 

The tax folders 2024 have been published. They offer comparative overviews (federal / cantonal) of income and deductions for natural persons, tax rates for legal entities, inheritance and gift taxes as well as property and real estate capital gains taxes. The tax folders can be found under the following link (in German).

Tax policy proposals and initiatives 

The Swiss Federal Tax Administration has updated the table overview of tax policy proposals and initiatives. The overviews can be found under the following link.

Tax information dossier «Federal withholding tax»

The tax information dossier "Federal withholding tax" has been updated. For example, the mechanism for collecting withholding tax and the conditions for its refund are explained. You can find the details under the following link (in German).

Tax information dossier «Temporal assessment of taxes»

The tax information dossier "Temporal assessment of taxes" has been updated. It explains the basic principles of temporal tax calculation and in particular the current system of one-year post-numerando taxation. You can find the details under the following link (in German).

Tax information dossier «Inheritance and gift taxes»

The tax information dossier "Inheritance and gift taxes" has been updated. The various aspects of the taxation of inheritances and gifts in the cantons are explained, such as the taxable object and the tax assessment. You can find the details under the following link (in German).

Current case law

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

• SFC dated 9 June 2024: The Swiss Federal Court has ruled that for the purposes of income tax, the repurchase of treasury shares is considered a capital reduction transaction. In this sense, the repurchased own shares do not constitute an effective asset. Accordingly, the reissue of own shares previously repurchased by the company is to be viewed as a tax-free capital contribution transaction.
• SFC dated July 3, 2024: The Swiss Federal Court disallowed for the specific case a “provision” for unused vacation for tax purposes. Accordingly, the Federal Supreme Court confirmed the view of the GE tax authorities and the GE cantonal courts.
• SFC dated August 22, 2024: If a taxable entity has failed to deduct a loss or loss carryforward from net profit in a previous tax period (assessment by the cantonal tax office is at its discretion), the loss offset cannot be made up for in a later tax period.
• SFC dated October 3, 2024: The Swiss Supreme Court issued a landmark decision regarding the Swiss withholding tax (WHT) refund right of a credit institute involved in cross-currency swaps. The claimant had acquired Swiss government bonds and swapped a fixed paymen in CHF (matching the gross coupon on the Swiss government bonds) for a floating rate in USD. The refund will only be granted if the credit institute qualifies as the beneficial owner of the interest payments in connection with the Swiss government bonds.

PwC newsletter 

We hope that this newsletter contains some topics of interest to you. If you have any questions, please do not hesitate to contact us. For ongoing updates from the world of tax, we also recommend our personalized newsletter, for which you can register using the following link.

VAT

New e-commerce VAT rules in Switzerland as of 2025 - ‘Deemed supplier concept’ for platforms

Old situation (until 31 December 2024):

Suppliers selling goods to Switzerland from abroad via an online platform have to register for VAT and charge VAT on the subsequent supplies if their annual turnover from low-value consignments (VAT amount < CHF 5) exceeds CHF 100,000. There are currently no VAT implications for platforms.

Changes as of 1 January 2025:

The ‘Deemed supplier concept’ will be introduced for cross-border AND domestic supplies – two separate transactions will be deemed to have taken place under certain conditions: 

1. Supply from the supplier to the platform – without CH VAT:
           a. Domestic supplies: VAT exempt (with input VAT deduction right) 
           b. Cross-border supplies to CH: place of supply abroad, no VAT 
   
   
2. Supply from the platform to the end customer:            
           a.  Domestic supplies: subject to Swiss VAT 
           b.  Cross-border supplies to CH: import VAT (generally) + Swiss VAT (8.1% / 2.6%) on B2B and B2C supplies

Resulting VAT implications for the platform as of 2025:

The platform is obliged to register for VAT if the platform’s turnover from low-value-consignments from abroad exceeds CHF 100,000 per year (or in the case of local supplies in CH, if worldwide turnover exceeds CHF 100,000 per year).

If turnover from low-value-consignments from abroad exceeds CHF 100,000 per year: 

• The place of supply performed by the platform is deemed to be in Switzerland.
• All subsequent supplies of goods from abroad to end customers in Switzerland, regardless of value, are subject to Swiss VAT, i.e. the platform will generally act as the importer of record and charge Swiss VAT to Swiss customers (even if no import VAT was due for the low-value-consignments in question).  

The end result of this is that the obligation to register for VAT is shifted from the supplier to the platform.

Recommended immediate actions:

• Assess the VAT implications and validate VAT registration obligations in Switzerland. 
• Review your agreements and general terms and conditions, taking into account the new subsidiary liability, the obligation for platforms to disclose information, and other relevant obligations.
• Prepare your ERP system considering the necessary changes in invoice processing and layout, as well as compliance processes. 
• Align with your suppliers, customers, and logistics service providers to agree on any potential changes in procedures. 
• Ensure awareness of the new rules within your organisation.

PwC is happy to support you on this journey. For further information, please see here.

VAT returns must be filed online as of 1 January 2025

Starting from January 1, 2025, all VAT-liable companies must settle their VAT online via the ePortal. The VAT return form can no longer be ordered on paper. This must be done through the ePortal using either VAT declaration pro or VAT declaration easy. The ePortal allows for easier communication with tax authorities and faster processing of applications.

From 1 January 2025, the following requirements will be introduced:

• Electronic VAT registration applications
• E-filing of VAT returns
• E-filing of VAT correction returns

Taxpayers may apply for a 1-year transition period from paper to electronic filing or communications. 

Introduction of voluntary annual reporting

With the partial revision of the Swiss VAT Act, which came into force on January 1, 2025, the tax administration has introduced the option of annual VAT reporting upon request.

Authorization for annual reporting will be granted if the taxable person:

a. has not made any taxable transactions of more than CHF 5,005,000 in the previous tax period; and

b. in the last three tax periods or, if the tax liability exists for a shorter period, has submitted all VAT returns on time since the start of the tax liability and has paid the VAT due in full and on time

The application must be submitted no later than 60 days after the start of the tax period from which the change is to take place.

The tax administration will determine four advance payment installments to be paid to the tax administration during the year based on the tax claim from the previous tax period. One installment amounts to a quarter of the previous year's tax liability. The installments paid are offset against the tax claim according to the submitted annual VAT return. In the event of an overpayment, the credit will be paid out.

New practical publications in the area of public bodies come into force

The VAT industry information number 19, revised by the tax administration, came into force on January 1, 2025. It brings with it comprehensive changes in the area of input tax deduction.

Public bodies should consider what impact these changes might have on them.

Customs

News on the DaziT transformation programme

The Federal Customs and Border Security Office (FOCBS) reported on key progress and updates regarding the DaziT transformation programme during the Economic Advisory Group meeting on 3 December 2025. 

A key focus is the gradual replacement of the existing e-dec Export system with Passar. Since 4 November export authorizations have been digitally processed. The automated examination of many additional regulatory areas will follow for imports (Passar 2.0). Furthermore, the concept phase for the national transition solution for the digitalization of EUR.1 has been completed. Currently, approximately 15 % of export volume is processed through Passar, with a significant increase expected in the first half of 2025, as the parallel phase ends on 31 December 2025.

Regarding the payment of import duties, with the switch to Passar in the import process, the previous ZAZ account will be replaced by the business partner ID (GP-ID). Companies must register independently via the ePortal, even if they currently hold a ZAZ account. The financial processes will remain largely the same; however, the previous PDF invoicing will no longer apply, and only one account per company will be allowed. Additionally, with the introduction of the debtor status, the blanket demand for security will be discontinued. A risk-based model will be implemented instead, which will specify targeted securities or immediate payments. However, foreign companies will still need to provide securities due to higher risks. From July 2025, the "Garanzia" monitoring tool will be operational for managing guarantees.

On an international level, the FOCBS is advancing the development of the BorderTicket approach. This digital system aims to simplify border control and customs processing by digitalizing the currently used goods declaration or transport document at border customs posts. The approach has also been included in the EU master plan and forms the basis for a future fully automated solution. Initial bilateral simplifications, such as the digital transport slip or fast lanes for transit in Chiasso, have already been successfully implemented.

Finally, the concept for future procedural simplifications was presented. In addition to continuing well-known facilitations such as the Authorized Consignor and Consignee status, the principle of monthly collective declarations will be expanded. Importers and customs service providers will be able to submit a reduced declaration with minimal data upon crossing the border and provide the full details within a defined period.

Winter Session 2024: Debate on the new customs law in parliament’s focus

A central event of the parliament’s Winter Session 2024, which took place from 2 to 20 December, is the debate on the new Customs Law in the Council of States on December 12. This discussion marks an important milestone in the total revision of the Customs Law, which will bring profound changes to Swiss customs procedures.

In addition to the Customs Law, other topics with customs-related impacts were on the agenda: The Torture Goods Act and the TEPA EFTA-India trade agreement were passed by the Council of States. The abolition of the VOC steering tax and the ban on importing real fur from cruel animal farming were also significant. Furthermore, the adaptation of Swiss law to EU regulations on combating deforestation and the partial revision of the Tobacco Products Act were discussed.

We will report on the relevant decisions in the next newsletter. Additionally, since 12 December our new platform for the customs law revision is live, providing comprehensive information on the changes and their impact on the Swiss customs landscape.

Entry into force of the revised PEM agreement on 1 January 2025, and new transition phase until the end of 2025

The revised Pan-European Mediterranean (PEM) Agreement came into force on 1 January 2025. Companies in the EU, EFTA, and the Mediterranean region must adapt to new origin rules designed to modernize and simplify trade. Changes include expanded cumulation, greater tolerance for non-originating materials, and the introduction of electronic proofs of origin.

However, as not all countries have yet adapted their free trade agreements, a transition phase until the end of 2025 has been introduced to ensure a smooth shift. During this period, both the previous and new rules may be applied in parallel. Exporters using the new rules must mark origin proofs with the note "REVISED RULES." Proofs issued before 2025 remain valid, as long as the goods are in transit or under customs supervision.

Companies should prepare early for the new regulations, review their supply chains, and update their origin documentation to benefit from the simplifications and ensure compliance. The transition phase allows companies to implement the new rules and ensure smooth operations in trade.

Reduction of the duty-free limit for travelers to CHF 150

As of 1 January 2025, the duty-free limit for personal goods that travelers can bring into Switzerland has been reduced from CHF 300 to CHF 150 per person per day. This measure aims to limit shopping tourism and promote tax fairness. The existing quantity limits for certain goods such as meat, alcohol, and tobacco remain unchanged.

Goods exceeding this new threshold must be declared, and Swiss VAT (Value Added Tax) will apply. Travelers can continue to declare private goods via the QuickZoll app, with the standard VAT rate of 8.1 % applied. For the reduced VAT rate of 2.6 %, travelers will still need to go to the counter until 2026.

Trade measures: Lessons from the Harley-Davidson judgment by the ECJ

The European Court of Justice (ECJ) ruled that Harley-Davidson's relocation of production from the USA to Thailand was primarily aimed at circumventing additional EU tariffs on US motorcycles. The relocation was classified as "non-economic processing" under Article 33 of the Delegated Regulation to the Union Customs Code, as its main purpose was to evade trade measures. This led to the invalidation of the binding origin rulings (BOIs) issued by Belgian customs authorities, which had confirmed Thailand as the country of origin.

The ECJ ruling highlights the importance of a sound economic justification for production relocations. Companies shifting production must ensure that such decisions are based on legitimate economic considerations and not solely on circumventing trade measures. Proper documentation and transparency are crucial to ensure the legality of such relocations and minimize regulatory risks.

Furthermore, the case shows that relocations coinciding with trade measures such as protectionist tariffs or sanctions will be scrutinized more closely by authorities. Companies should carefully plan their production decisions, conduct legal analyses of relevant trade and customs regulations, and demonstrate the economic viability of the measures. The Harley-Davidson ruling underscores the need for a proactive and compliant approach to avoid regulatory uncertainties and potential economic disadvantages.

Centralized Clearance for Import (CCI): Expansion in the EU

The Centralized Clearance for Import (CCI) system, introduced in July 2024, is being gradually rolled out across the EU. After Croatia joined the system on 30 September 2024, Italy became part of it on 8 November 2024. CCI is based on the Union Customs Code and simplifies and digitalizes customs clearance across member state borders.

Currently, the system is operational in ten member states: Bulgaria, Estonia, Spain, Luxembourg, Latvia, Lithuania, Poland, Romania, Croatia, and Italy. The next phase of implementation, planned for June 2025, will include features such as simplified customs declarations, entries into the declarant's records, inclusion of consumables, and consideration of excise tax areas. By this time, all other member states are expected to join the system, making the CCI system increasingly significant for cross-border trade.

The CCI system significantly facilitates international trade. It enables faster customs clearance, reduces administrative hurdles, eliminates unnecessary transit procedures, cuts costs, and improves compliance with regulations. For businesses, this means less effort and greater competitiveness globally. Early preparation for the expansion of the CCI system is crucial for affected companies.

European Commission releases 2025 version of the Combined Nomenclature

The European Commission has published the latest version of the Combined Nomenclature (CN), which applies from 1 January 2025. The CN serves as the foundation for the declaration of goods during import, export, and intra-union trade statistics. It determines the applicable customs duties and the treatment of goods for statistical purposes. The Combined Nomenclature is an essential tool for both businesses and customs administrations of member states and is updated annually.

The new version of the CN for 2025 introduces some significant updates. New tariff codes have been added for products such as “sharks and shark fins” in Chapter 3, “tomatoes” in Chapter 7, “biofuels” in Chapter 27, “wood waste” and “laminate floor coverings” in Chapter 44, and “steel laminations and stator and rotor cores” in Chapter 85.

These changes are important for companies engaged in international trade as they directly impact product classification and related customs duties. Businesses are advised to familiarize themselves with the new nomenclature early to ensure smooth customs processing and compliance with the updated regulations.

New guidelines for the export of cyber surveillance items

The European Commission has published guidelines to better control the export of cyber surveillance items. The aim is to minimize the risks associated with the misuse of such technologies and provide exporters with practical tools for assessing human rights risks. The guidelines offer exporters a step-by-step approach to reviewing transactions and help identify risks such as internal repression or human rights violations.

If a risk is identified, exporters are required to submit an export notification to the relevant national authority. The measures are based on the Dual-Use Regulation, which governs the export of such technologies, as they can be used legally but also misused.

Pharma VAT Recovery for Rebates granted under KVV Art. 71a: A Smart Business Move for You

Pharmaceutical companies selling drugs listed on the Speciality List (SL) in Switzerland have the opportunity to gain a valuable VAT benefit that could significantly enhance their financial standing. The reason for this opportunity is a recent shift in the approach of health and/or disability insurers regarding the rebates required under Swiss law (KVV Article 71a).

Previously, pharmaceutical companies had to grant rebates for Specialty List (SL) medicines under KVV Art. 71a if those drugs had been used in special cases, the price had to be below the price listed on the SL with no further stipulation in the law.  

Non-SL drugs (which typically are not reimbursed by the health insurance) are reimbursed in special cases under KVV Art 71b, the prices in those cases were subject to negotiation between the health insurance and the pharmaceutical company. Rebates in those cases were not obligatory, but often agreed upon in the negotiations.  

The partial revision of the KVV which went into force on 1 January 2024 now requires pharmaceutical companies to grant a set percentage of rebate on drugs reimbursed in special cases, regardless of whether those Drugs are listed in the SL or not, the same rebates apply for both SL and non-SL drugs.   

Until recently, these rebates were usually issued with VAT on the credit notes, but recently, many insurers have requested the credit notes to be issued without VAT, to avoid any VAT risk on their side.  

This change implies that pharmaceutical companies may have inadvertently VAT on these rebates in the past that can be claimed back. The good news is that such overpaid VAT amounts can be reclaimed from the Swiss VAT authorities, provided that a VAT ruling confirming this option is in place. We've been instrumental in assisting numerous pharmaceutical clients in securing these rulings, enabling them to recoup substantial VAT sums spanning the past five years.

A comprehensive exploration of the KVV Art 71a to c revision from a tax perspective can be found in our recent blog post.

Our Swiss Pharma Regulatory and Indirect Tax experts are looking forward to discussing VAT refund opportunities together with you.

EU VAT package ViDA (VAT in the Digital Age) adopted

The European Council has adopted the VAT in the Digital Age (‘ViDA’) package on 5 November 2024. This means that significant changes will be made to the EU VAT system starting from 2028. 

The following changes have been approved in this regard:

1. Digital Reporting Requirements (DRR) and mandatory e-invoicing on intra-EU business-to-business (B2B) transactions - the application date and transitional date for DRR are 1 July 2030 and 1 January 2035 respectively;
2. The platform economy - the application date is 1 July 2028 (at the earliest) with a mandatory application date of 1 January 2030; and
3. Simplifying VAT compliance by taking away the need for multiple VAT registrations - application date of 1 July 2028.

Environment – Social – Government («ESG») levies

In the EU, we are currently witnessing significant developments in the ESG (Environmental, Social, Governance) tax landscape. New levies are constantly being introduced, both small and large, which require our attention. These include among other plastic packaging taxes, sugar taxes, and the extended producer responsibility. All of these topics fall within the realm of ESG and are becoming increasingly important.

How does a court ruling in Sweden affect the trade of pharmaceutical products within the EU? 

In this blog post, we explain the background, the ruling, and the appeal of a case that challenges the interpretation and application of the EU rules and regulations on wholesale trade in pharmaceuticals, especially regarding the role of financial transactions and third-country actors in the supply chain. 

The case involves a Swedish company that procures pharmaceuticals from a Swiss company and transfers ownership to itself when the products arrive at the Swedish distribution centre. The Swedish Medical Products Agency claims that this procurement violates the law and the EU directive, which require that wholesale trade can only occur between persons who hold a wholesale authorisation issued by a competent authority within the EEA. 

The Administrative Court disagrees and finds that the law and the directive do not cover financial transactions and that the procurement does not deviate from the good distribution practice guidelines. 

The Agency appeals the ruling to the Administrative Court of Appeal, which will decide whether to review the case and, if so, whether to uphold or overturn the ruling. 

The outcome of the case may have significant implications for the pharmaceutical industry and the EU regulatory, tax and transfer pricing framework, as well as for Swiss-based companies operating in the EU. The case also highlights the need for clarity and guidance from the EU Commission, which is in the process of proposing a new directive on human medicines that would address the issue. If you are interested in learning more about the case, the proposed directive, and what it means for you, read the full blog post here.

On 29th October 2024, the German Bundesrat approved the Fourth Bureaucracy Relief Act which will take effect from 1st January 2025. This latest amendment introduced the following changes to transfer pricing documentation requirements. 

Introduction of transaction matrix 

The transfer pricing documentation obligation will now include a transaction matrix as a core component where taxpayers are now required to present a detailed overview of all their controlled transactions. The transaction matrix will include the following information: 

1. Subject and nature of the transactions; 
2. Parties involved in the transactions and their roles (i.e., recipients and providers);
3. Transaction volume and remuneration;
4. Contractual basis;
5. Transfer pricing methods applied;
6. Tax jurisdictions concerned; and
7. Any deviations from standard taxation practices in the relevant jurisdiction. 

Further specifications on the transaction matrix will be issued in an updated version of the Profit Accrual Recording Ordinance (GAufzV) of 2017. 

The taxpayers upon receipt of the audit order notification will now have to submit the following documentation without any further request:

• Transaction matrix
• Master file (if the group turnover exceeds EUR 100 million)
• Documentation of extraordinary business transactions (e.g., Assets transfer/ provision due to business restructuring or changes in the functional profile of the company, conclusion/ modification of a long-term agreement, etc.) 

Additionally, a penalty of at least EUR 5,000 will be imposed if the transaction matrix is not submitted. 

Shortened submission timeline 

The submission deadline for transfer pricing documentation (local file including transaction matrix, master file, and documentation of extraordinary business transactions) has been reduced from 60 to 30 days following an audit notification or upon request by the tax authority, whether during a tax audit or not. 

The new submission deadline is applicable to transfer pricing documentation for all “open” fiscal years before 1st January 2025, if a tax audit notification for the relevant documentation period is issued after 31st December 2024. 

The shortened submission timeline poses significant challenges in preparing adequate documentation on short notice. 

Consequently, it is advisable for German companies to re-evaluate their transfer pricing documentation strategies.

Belgium has published Royal Decrees updating the Local File Form (275.LF) and the Master File Form (275.MF) for the financial years starting on or after 1 January 2025, requiring the qualifying taxpayers to submit these forms through online portal to the Belgian Tax Authorities.

Please find here the article from PwC Belgium for further information.

On the 19th of December 2024, the OECD has published a pricing tool and fact sheets to facilitate the understanding and operation of the simplified and streamlined approach to transfer pricing. Further, the ECD will hold a technical webinar on 11 February 2025 on the latest developments relating to Amount B, including a demonstration of the Pricing Automation Tool.

Details can be found on the OECD website.

As of mid-2024, the Swiss Federal Tax Administration (SFTA) has carried out a reorganisation of its internal structures. The core element of this reorganisation is the creation of a dedicated unit called Transfer Pricing, which reports directly to the head of the main department for Federal Direct Tax, Withholding Tax, and Stamp Duties. The team, which previously existed as part of the External Audit Division, is thus elevated to a higher organisational level and can operate more independently in the future.

Thus, it is expected that the team will play a more active role in evaluating transfer pricing behaviours in the future. The organisational realignment is related to the anticipated increased focus of the SFTA on transfer pricing, which was already evident at the beginning of the year with the publication of an article and the launch of a new website on the topic of transfer pricing.

Please find here the article (in German) from our colleagues in the current DACH newsletter.