OECD/G20 Base Erosion and Profit Shifting Project. Making Dispute Resolution More Effective MAP Peer Review Report, Switzerland (Stage 1)

Transcription

1 ECD/G20 Base Eroson and Proft Shftng Project Makng Dspute Resoluton More Effectve MAP Peer Revew Report, Swtzerland (Stage 1) Inclusve FRAMEwork on BEPS: Acton 14

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3 ECD/G20 Base Eroson and Proft Shftng Project Makng Dspute Resoluton More Effectve MAP Peer Revew Report, Swtzerland (Stage 1) ICLUSIVE FRAMEWRK BEPS: ACTI 14

4 Ths document, as well as any data and any map ncluded heren, are wthout prejudce to the status of or soveregnty over any terrtory, to the delmtaton of nternatonal fronters and boundares and to the name of any terrtory, cty or area. Please cte ths publcaton as: ECD (2017), Makng Dspute Resoluton More Effectve - MAP Peer Revew Report, Swtzerland (Stage 1): Inclusve Framework on BEPS: Acton 14, ECD/G20 Base Eroson and Proft Shftng Project, ECD Publshng, Pars. ISB (prnt) ISB (PDF) Seres: ECD/G20 Base Eroson and Proft Shftng Project ISS (prnt) ISS (onlne) The statstcal data for Israel are suppled by and under the responsblty of the relevant Israel authortes. The use of such data by the ECD s wthout prejudce to the status of the Golan Heghts, East Jerusalem and Israel settlements n the West Bank under the terms of nternatonal law. Photo credts: Cover nnog-fotola.com Corrgenda to ECD publcatons may be found on lne at: ECD 2017 ou can copy, download or prnt ECD content for your own use, and you can nclude excerpts from ECD publcatons, databases and multmeda products n your own documents, presentatons, blogs, webstes and teachng materals, provded that sutable acknowledgement of ECD as source and copyrght owner s gven. All requests for publc or commercal use and translaton rghts should be submtted to rghts@oecd.org. Requests for permsson to photocopy portons of ths materal for publc or commercal use shall be addressed drectly to the Copyrght Clearance Center (CCC) at nfo@copyrght.com or the Centre franças d explotaton du drot de cope (CFC) at contact@cfcopes.com.

5 FREWRD 3 Foreword The ntegraton of natonal economes and markets has ncreased substantally n recent years, puttng a stran on the nternatonal tax rules, whch were desgned more than a century ago. Weaknesses n the current rules create opportuntes for base eroson and proft shftng (BEPS), requrng bold moves by polcy makers to restore confdence n the system and ensure that profts are taxed where economc actvtes take place and value s created. Followng the release of the report Addressng Base Eroson and Proft Shftng n February 2013, ECD and G20 countres adopted a 15-pont Acton Plan to address BEPS n September The Acton Plan dentfed 15 actons along three key pllars: ntroducng coherence n the domestc rules that affect cross-border actvtes, renforcng substance requrements n the exstng nternatonal standards, and mprovng transparency as well as certanty. After two years of work, measures n response to the 15 actons were delvered to G20 Leaders n Antalya n ovember All the dfferent outputs, ncludng those delvered n an nterm form n 2014, were consoldated nto a comprehensve package. The BEPS package of measures represents the frst substantal renovaton of the nternatonal tax rules n almost a century. nce the new measures become applcable, t s expected that profts wll be reported where the economc actvtes that generate them are carred out and where value s created. BEPS plannng strateges that rely on outdated rules or on poorly co-ordnated domestc measures wll be rendered neffectve. Implementaton s now the focus of ths work. The BEPS package s desgned to be mplemented va changes n domestc law and practces, and va treaty provsons. Wth the negotaton for a multlateral nstrument (MLI) havng been fnalsed n 2016 to facltate the mplementaton of the treaty related measures, 67 countres sgned the MLI on 7 June 2017, pavng the way for swft mplementaton of the treaty related measures. ECD and G20 countres also agreed to contnue to work together to ensure a consstent and co-ordnated mplementaton of the BEPS recommendatons and to make the project more nclusve. Globalsaton requres that global solutons and a global dalogue be establshed whch go beyond ECD and G20 countres. A better understandng of how the BEPS recommendatons are mplemented n practce could reduce msunderstandngs and dsputes between governments. Greater focus on mplementaton and tax admnstraton should therefore be mutually benefcal to governments and busness. Proposed mprovements to data and analyss wll help support ongong evaluaton of the quanttatve mpact of BEPS, as well as evaluatng the mpact of the countermeasures developed under the BEPS Project. As a result, the ECD establshed an Inclusve Framework on BEPS, brngng all nterested and commtted countres and jursdctons on an equal footng n the Commttee on Fscal Affars and all ts subsdary bodes. The Inclusve Framework, whch already has more than 100 members, wll montor and peer revew the mplementaton of the mnmum standards as well as complete the work on standard settng to address BEPS ssues. In addton to BEPS Members, other nternatonal organsatons and regonal tax bodes are nvolved n the work of the Inclusve Framework, whch also consults busness and the cvl socety on ts dfferent work streams.

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7 TABLE F CTETS 5 Table of contents Foreword... 3 Table of contents... 5 Abbrevatons and acronyms... 7 Executve summary... 9 Introducton Avalable mechansms n Swtzerland to resolve tax treaty-related dsputes Recent developments n Swtzerland Bass for the peer revew process vervew of MAP caseload n Swtzerland General outlne of the peer revew report Bblography Part A Preventng Dsputes [A.1] [A.2] Include Artcle 25(3), frst sentence, of the ECD Model Tax Conventon n tax treates Provde roll-back of blateral APAs n approprate cases Bblography Part B Avalablty and Access to MAP [B.1] Include Artcle 25(1) of the ECD Model Tax Conventon n tax treates [B.2] Allow submsson of MAP requests to the competent authorty of ether treaty partner, or, alternatvely, ntroduce a blateral consultaton or notfcaton process [B.3] Provde access to MAP n transfer prcng cases [B.4] Provde access to MAP n relaton to the applcaton of ant-abuse provsons [B.5] Provde access to MAP n cases of audt settlements [B.6] Provde access to MAP f requred nformaton s submtted [B.7] Include Artcle 25(3), second sentence, of the ECD Model Tax Conventon n tax treates.. 27 [B.8] Publsh clear and comprehensve MAP gudance [B.9] Make MAP gudance avalable and easly accessble and publsh MAP profle [B.10] Clarfy n MAP gudance that audt settlements do not preclude access to MAP Part C Resoluton of MAP Cases [C.1] Include Artcle 25(2), frst sentence, of the ECD Model Tax Conventon n tax treates [C.2] Seek to resolve MAP cases wthn a 24-month average tmeframe [C.3] Provde adequate resources to the MAP functon [C.4] Ensure staff n charge of MAP has the authorty to resolve cases n accordance wth the applcable tax treaty [C.5] Use approprate performance ndcators for the MAP functon [C.6] Provde transparency wth respect to the poston on MAP arbtraton... 44

8 6 TABLE F CTETS Part D Implementaton of MAP Agreements [D.1] Implement all MAP agreements [D.2] Implement all MAP agreements on a tmely bass [D.3] Include Artcle 25(2), second sentence, of the ECD Model Tax Conventon n tax treates or alternatve provsons n Artcle 9(1) and Artcle 7(2) Bblography Summary Annex A tax treaty network of swtzerland Annex B map statstcs pre-2016 cases Glossary Fgures Fgure C.1 Fgure C.2 Fgure C.3 Fgure C.4 Swtzerland's MAP nventory End nventory on 31 December 2016 (347 cases) Cases resolved durng the Reportng Perod (98 cases) Average tme (n months)... 41

9 ABBREVIATI AD ACRMS 7 Abbrevatons and Acronyms APA Advance Prcng Arrangement FTA Forum on Tax Admnstraton MAP Mutual Agreement Procedure ECD rgansaton for Economc Co-operaton and Development

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11 EXECUTIVE SUMMAR 9 Executve summary Swtzerland has a large tax treaty network consstng of 90 tax treates. Swtzerland has an establshed MAP program and has extensve experence wth resolvng MAP cases. It has a large MAP nventory wth a consderable number of new cases submtted each year and almost 350 cases pendng on 31 December 2016, and approxmately 40% of whch consst of attrbuton/allocaton cases. verall Swtzerland meets most of the elements of the Acton 14 Mnmum Standard. Where t has defcences, Swtzerland s workng to address them. All of Swtzerland s tax treates nclude a provson relatng to MAP, whch generally follows paragraphs 1 through 3 of Artcle 25 of the Model Tax Conventon on Income and on Captal 2014 (ECD Model Tax Conventon, ECD 2015). Its treaty network s largely consstent wth the requrements of the Acton 14 Mnmum Standard, except manly for the fact that: more than half of Swtzerland s tax treates do not contan a provson to mplement any mutual agreement reached through MAP notwthstandng any tme lmts n the domestc law nor nclude the alternatve provsons provded for n Artcle 9(1) and Artcle 7(2) of the ECD Model Tax Conventon (ECD, 2015) to set a tme lmt for makng transfer prcng adjustments; and more than a quarter of Swtzerland s tax treates do not contan a provson to mplement any mutual agreement reached through MAP notwthstandng any tme lmts n the domestc law and only nclude the alternatve provson provded for n Artcle 9(1). In order to be fully complant wth the four key areas of an effectve dspute resoluton mechansm under the Acton 14 Mnmum Standard, Swtzerland therefore should nclude the second sentence of Artcle 25(2) of the ECD Model Tax Conventon (ECD, 2015) n ts tax treates or be wllng to accept both alternatve provsons n Artcle 9(1) and Artcle 7(2). Furthermore, Swtzerland needs to amend and update some of ts tax treates n other aspects. In ths respect, Swtzerland ndcated that t recently sgned the Multlateral Instrument potentally coverng 14 of Swtzerland s tax treates but that for the ssue of mplementaton of MAP agreements, t ntends to mplement ths element va the ncluson of the alternatves provded for n artcle 9(1) and 7(2) and therefore wll amend and update ts treates va blateral negotatons. Furthermore, Swtzerland opted for the arbtraton part of the Multlateral Instrument. Swtzerland meets the Acton 14 Mnmum Standard concernng the preventon of dsputes. It has long experence wth blateral APAs and allows taxpayers to request rollbacks of these blateral APAs. Swtzerland also meets the requrements regardng the avalablty and access to MAP under the Acton 14 Mnmum Standard but t needs to ssue more comprehensve MAP gudance. Swtzerland provdes access to MAP n all elgble cases. It has a notfcaton process n place for those stuatons n whch Swtzerland s competent authorty consders the objecton rased by taxpayers n a MAP request as not justfed. In addton,

12 10 EXECUTIVE SUMMAR Swtzerland has MAP gudance whch already provdes practcal nformaton on MAP. However, ths document does not establsh comprehensve MAP gudance. Furthermore, Swtzerland s competent authorty uses a pragmatc approach to resolve MAP cases n an effectve and effcent manner. Its organsaton s adequate and the performance ndcators used are approprate to perform the MAP functon. Swtzerland therefore meets the requrements under the Acton 14 Mnmum Standard n relaton to the resoluton of MAP cases. Concernng the average tme needed to resolve MAP cases, the MAP statstcs for the year 2016 are as follows: Average tme penng Cases Cases End 2016 Inventory started closed nventory Attrbuton/Allocat on cases ther cases Total to resolve cases (n months)(*) (*) The average tme taken for resolvng MAP cases for post-2015 cases follows the MAP Statstcs Reportng Framework. For computng the average tme taken for resolvng pre-2016 MAP cases, Swtzerland used as a start date the date of flng of the MAP request and as the end date the earlest of the followng dates: () the date when the taxpayer s nformed of the outcome of the MAP, () the date of the closng letter whch s drafted upon taxpayer s approval of the agreement reached, or () the date when the Swss Competent Authorty formally closed the case. These fgures pont out that the number of MAP cases resolved by Swtzerland durng 2016 s consderably lower than the number of MAP cases started durng 2016 and ts MAP nventory as per 31 December 2016 ncreased by approxmately 15% as compared to ts nventory as per 1 January The current resources for the MAP functon n Swtzerland are n prncple adequate, but more resources may be necessary to acheve a net reducton of ts MAP nventory and manage the nflux of new cases because fewer cases were resolved than were ntated. Although Swtzerland s competent authorty resolved MAP cases on average wthn a tmeframe of less than 24 months, the average tme necessary to resolve attrbuton/allocaton was sgnfcantly longer (27.42 months) than other cases (15.49 months). Ths ndcates that addtonal resources specfcally dedcated to handlng attrbuton/allocaton cases may be necessary to accelerate the resoluton of these cases. Lastly, Swtzerland also meets the Acton 14 Mnmum Standard as regards the mplementaton of MAP agreements. Although Swtzerland does not montor the mplementaton of MAP agreements no ssues have surfaced regardng mplementaton throughout the peer revew process.

13 ITRDUCTI 11 Introducton Avalable mechansms n Swtzerland to resolve tax treaty-related dsputes Swtzerland has entered nto 90 tax treates on ncome (and/or captal) all of whch are n force. 1 These 90 treates apply to 105 jursdctons. 2 All 90 of these tax treates provde for a mutual agreement procedure (MAP) for resolvng dsputes on the nterpretaton and applcaton of the provsons of the tax treaty. In addton, 26 of the 90 treates provde for an arbtraton procedure as a fnal stage to the mutual agreement procedure. 3 In Swtzerland, the competent authorty functon to conduct MAP s performed by the State Secretarat for Internatonal Fnancal Matters. The competent authorty of Swtzerland currently employs 13 employees. The organsaton of ths competent authorty functon s governed by the Tax Dvson of the State Secretarat for Internatonal Fnancal Matters. The competent authorty for mutual agreement procedures publshed a fact sheet n German, French, Italan and Englsh on the mutual agreement procedures on ts webste. Gudelnes regardng the request for mutual agreement procedure are provded n sectons 4(ff) on pages 2 and 3 of the Federal Department of Fnance State Secretarat for Internatonal Fnancal Matters Tax Dvson s Fact Sheet on the Mutual Agreement Procedure of June Recent developments n Swtzerland Snce the adopton of the Acton 14 Mnmum Standard, Swtzerland has partcpated as an ad-hoc member of the sub-group on arbtraton n the Multlateral Conventon to Implement Tax Treaty Related Measures to Prevent Base Eroson and Proft Shftng ( Multlateral Instrument ). Swtzerland constantly has ongong negotatons for the revson of exstng and the concluson of new tax treates. Swtzerland ntends to nclude the Acton 14 Mnmum Standard, as far as t s not met, n future tax treates. Bass for the peer revew process The peer revew process entals an evaluaton of Swtzerland s mplementaton of the mnmum standard, through an analyss of ts legal and admnstratve framework relatng to the mutual agreement procedure, as governed by ts tax treates, domestc legslaton and regulatons, as well as ts MAP programme gudance and the practcal applcaton of that framework. The revew process performed s desk-based and conducted through specfc questonnares completed by Swtzerland, ts peers and taxpayers. For the purpose of ths report n assessng whether Swtzerland s complant wth the elements of the Acton 14 Mnmum Standard that relate to a specfc treaty provson, the newly negotated treates or the treates as modfed by a protocol, as descrbed above, were taken nto account, even f t concerned a modfcaton or a replacement of an

14 12 ITRDUCTI exstng treaty currently n force. Furthermore, the treaty analyss also takes nto account the treaty wth former Serba and Montenegro (see above). As t concerns one tax treaty that s beng appled to multple jursdctons, ths treaty s only counted as one for ths purpose. In addton, the treaty wth Denmark s also counted as one treaty, even though t s beng appled to the Faroe Islands. Lastly, the 1954 treaty wth the Unted Kngdom s beng appled to 14 jursdctons, not ncludng the Unted Kngdom (whch has a separate treaty wth Swtzerland). As ths also concerns one treaty beng appled to multple jursdctons, t s agan counted as one for the treaty analyss. Reference s made to Annex A for the overvew of Swtzerland s tax treates regardng the mutual agreement procedure. The questonnares for the peer revew process were sent to Swtzerland and the peers on 5 December Whle the commtment to Acton 14 Mnmum Standard only starts from 1 January 2016, Swtzerland opted to provde nformaton on the perod startng as from 1 January 2014 ( the look back perod ) and also requested peer nput relatng to the look back perod. In addton to the assessment on the complance wth the Acton 14 Mnmum Standard, Swtzerland also addressed best practces and asked for peer nput on these best practces. In total 20 peers provded nput: Austra, Belgum, Canada, Denmark, France, Germany, Greece, Inda, Italy, Japan, Korea, Lechtensten, etherlands, orway, People s Republc of Chna, Sngapore, Span, Sweden, the Unted Kngdom and the Unted States. All nput was forwarded to Swtzerland. These peers represent more than 90% of post2015 MAP n Swtzerland s nventory on 31 December Broadly, all peers ndcated havng good workng relatonshps wth Swtzerland n regard of MAP and some of them emphassed the ease of contact wth Swtzerland s competent authorty. Input was also receved from taxpayers. Swtzerland provded extensve answers n ts questonnare, whch was submtted on tme. Swtzerland was very responsve n the course of the draftng of the peer revew report by respondng tmely and comprehensvely to requests for addtonal nformaton and provded further clarty where necessary. In addton Swtzerland provded the followng nformaton: ; MAP profle;5 ; MAP statstcs6 accordng to the MAP Statstcs Reportng Framework7 (see below) Fnally, Swtzerland s an actve member of the FTA MAP Forum and has shown good cooperaton durng the peer revew process. Swtzerland provded detaled peer nput on other jursdctons n the framework of ther peer revew and made constructve suggestons on how to mprove the process wth the concerned assessed jursdctons. vervew of MAP caseload n Swtzerland Swtzerland provded ther MAP statstcs on the perod startng on 1 January 2016 (the Reportng Perod n advance of the due date on 31 May 2017 n order to be able to ncorporate them n the report. Accordng to these statstcs, the MAP nventory of Swtzerland was 347 cases on 31 December 2016, 140 of whch concern attrbuton/allocaton cases and 207 other cases. Durng the Reportng Perod 142 cases were ntated and 98 cases were closed.

15 ITRDUCTI 13 General outlne of the peer revew report Ths report ncludes an evaluaton of Swtzerland s mplementaton of the Acton 14 Mnmum Standard. The report comprses the followng four sectons: A. Preventng Dsputes; B. Avalablty and Access to MAP; C. Resoluton of MAP cases; and D. Implementaton of MAP agreements. Each of these sectons s dvded nto elements of the Acton 14 Mnmum Standard, as descrbed n the ( Terms of Reference )8. Apart from analysng Swtzerland s legal framework and ts admnstratve practce, the report also ncorporates peer nput and responses to such nput by Swtzerland. Furthermore, the report depcts the changes adopted and plans shared by Swtzerland to mplement elements of the Acton 14 Mnmum Standard where relevant. The concluson of each element dentfes areas for mprovement (f any) and provdes for recommendatons how the specfc area for mprovement should be addressed. The objectve of the Acton 14 Mnmum Standard s to make dspute resoluton mechansms more effectve and concerns a contnuous effort. Therefore, ths peer revew report ncludes recommendatons that Swtzerland contnues to act n accordance wth a gven element of the Acton 14 Mnmum Standard, even f there s no area for mprovement for ths specfc element.

16 14 ITRDUCTI otes 1. The tax treates Swtzerland has entered nto are avalable at: (n French); (n German); and (n Italan); accessed on 10 September The treaty wth Denmark also apples to the Faroe Islands and the 1954 treaty wth the Unted Kngdom contnues to be appled to Angulla, Antgua & Barbuda, Barbados, Belze, the Brtsh Vrgn Islands, Domnca, Gamba, Grenada, Malaw, Montserrat, Sant Ktts & evs, Sant Luca, Sant Vncent & Grenadnes and Zamba, even though Swtzerland and the Unted Kngdom have entered nto a new conventon n Swtzerland also contnues to apply the 2005 treaty wth the former Serba and Montenegro to both Serba and Montenegro. 3. Ths concerns treates wth Albana, Australa, Austra, Belgum, Canada, Denmark, Estona, France, Germany, Greece, Hong Kong (Chna), Iceland, Kazakhstan, Lechtensten, Luxembourg, the etherlands, orway, Poland, the Slovak Republc, Slovena, South Afrca, Span, Sweden, Unted Kngdom, Unted States and Uruguay. See for a dscusson element C.6 of ths report. Reference s made to Annex A for the overvew of Swtzerland s tax treates that nclude an arbtraton clause (accessed on 10 September 2017) The MAP statstcs of Swtzerland are ncluded n Annex B and C of ths report. 7. MAP Statstcs Reportng Framework, n Peer Revew Documents (ECD 2016): on 22 August 2017) 8. Terms of reference to montor and revew the mplementng of the BEPS Acton 14 Mnmum Standard to make dspute resoluton mechansms more effectve n Peer Revew Documents (ECD, 2016): (accessed on 22 August 2017). Bblography ECD (2016), BEPS Acton 14 on More Effectve Dspute Resoluton Mechansms, Peer Revew Documents, (accessed on 22 August 2017).

17 PART A - PREVETIG DISPUTES 15 Part A Preventng Dsputes [A.1] Include Artcle 25(3), frst sentence, of the ECD Model Tax Conventon n tax treates Jursdctons should ensure that ther tax treates contan a provson whch requres the competent authorty of ther jursdcton to endeavour to resolve by mutual agreement any dffcultes or doubts arsng as to the nterpretaton or applcaton of ther tax treates. 1. Cases may arse concernng the nterpretaton or the applcaton of tax treates that do not necessarly relate to ndvdual cases, but are more of a general nature. Incluson of the frst sentence of Artcle 25(3) of the ECD Model Tax Conventon (ECD, 2015) n tax treates nvtes and authorses competent authortes to solve these cases, whch may avod submsson of MAP requests and/or future dsputes from arsng, and whch may renforce the consstent blateral applcaton of tax treates. Current stuaton of Swtzerland s tax treates 2. ut of Swtzerland s 90 tax treates, 88 contan a provson equvalent to Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) requrng ther competent authorty to endeavour to resolve by mutual agreement any dffcultes or doubts arsng as to the nterpretaton or applcaton of the tax treaty. Antcpated modfcatons 3. For those treates that do not contan a provson equvalent to Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015), Swtzerland ndcated that t ntends to mplement element A.1 by sgnng the Multlateral Instrument. In that regard, Swtzerland envsages not makng any reservatons aganst the modfcatons made by Artcle 16 of the Multlateral Instrument for the tax treates to be covered by that nstrument, relatng to ths element. Furthermore, Swtzerland has ndcated t wll sgn and ratfy the Multlateral Instrument as soon as practcable. Where a tax treaty wll not be modfed by the Multlateral Instrument, Swtzerland reported that t ntends to update ts treates va blateral negotatons to be n lne wth element A.1. In addton, Swtzerland wll seek to nclude Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) n all of ts future treates.

18 16 PART A - PREVETIG DISPUTES Concluson Areas for Improvement Recommendatons Two1 out of 90 tax treates do not contan a provson that s equvalent to Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015). Where treates do not nclude the equvalent of Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) and wll not be modfed by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, Swtzerland should request the ncluson of the requred provson va blateral negotatons. Specfcally wth respect to the 1954 treaty wth the Unted Kngdom that s beng appled to 14 jursdctons (not ncludng the Unted Kngdom), and the treaty wth former Serba and Montenegro that contnues to be appled to both Montenegro and Serba, Swtzerland should ensure that, once t enters nto negotatons wth the jursdctons for whch t apples that treaty, t ncludes the requred provson. [A.1] In addton, Swtzerland should mantan ts stated ntenton to nclude the requred provson n all future treates. [A.2] Provde roll-back of blateral APAs n approprate cases Jursdctons wth blateral advance prcng arrangement ( APA ) programmes should provde for the roll-back of APAs n approprate cases, subject to the applcable tme lmts (such as statutes of lmtaton for assessment) where the relevant facts and crcumstances n the earler tax years are the same and subject to the verfcaton of these facts and crcumstances on audt. 4. An APA s an arrangement that determnes, n advance of controlled transactons, an approprate set of crtera (e.g. method, comparables and approprate adjustment thereto, crtcal assumptons as to future events) for the determnaton of the transfer prcng for those transactons over a fxed perod of tme2. The methodology to be appled prospectvely under a blateral or multlateral APA may be relevant n determnng the treatment of comparable controlled transactons n prevous fled years. The roll-back of an APA to these prevous fled years may be helpful to prevent or resolve potental transfer prcng dsputes. Swtzerland s APA programme 5. Swtzerland s authorsed to enter nto blateral APAs. However, Swtzerland does not have a formal APA programme. Roll-back of blateral APAs 6. APAs ncludng roll-back are provded drectly on the bass of the dspute resoluton provsons n the treates. The only requrement for Swtzerland s APAs s that the roll-back perod s wthn Swtzerland s domestc tme lmt of 10 years. Thus far, Swtzerland has never had a case where they refused or lmted the roll-back perod.

19 PART A - PREVETIG DISPUTES 17 Practcal applcaton of roll-back of blateral APAs 7. Swtzerland does not have n place a recordkeepng system that tracks () the number of APA requests that nclude the rollback of an APA and () for whch such requests a roll back was granted. In that regard, there s no data avalable on the number of cases for whch taxpayers requested the rollback of an APA and n how many cases such rollback was granted and therefore does not have a fgure of rollback requests t has receved snce 1 January Peers provdng nput have ndcated that roll-backs are possble n Swtzerland and have been provded snce 1 January Another peer wrote that requests for rollback wth Swtzerland occurred and were addressed approprately. ther peers expressed confdence that the competent authorty of Swtzerland would provde for a roll back when both sdes agree to an APA. Antcpated modfcatons 9. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element A.2. Concluson Areas for Improvement [A.2] Recommendatons Swtzerland should contnue to provde for roll-back of blateral APAs n approprate cases as t has done thus far. - To keep a record of the number of APAs where a rollback was and was not granted, Swtzerland could ntroduce a trackng system. otes 1. These two treates nclude the 1954 treaty wth the Unted Kngdom that contnues to be appled to 14 jursdctons. 2. Ths descrpton of an APA s based on the defnton of an APA n the ECD Transfer Prcng Gudelnes (ECD, 2017) for Multnatonal Enterprses and Tax Admnstratons.

20 18 PART A - PREVETIG DISPUTES Bblography ECD (2017), ECD Transfer Prcng Gudelnes for Multnatonal Enterprses and Tax Admnstratons 2017, ECD Publshng, Pars, ECD (2015), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars,

21 PART B - AVAILABILIT AD ACCESS T MAP 19 Part B Avalablty and Access to MAP [B.1] Include Artcle 25(1) of the ECD Model Tax Conventon n tax treates Jursdctons should ensure that ther tax treates contan a MAP provson whch provdes that when the taxpayer consders that the actons of one or both of the Contractng Partes result or wll result for the taxpayer n taxaton not n accordance wth the provsons of the tax treaty, the taxpayer, may rrespectve of the remedes provded by the domestc law of those Contractng Partes, make a request for MAP assstance, and that the taxpayer can present the request wthn a perod of no less than three years from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provsons of the tax treaty. 10. For resolvng cases of taxaton not n accordance wth the provsons of the tax treaty, t s necessary that tax treates nclude a provson allowng taxpayers to request a mutual agreement procedure and that ths procedure can be requested rrespectve of the remedes provded by the domestc law of the treaty partners. In addton, to provde certanty to taxpayers and competent authortes on the avalablty of the mutual agreement procedure, a mnmum perod of three years for submsson of a MAP request, begnnng on the date of the frst notfcaton of the acton resultng n taxaton not n accordance wth the provsons of the tax treaty, s the baselne. Current stuaton of Swtzerland s tax treates Incluson of Artcle 25(1), frst sentence of the ECD Model Tax Conventon 11. ut of Swtzerland s 90 tax treates, 73 treates contan a provson equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of the Makng Dspute Resoluton Mechansms More Effectve, Acton Fnal Report (Acton 14 fnal report (ECD, 2015b) allowng taxpayers to submt a MAP request to the competent authorty of the state n whch they are a resdent when they consder that the actons of one or both of the treaty partners result or wll result for the taxpayer n taxaton not n accordance wth the provsons of the tax treaty and that can be requested rrespectve of the remedes provded by domestc law of ether state.

22 20 PART B - AVAILABILIT AD ACCESS T MAP 12. The 17 remanng tax treates that do not contan a provson that s the full equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a), ether as changed by the Acton 14 fnal report (ECD, 2015b) or as t read pror to that report can be categorsed as follows: Provson umber of treates A varaton of Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b), whereby taxpayers can only submt a MAP request to the competent authortes of the contractng state of whch they are resdent. 14 A varaton of Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b), whereby taxpayers can only submt a MAP request to the competent authortes of the contractng state of whch they are a natonal. 1 A provson ncluded n the MAP artcle, but whch does not assgn specfc rghts to taxpayers to fle a MAP request when he consders that there may or wll be taxaton not n accordance wth the provsons of the conventon and whch procedure cannot be requested rrespectve of domestc remedes. 1 A varaton of Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b), whereby the taxpayer can submt a MAP request rrespectve of domestc avalable remedes, but whereby pursuant to a protocol provson the taxpayer s also requred to ntate these remedes when submttng a MAP request The 14 treates mentoned above are consdered not to have the full equvalent of Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as t read pror to the adopton of the Acton 14 fnal report (ECD, 2015b), snce taxpayers are not allowed to submt a MAP request n the state of whch they are a natonal where the case comes under the non-dscrmnaton artcle. However, 12 of those 14 treates are consdered to be n lne wth ths part of element B.1, as the non-dscrmnaton provson ncluded n these treates only covers natonals that are resdent of one of the contractng states, followng whch t s logcal to only allow for the submsson of MAP requests to the state of whch the taxpayer s a resdent. Furthermore, one treaty does not nclude a non-dscrmnaton provson. The remanng treaty s, however, not n lne wth ths part of element B.1, because the non-dscrmnaton provson n that treaty also apples to natonals that are not resdent of one of the contractng states. Incluson of Artcle 25(1), second sentence of the ECD Model Tax Conventon 14. ut of the 90 tax treates, 75 contan a provson allowng taxpayers to submt a MAP request wthn a perod of no less than three years from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provsons of the partcular tax treaty. 15. The remanng 15 treates can be categorsed as follows: Provson Flng perod less than three years for a MAP request (two years) o flng perod for a MAP request umber of treates 5 101

23 PART B - AVAILABILIT AD ACCESS T MAP Wth respect to the 10 treates that do not nclude a flng perod of a MAP request, Swtzerland ndcated that t apples ts domestc 10 year tme lmt for the flng of such requests. Antcpated modfcatons 17. For those treates that do not contan a provson equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a), Swtzerland ndcated that t ntends to mplement element B.1 by sgnng the Multlateral Instrument. In that regard, Swtzerland envsages not makng any reservatons aganst the modfcatons made by Artcle 16 of the Multlateral Instrument for the treates to be covered by that nstrument, relatng to ths element. Furthermore, Swtzerland has ndcated t wll sgn and ratfy the Multlateral Instrument as soon as practcable. Where a tax treaty wll not be modfed by the Multlateral Instrument, Swtzerland reported that t ntends to update va blateral negotatons all of ts tax treates to be n lne wth element B.1. In addton, Swtzerland wll seek to nclude Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) n all of ts future treates. 18. Several peers also reported that ther tax treaty wth Swtzerland does not meet the relevant elements of the Acton 14 Mnmum Standard on all ponts and that they envsage mplementng these elements by sgnng the Multlateral Instrument. ne peer stated that ts tax treaty wth Swtzerland s currently under negotaton and both partes are seekng to meet the Acton 14 Mnmum Standard. Concluson Areas for Improvement o Two out of 90 tax treates do not contan a provson that s the equvalent of Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a), ether as t read pror to the adopton of the fnal report on Acton 14 or as amended by that fnal report; o Four out of the 90 tax treates do not contan a provson based on Artcle 25(1), second sentence of the ECD Model Tax Conventon (ECD, 2015a), allowng taxpayers to submt a MAP request wthn a perod of no less than three years as from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provson of the tax treaty. Under these treates the flng perod for a MAP request s two years; and ne out of the 90 tax treates does not contan a provson based on Artcle 25(1), frst and second sentence of the ECD Model Tax Conventon (ECD, 2015a). [B.1] o Recommendatons Where treates do not nclude the equvalent of Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015a) and wll not be modfed by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, Swtzerland should request the ncluson of the requred provson va blateral negotatons. Ths concerns both: o A provson that s equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) ether: a) As amended n the fnal report of Acton 14; or b) As t read pror to the adopton of fnal report of Acton 14; and; a provson that allows taxpayers to submt a MAP request wthn a perod of no less than three years from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provson of the tax treaty. In addton, Swtzerland should mantan ts stated ntenton to nclude the requred provson n all future treates. o

24 22 PART B - AVAILABILIT AD ACCESS T MAP [B.2] Allow submsson of MAP requests to the competent authorty of ether treaty partner, or, alternatvely, ntroduce a blateral consultaton or notfcaton process Jursdctons should ensure that ether () ther tax treates contan a provson whch provdes that the taxpayer can make a request for MAP assstance to the competent authorty of ether Contractng Party, or () where the treaty does not permt a MAP request to be made to ether Contractng Party and the competent authorty who receved the MAP request from the taxpayer does not consder the taxpayer s objecton to be justfed, the competent authorty should mplement a blateral consultaton or notfcaton process whch allows the other competent authorty to provde ts vews on the case (such consultaton shall not be nterpreted as consultaton as to how to resolve the case). 19. In order to ensure that all competent authortes concerned are aware of MAP requests submtted, for a proper consderaton of the request by them and to ensure that taxpayers have effectve access to MAP n elgble cases, t s essental that all tax treates nclude a provson that ether allows taxpayers to submt a MAP request to the competent authorty: () of ether treaty partner; or n the absence of such provson ; () where t s a resdent, or to the competent authorty of the state of whch they are a natonal f ther cases come under the non-dscrmnaton artcle. In such cases, jursdctons should have n place a blateral consultaton or notfcaton process n the stuaton a competent authorty consders the objecton rased by the taxpayer n a MAP request as beng not justfed. Domestc blateral consultaton or notfcaton process n place 20. ut of Swtzerland s 90 tax treates, none contan a provson equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) as changed by the Acton 14 fnal report (ECD, 2015b) allowng taxpayers to submt a MAP request to ether treaty partner. Swtzerland reported that as a matter of practce t notfes the other competent authorty concerned when t consders that the objecton rased by the taxpayer n a MAP request s not justfed. Practcal applcaton 21. From the MAP Statstcs provded by Swtzerland t follows that durng the Reportng Perod t has for no MAP cases consdered the objecton rased by the taxpayer not justfed. Antcpated modfcatons 22. For those treates that do not contan a provson equvalent to Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015a) as amended by the Acton 14 fnal report (ECD, 2015b), Swtzerland ndcated that t ntends to modfy ts exstng tax treates by sgnng the Multlateral Instrument and by dong so allowng for the submsson of MAP requests to the competent authorty of ether contractng state. Where a tax treaty wll not be modfed by the Multlateral Instrument, Swtzerland ntends to amend ts treates va blateral negotatons wth ts treaty partners. In the meantme, Swtzerland wll contnue to apply ts blateral notfcaton process descrbed above.

25 PART B - AVAILABILIT AD ACCESS T MAP 23 Concluson Areas for Improvement [B.2] Recommendatons Swtzerland has n place a process to notfy the other competent authorty n cases access to MAP s dened or where ts competent authorty consdered the objecton rased n a MAP request as not justfed. Because for the perod under revew no such cases have occurred, t was not possble to assess whether the notfcaton process s appled n practce. [B.3] Provde access to MAP n transfer prcng cases Jursdctons should provde access to MAP n transfer prcng cases. 23. Where two or more tax admnstratons take dfferent postons on what consttutes arm s length condtons for specfc transactons between assocated enterprses, economc double taxaton may occur. ot grantng access to MAP wth respect to a treaty partner s transfer prcng adjustment, wth a vew to elmnatng the economc double taxaton that may arse from such adjustment, wll lkely frustrate the man objectve of tax treates. Countres should thus provde access to MAP n transfer prcng cases. Legal and admnstratve framework 24. ut of Swtzerland s 90 tax treates 28 contan a provson equvalent to Artcle 9(2) of the ECD Model Tax Conventon (ECD, 2015a) requrng ther state to make a correlatve adjustment n case a transfer prcng adjustment s made by the other treaty partner. Furthermore, 41 treates nclude a provson that s based on Artcle 9(2) of the ECD Model Tax Conventon (ECD, 2015a), but contans devatng wordng, for example because they do not requre a correspondng adjustment to be made further to a prmary adjustment but only suggests the competent authortes may consult wth each other. 25. otwthstandng whether the equvalent of Artcle 9(2) s ncluded n Swtzerland s tax treates and rrespectve of whether ts domestc legslaton enables the grantng of correspondng adjustments, Swtzerland ndcated that t wll always provde access to MAP for transfer prcng cases. It s not, however, specfcally addressed that MAP s avalable for transfer prcng cases n the Swss Federal Department of Fnance State Secretarat for Internatonal Fnancal Matters Tax Dvson s Fact Sheet on the Mutual Agreement Procedure. Practcal applcaton of legal and admnstratve framework n practce 26. Swtzerland reported that snce 1 January 2014 t has not dened access to MAP on the bass that the case concerned a transfer prcng case. 27. o peer ndcated that t was aware of or that t had been notfed of a case that would have been dened access to the MAP n Swtzerland on the grounds that t was a transfer prcng case snce 1 January 2014.

26 24 PART B - AVAILABILIT AD ACCESS T MAP Antcpated modfcatons 28. Swtzerland ndcated that t dd not antcpate any modfcatons n relaton to element B.3. Concluson Areas for Improvement Recommendatons - As Swtzerland has thus far granted access to the MAP n elgble transfer prcng cases t should contnue grantng access for these cases. [B.3] [B.4] Provde access to MAP n relaton to the applcaton of ant-abuse provsons Jursdctons should provde access to MAP n cases n whch there s a dsagreement between the taxpayer and the tax authortes makng the adjustment as to whether the condtons for the applcaton of a treaty ant-abuse provson have been met or as to whether the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a treaty. 29. There s no general rule denyng access to MAP n cases of perceved abuse. In order to protect taxpayers from arbtrary applcaton of ant-abuse provsons n tax treates and n order to ensure that competent authortes have a common understandng on such applcaton, t s mportant that taxpayers have access to MAP f they consder the nterpretaton and/or applcaton of a treaty ant-abuse provson as beng ncorrect. Subsequently, to avod cases n whch the applcaton of domestc ant-abuse legslaton s n conflct wth the provsons of a tax treaty, t s also mportant that taxpayers have access to MAP n such cases. Legal and admnstratve framework 30. one of Swtzerland s 90 tax treates allows competent authortes to restrct access to MAP for cases when a treaty ant-abuse provson apples or when there s a dsagreement between the taxpayer and the tax authortes as to whether the condtons for the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a tax treaty. 31. In Swtzerland, there s a general legal prncple allowng, but not requrng, ts competent authorty to lmt access to MAP for cases when a domestc ant-abuse rule apples. Issues relatng to the applcaton of domestc ant-abuse provsons are covered wthn the scope of MAP provded such a provson mpacts the applcaton of a treaty n the specfc case. It s not, however, specfcally addressed that MAP s avalable n relaton to the applcaton of ant-abuse cases n the Swss Federal Department of Fnance State Secretarat for Internatonal Fnancal Matters Tax Dvson s Fact Sheet on the Mutual Agreement Procedure. Practcal applcaton 32. Whle the Swss competent authorty s allowed to lmt access to MAP for cases when a domestc ant-abuse rule apples, Swtzerland reported that snce 1 January 2014 t has not dened access to MAP requests n whch there was a dsagreement between the taxpayer and the tax authortes as to whether the condtons for the applcaton of a treaty

27 PART B - AVAILABILIT AD ACCESS T MAP 25 ant-abuse provson have been met, or as to whether the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a tax treaty. 33. Peers ndcated not beng aware of cases of denal of access to the MAP by Swtzerland n relaton to the applcaton of treaty and/or domestc ant-abuse provson snce 1 January Antcpated modfcatons 34. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element B.4. Concluson Areas for Improvement - [B.4] Recommendatons As Swtzerland has thus far granted access to the MAP n all elgble cases concernng whether the condtons for the applcaton of a treaty ant-abuse provson has been met or whether the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a treaty, t should contnue grantng access for these cases. [B.5] Provde access to MAP n cases of audt settlements Jursdctons should not deny access to MAP n cases where there s an audt settlement between tax authortes and taxpayers. If jursdctons have an admnstratve or statutory dspute settlement/resoluton process ndependent from the audt and examnaton functons and that can only be accessed through a request by the taxpayer, jursdctons may lmt access to the MAP wth respect to the matters resolved through that process. 35. An audt settlement procedure can be valuable to taxpayers by provdng certanty on ther tax poston. evertheless, as double taxaton may not be fully elmnated by agreeng on such settlements, taxpayers should have access to the MAP n such cases, unless they were already resolved va an admnstratve or a statutory dspute settlement/resoluton process that functons ndependently from the audt and examnaton functon and whch s only accessble through a request by taxpayers. Legal and admnstratve framework 36. Swtzerland reported that t does not have an audt settlement process. 37. There s no other admnstratve or statutory dspute settlement or resoluton process(es) avalable whereby ssues resolved va such process(es) may be dened access to MAP n Swtzerland. Practcal applcaton 38. Swtzerland reported that t has snce 1 January 2014 not dened access to MAP for cases where the ssue presented by the taxpayer has already been dealt wth n an audt settlement.

28 26 PART B - AVAILABILIT AD ACCESS T MAP 39. Peers ndcated not beng aware of a denal of access to MAP by Swtzerland snce 1 January 2014 n case there was already an audt settlement between the taxpayer and Swtzerland s tax admnstraton. Antcpated modfcatons 40. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element B.5. Concluson Areas for Improvement Recommendatons - - [B.5] [B.6] Provde access to MAP f requred nformaton s submtted Jursdctons should not lmt access to MAP based on the argument that nsuffcent nformaton was provded f the taxpayer has provded the requred nformaton based on the rules, gudelnes and procedures made avalable to taxpayers on access to and the use of MAP. 41. To resolve cases where there s taxaton not n accordance wth the provsons of the tax treaty, t s mportant that competent authortes do not lmt access to MAP when taxpayers have compled wth the nformaton and documentaton requrements as provded n the jursdcton s gudance relatng hereto. Access to MAP wll be facltated when such requred nformaton and documentaton s made publcally avalable. Legal framework on access to MAP and nformaton to be submtted 42. The nformaton and documentaton Swtzerland requres that taxpayers nclude n a request for MAP assstance are dscussed under element B.8. Practcal applcaton 43. Accordng to Swtzerland t provdes access to MAP n all cases where taxpayers have compled wth the nformaton or documentaton requred by ts competent authorty and as set out n ts MAP gudance. If a taxpayer does not provde the requred nformaton Swtzerland wll request the nformaton wthn 60 days from the recept of the request to ntate a MAP. Swtzerland s competent authorty does not set a specfc tmeframe wthn whch the taxpayers s requred to provde the requested nformaton. 44. Snce 1 January 2014 Swtzerland has not lmted access to MAP on the grounds that nformaton n the MAP request was not the nformaton or documentaton requred by ts competent authorty. 45. Peers ndcated not beng aware of denal of access to MAP by Swtzerland n stuatons on the grounds that not enough nformaton was provded. Antcpated modfcatons 46. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element B.6.

29 PART B - AVAILABILIT AD ACCESS T MAP 27 Concluson [B.6] Areas for Improvement Recommendatons - As Swtzerland has thus far granted access to the MAP n elgble cases when taxpayers have compled wth Swtzerland s nformaton and documentaton requrements for MAP requests, t should contnue ths practce. [B.7] Include Artcle 25(3), second sentence, of the ECD Model Tax Conventon n tax treates Jursdctons should ensure that ther tax treates contan a provson under whch competent authortes may consult together for the elmnaton of double taxaton n cases not provded for n ther tax treates. 47. For ensurng that tax treates operate effectvely and n order for competent authortes to be able to respond quckly to unantcpated stuatons, t s useful that tax treates nclude the second sentence of Artcle 25(3) of the ECD Model Tax Conventon (ECD, 2015a), enablng them to consult together for the elmnaton of double taxaton n cases not provded for by these treates. Current stuaton of Swtzerland s tax treates 48. ut of Swtzerland s 90 tax treates, 85 contan a provson allowng ther competent authorty to consult together for the elmnaton of double taxaton n cases not provded for n ther tax treates. ne of the fve treates that do not contan ths provson s the 1954 treaty wth the Unted Kngdom that Swtzerland contnues to apply to 14 jursdctons. Antcpated modfcatons 49. ne of the fve treates that does not contan a provson equvalent to Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015a) s the 1954 treaty wth the Unted Kngdom, whch contnues to be appled to 14 jursdctons (except for the Unted Kngdom, as Swtzerland entered nto a separate treaty wth ths state n 1977) and whch cannot be amended by Swtzerland. For the other four treates that also do not contan the requred provson, Swtzerland ndcated that t ntends to mplement element B.7 by sgnng the Multlateral Instrument. In that regard, Swtzerland envsages not makng any reservatons aganst the modfcatons made by Artcle 16 of the Multlateral Instrument concernng the mutual agreement procedure or all of ts exstng tax treates to be covered by that nstrument, relatng to ths element. Furthermore, Swtzerland has ndcated t wll sgn and ratfy the Multlateral Instrument as soon as practcable. Where a tax treaty wll not be modfed by the Multlateral Instrument, Swtzerland reported that t ntends to update va blateral negotatons ts tax treates to be n lne wth element B.7. In addton, Swtzerland wll seek to nclude Artcle 25(3), second sentence of the ECD Model Tax Conventon (ECD, 2015a) n all of ts future treates.

30 28 PART B - AVAILABILIT AD ACCESS T MAP 50. ne peer ndcated that ther treaty wth Swtzerland s under negotaton and that both contractng states are seekng to meet the Acton 14 mnmum standard. Concluson Areas for Improvement Recommendatons Fve out of 90 tax treates do not contan a provson that s equvalent to Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015a). Where treates do not nclude the equvalent of Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015a) and wll not be modfed by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, Swtzerland should request the ncluson of the requred provson va blateral negotatons. Specfcally wth respect to the 1954 treaty wth the Unted Kngdom that s beng appled to 14 jursdctons (not ncludng the Unted Kngdom), Swtzerland should, once t enters nto negotatons wth the jursdctons for whch t apples that treaty, request the ncluson of the requred provson. [B.7] In addton, Swtzerland should mantan ts stated ntenton to nclude the requred provson n all future treates. [B.8] Publsh clear and comprehensve MAP gudance Jursdctons should publsh clear rules, gudelnes and procedures on access to and use of the MAP and nclude the specfc nformaton and documentaton that should be submtted n a taxpayer s request for MAP assstance. 51. Informaton on a jursdcton s MAP regme facltates the tmely ntaton and resoluton of MAP cases. Clear rules, gudelnes and procedures on access to and use of the MAP are essental for makng taxpayers and other stakeholders aware of how a jursdcton s MAP regme functons. In addton, to ensure that a MAP request s receved and wll be revewed by the competent authorty n a tmely manner, t s mportant that a jursdcton s MAP gudance clearly and comprehensvely explans how a taxpayer can make a MAP request and what nformaton and documentaton should be ncluded n such request. Swtzerland s MAP gudance 52. Swtzerland s competent authorty for mutual agreement procedures publshes ther MAP fact sheet n German, French, Italan and Englsh. Gudelnes regardng the request for MAP are provded n secton 4(ff) on pages two and three of ther MAP gudance. Swtzerland s rules, gudelnes and procedures are ncluded n ths document.2 Ths contans basc nformaton on: (a) Contact nformaton of the competent authorty or the offce n charge of MAP cases; (b) The manner and form n whch the taxpayer should submt ts MAP request; (c) The specfc nformaton and documentaton that should be ncluded n a MAP request (see also below);

31 PART B - AVAILABILIT AD ACCESS T MAP 29 (d) How the MAP functons n terms of tmng and the role of the competent authortes; (e) Relatonshp wth domestc avalable remedes; (f) Tme lmts for flng a MAP request; (g) Access to MAP n transfer prcng cases and audt settlements; (h) Implementaton of MAP agreements; and () Rghts and role of taxpayers n the process 53. The above-descrbed MAP gudance of Swtzerland ncludes nformaton on the avalablty and the use of the MAP and how ts competent authorty conducts the process n practce. Ths gudance ncludes the nformaton that the FTA MAP Forum agreed should be ncluded n a jursdcton s MAP gudance, whch concerns: () contact nformaton of the competent authorty or the offce n charge of MAP cases and () the manner and form n whch the taxpayer should submt ts MAP requests.3 Informaton and documentaton to be ncluded n a MAP request 54. To facltate the revew of a MAP request by competent authortes and to have more consstency n the requred content of MAP requests, the FTA MAP Forum agreed on gudance that jursdctons could use n ther domestc gudance on what nformaton and documentaton taxpayers need to nclude n a request for MAP assstance.4 Ths agreed gudance s shown below. Swtzerland s MAP gudance enumeratng whch tems must be ncluded n a request for MAP assstance s checked n the followng lst: ; Identty of the taxpayer(s) covered n the MAP request; ; The bass for the request; ; Facts of the case; ; Analyss of the ssue(s) requested to be resolved va MAP; ; Whether the MAP request was also submtted to the competent authorty of the other treaty partner; ; Whether the MAP request was also submtted to another authorty under another nstrument that provdes for a mechansm to resolve treaty-related dsputes; ; Whether the ssue(s) nvolved were dealt wth prevously; and ; A statement confrmng that all nformaton and documentaton provded n the MAP request s accurate and that the taxpayer wll assst the competent authorty n ts resoluton of the ssue(s) presented n the MAP request by furnshng any other nformaton or documentaton requred by the competent authorty n a tmely manner. 55. Taxpayer nput suggested that the exstng gudance provdes full clarty on how to access and use the MAP process. Antcpated modfcatons 56. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element B.8.

32 30 PART B - AVAILABILIT AD ACCESS T MAP Concluson Areas for Improvement Recommendatons MAP gudance s avalable but further clarty could be provded. Swtzerland should mprove the level of clarty of ts MAP gudance. Addtonally, although not part of the Acton 14 Mnmum Standard, n order to further mprove the level of clarty, Swtzerland could consder ncludng n ts MAP gudance nformaton on: o whether MAP s avalable n cases of () transfer prcng cases; () the applcaton of ant-abuse provsons; () bona fde taxpayer-ntated adjustments; and (v) multlateral dsputes; o the condtons for suspenson of tax collecton durng the course of a MAP; o the consderaton of nterest and penaltes; and; o the steps of the process and the tmng of such steps for the mplementaton of MAP agreements. [B.8] [B.9] Make MAP gudance avalable and easly accessble and publsh MAP profle Jursdctons should take approprate measures to make rules, gudelnes and procedures on access to and use of the MAP avalable and easly accessble to the publc and should publsh ther jursdcton MAP profles on a shared publc platform pursuant to the agreed template. 57. The publc avalablty and accessblty of a jursdcton s MAP gudance ncreases publc awareness on access to and the use of the MAP n that jursdcton. Publshng MAP profles on a shared publc platform5 further promotes the transparency and dssemnaton of the MAP programme. Rules, gudelnes and procedures on access to and use of the MAP 58. The MAP gudance of Swtzerland s publshed and can be found at: The gudance was last updated n June As regards ts accessblty, t can be easly found onlne by searchng for double taxaton and Swtzerland. MAP Profle 60. The MAP profle of Swtzerland s publshed on the webste of the ECD. Ths MAP profle as of 1 September 2016 s complete and meets the baselne of what s requred wth mnmal nformaton. The MAP profle of Swtzerland s publshed on the webste of the ECD.6 Ths profle ncludes external lnks whch provde extra nformaton and gudance.

33 PART B - AVAILABILIT AD ACCESS T MAP 31 Antcpated modfcatons 61. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element B.9. Concluson Areas for Improvement [B.9] - Recommendatons Swtzerland should ensure that future updates of ts MAP gudance are made publcally avalable and easly accessble. Its MAP profle, publshed on the shared publc platform, should be updated f needed. [B.10] Clarfy n MAP gudance that audt settlements do not preclude access to MAP Jursdctons should clarfy n ther MAP gudance that audt settlements between tax authortes and taxpayers do not preclude access to MAP. If jursdctons have an admnstratve or statutory dspute settlement/resoluton process ndependent from the audt and examnaton functons and that can only be accessed through a request by the taxpayer, and jursdctons lmt access to the MAP wth respect to the matters resolved through that process, jursdctons should notfy ther treaty partners of such admnstratve or statutory processes and should expressly address the effects of those processes wth respect to the MAP n ther publc gudance on such processes and n ther publc MAP programme gudance. 62. As explaned under element B.5, an audt settlement can be valuable to taxpayers by provdng certanty to them on ther tax poston. evertheless, as double taxaton may not be fully elmnated by agreeng wth such settlements, t s mportant that a jursdcton s MAP gudance clarfes that n case of audt settlement taxpayers have access to the MAP. In addton, for provdng clarty on the relatonshp between admnstratve or statutory dspute settlement or resoluton processes and the MAP (f any), t s crtcal that both the publc gudance on such processes and the publc MAP programme gudance address the effects of those processes, f any. Fnally, as the MAP represents a collaboratve approach between treaty partners, t s helpful that treaty partners are notfed of each other s MAP programme and lmtatons thereto, partcularly n relaton to the prevous mentoned processes. MAP and audt settlements n the MAP gudance 63. As prevously mentoned under element B.5, audt settlements are not avalable n Swtzerland. MAP and other admnstratve or statutory dspute settlement/resoluton processes n avalable gudance 64. As prevously mentoned under element B.5, Swtzerland does not have an admnstratve or statutory dspute settlement / resoluton process avalable.

34 32 PART B - AVAILABILIT AD ACCESS T MAP otfcaton of treaty partners of exstng admnstratve or statutory dspute settlement/resoluton processes 65. As Swtzerland does not have an nternal admnstratve or statutory dspute settlement / resoluton process avalable, there s no need to notfy treaty partners of such process. Antcpated modfcatons 66. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element B.10. Concluson [B.10] Areas for Improvement Recommendatons - -

35 PART B - AVAILABILIT AD ACCESS T MAP 33 otes 1. These ten treates nclude the 1954 treaty wth the Unted Kngdom that contnues to be appled to 14 jursdctons (accessed on 10 September 2017). 3. Avalable at: The shared publc platform can be found at: Bblography ECD (2016), BEPS Acton 14 on More Effectve Dspute Resoluton Mechansms, Peer Revew Documents, (accessed on 22 August 2017). ECD (2015a), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars, ECD (2015b), Makng Dspute Resoluton Mechansms More Effectve, Acton Fnal Report, ECD Publshng, Pars,

36

37 PART C - RESLUTI F MAP CASES 35 Part C Resoluton of MAP Cases [C.1] Include Artcle 25(2), frst sentence, of the ECD Model Tax Conventon n tax treates Jursdctons should ensure that ther tax treates contan a provson whch requres that the competent authorty who receves a MAP request from the taxpayer, shall endeavour, f the objecton from the taxpayer appears to be justfed and the competent authorty s not tself able to arrve at a satsfactory soluton, to resolve the MAP case by mutual agreement wth the competent authorty of the other Contractng Party, wth a vew to the avodance of taxaton whch s not n accordance wth the tax treaty. 67. It s of crtcal mportance that n addton to allowng taxpayers to request for a MAP, tax treates also nclude the frst sentence of Artcle 25(2) of the ECD Model Tax Conventon (ECD, 2015a), whch oblges competent authortes, n stuatons where the objecton rased by taxpayers are consdered justfed and where cases cannot be unlaterally resolved, to enter nto dscussons wth each other to resolve cases of taxaton not n accordance wth the provsons of a tax treaty. Current stuaton of Swtzerland s tax treates 68. ut of Swtzerland s 90 tax treates 89 contan a provson equvalent to Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) requrng ts competent authorty to endeavour - when the objecton rased s justfed and no unlateral soluton s possble - to resolve by mutual agreement wth the competent authorty of the other treaty partner the MAP case wth a vew to the avodance of taxaton whch s not n accordance wth the tax treaty. The one treaty that does not contan ths provson s the 1954 treaty wth the Unted Kngdom that Swtzerland contnues to apply to 14 jursdctons. Antcpated modfcatons 69. As the one treaty that does not nclude the requred provson s the 1954 treaty wth the Unted Kngdom, whch contnues to be appled to 14 jursdctons (except for the Unted Kngdom, as Swtzerland entered nto a separate treaty wth ths state n 1977), ths treaty cannot be amended by Swtzerland. As all of Swtzerland s other tax treates nclude the requred provson, Swtzerland has ndcated that t does not antcpate any modfcatons n relaton to element C.1 but that t wll seek to nclude Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a) n all future treates.

38 36 PART C - RESLUTI F MAP CASES Concluson Areas for Improvement Recommendatons ne out of 90 tax treates does not contan a provson equvalent to Artcle 25(2), frst sentence of the ECD Model Tax Conventon (ECD, 2015a). Swtzerland should ensure that all ts tax treates nclude the equvalent of Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015a). As the one treaty that does not nclude such provson s the 1954 treaty wth the Unted Kngdom that s beng appled to 14 jursdctons (not ncludng the Unted Kngdom), Swtzerland should ensure that, once t enters nto negotatons wth the jursdctons for whch t apples that treaty, t ncludes the requred provson. [C.1] In addton, Swtzerland should mantan ts stated ntenton to nclude the requred provson n all future treates. [C.2] Seek to resolve MAP cases wthn a 24-month average tmeframe Jursdctons should seek to resolve MAP cases wthn an average tme frame of 24 months. Ths tme frame apples to both jursdctons (.e. the jursdcton whch receves the MAP request from the taxpayer and ts treaty partner). 70. As double taxaton creates uncertantes and leads to costs for both taxpayers and jursdctons, and as the resoluton of MAP cases may also avod (potental) smlar ssues for future years concernng the same taxpayers, t s mportant that MAP cases are resolved swftly. A perod of 24 months s consdered as an approprate tme perod to resolve MAP cases on average. Reportng of MAP statstcs 71. Statstcs regardng all tax treaty related dsputes concernng Swtzerland are publshed on the webste of the ECD as of The FTA MAP Forum has agreed on rules for reportng of MAP statstcs ( MAP Statstcs Reportng Framework ) for MAP requests submtted on or after 1 January 2016 ( post-2015 cases ). Also, for MAP requests submtted pror to that date ( pre-2016 cases ) the FTA MAP Forum agreed to report MAP statstcs on the bass of an agreed template. Swtzerland provded ther MAP statstcs pursuant to the MAP Statstcs Reportng Framework wthn the gven deadlne, ncludng all cases nvolvng Swtzerland and of whch ts competent authorty was aware. The statstcs dscussed below nclude both post-2015 and pre-2016 cases and the full statstcs are attached to ths report as Annex B and C respectvely.2 It s to be noted that the statstcs for both reportng perods should be consdered jontly for an understandng of the MAP caseload of Swtzerland. Wth respect to post-2015 cases, Swtzerland reported havng reached out to all ts MAP partners wth a vew to have ther MAP statstcs matchng. Swtzerland ndcated that t matched ts statstcs wth all of ts MAP partners. Montorng of MAP statstcs 72. Swtzerland reported that n 2016 t ntroduced a new management trackng system to measure performance wth respect to MAP. Ths system concerns measurng the ablty to reach an agreement wthn 24 months as well as the overall tmeframes of each step of the mutual agreement procedure.

39 PART C - RESLUTI F MAP CASES 37 Analyss of Swtzerland s caseload 73. The analyss of Swtzerland s MAP caseload relates to the perod startng on 1 January 2016 (the Reportng Perod ). The followng graph shows the evoluton of Swtzerland s MAP caseload over the Reportng Perod. Fgure C.1 Swtzerland's MAP nventory penng Inventory on 1/1/2016 Cases started Cases closed End nventory on 31/12/ At the begnnng of the Reportng Perod Swtzerland had 303 pendng MAP cases, of whch 141 were attrbuton/allocaton cases and 162 other MAP cases.3 At the end of the Reportng Perod, Swtzerland had 347 MAP cases n nventory, of whch 140 are attrbuton/allocaton cases and 207 are other MAP cases. The breakdown of the end nventory can be llustrated as follows: Fgure C.2 End nventory on 31 December 2016 (347 cases) Attrbuton / allocaton cases 40% ther cases 60%

40 38 PART C - RESLUTI F MAP CASES 75. Durng the Reportng Perod Swtzerland resolved 98 MAP cases and the followng outcomes were reported: Fgure C.3 Cases resolved durng the Reportng Perod (98 cases) 1% 1% 2% 3% dened MAP access 3% 3% 3% objecton s not justfed 3% 7% wthdrawn by taxpayer 3% 2% unlateral relef granted 7% resolved va domestc remedy 2% agreement fully elmnatng double taxaton / fully resolvng taxaton not n accordance wth tax treaty 78% agreement partally elmnatng double taxaton / partally resolvng taxaton not n accordance wth tax treaty 2% no agreement ncludng agreement to dsagree 1% 78% any other outcome 1% 76. Ths chart ponts out that durng the Reportng Perod, 76 out 98 cases were resolved through an agreement that fully elmnated double taxaton or fully resolved taxaton not n accordance wth the tax treaty. Average tmeframe needed to resolve MAP cases Pre-2016 cases 77. Swtzerland reported that on average t needed months to close attrbuton/allocaton cases and months to close other cases. Ths resulted n an average tme needed of months to close pre-2016 cases. For the purpose of computng the tme to resolve pre-2016 cases, Swtzerland used: as the start date the date of flng of the MAP request; and as the end date, the earlest of the followng dates: () the date when the taxpayer s nformed of the outcome of the MAP, () the date of the closng letter whch s drafted upon taxpayer s approval of the agreement reached, or () the date when Swtzerland s competent authorty formally closed the case. Post-2015 cases 78. As a prelmnary remark, t should be noted that the perod for assessng post2015 MAP statstcs only comprses 12 months. Swtzerland closed 9.86% of post-2015

41 PART C - RESLUTI F MAP CASES 39 cases durng the Reportng Perod. Durng these 12 months, eght cases closed concern other MAP cases and sx cases concern attrbuton / allocaton cases. Swtzerland closed on average these attrbuton/allocaton cases wthn 2.37 months. For other MAP cases, the average tme to resolve the other cases was reported as 1.79 months. Pre-2016 and Post-2015 cases 79. The average tme needed to resolve MAP cases durng the Reportng Perod was months. Ths average can be broken down as follows: umber of cases Start date to End date (n months) Attrbuton / Allocaton cases ther cases All cases Peer nput 80. All peers that provded nput on Swtzerland s complance wth the mnmum standard report a good workng relatonshp wth the competent authorty of Swtzerland whch s further dscussed under element C.3 below. Ths concerns jursdctons that have large MAP nventores wth Swtzerland as well as those wth a relatvely modest caseload. Peers ndcated that contact wth the competent authorty of Swtzerland s easy and that the competent authorty s soluton-orented. Peers further ndcated that cases are generally resolved wthn a reasonable perod, although not all cases are resolved wthn a 24-month perod as some cases are partcularly complex and take longer to resolve. Antcpated modfcatons 81. As mentoned under element C.6, Swtzerland has commtted to provde for mandatory and bndng MAP arbtraton n ts blateral tax treates as a mechansm to provde that treaty-related dsputes wll be resolved wthn a specfed tmeframe. ther than ths commtment, Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element C.2. Concluson Areas for Improvement [C.2] Recommendatons Swtzerland submtted tmely comprehensve MAP statstcs and ndcated they have been matched wth all of ts MAP partners. The year 2016 was the frst year for whch MAP statstcs were reported under the new MAP Statstcs Reportng Framework. These statstcs were only recently submtted by most jursdctons that commtted themselves to the mplementaton of the Acton 14 Mnmum Standard and some stll need to be submtted or confrmed. Gven ths state of play, t was not yet possble to assess whether Swtzerland s MAP statstcs match those of ts treaty partners as reported by the latter. Wthn the context of the state of play outlned above and n relaton to the MAP statstcs provded by Swtzerland, t resolved durng the Reportng Perod 9.86% (14 out of 142 cases) of ts post-2015 cases n 2.04 months on average. In that regard, Swtzerland s recommended to seek to resolve the remanng 90.14% (128 cases) of the post-2015 cases pendng on 31 December 2016 wthn a tmeframe that results n an average tmeframe of 24 months for all post-2015 cases.

42 40 PART C - RESLUTI F MAP CASES [C.3] Provde adequate resources to the MAP functon Jursdctons should ensure that adequate resources are provded to the MAP functon. 82. Adequate resources, ncludng personnel, fundng and tranng, are necessary to properly perform the competent authorty functon and to ensure that MAP cases are resolved n a tmely, effcent and effectve manner. Descrpton of Swtzerland s competent authorty 83. Swtzerland s competent authorty conssts of 13 employees who work n the tax dvson of the State Secretarat for Internatonal Fnancal Matters. The State Secretarat for Internatonal Fnancal Matters s responsble for the coordnaton and strategc management of nternatonal fnancal, monetary and tax matters. The State Secretary represents Swtzerland s nterests n nternatonal fnancal and tax matters, and leads negotatons related to these. f these 13 employees, sx of them are partally dedcated to other actvtes such as the negotaton of tax treates. Swtzerland s competent authorty s determned n the treaty and Swtzerland publshes who the competent authorty s on ts competent authorty webste.4 Montorng mechansm 84. The framework for the montorng and assessment of whether such resources are adequate s based on the average tme taken to complete a case and the number of pendng cases on fle. The mechansms/procedure to request more staff to handle the ncrease of MAP nventory should such a case arse s not descrbed by Swtzerland s competent authorty. Practcal applcaton 85. As dscussed under element C.2, Swtzerland dd not solve ts MAP cases wthn the requred 24-month average. There was also a dscrepancy between the average tme taken to solve attrbuton / allocaton cases and other cases. Ths can be llustrated by the followng graph:

43 PART C - RESLUTI F MAP CASES 41 Fgure C.4 Average tme (n months) All cases ther cases Pre-2016 cases Post-2015 cases (*) Attrbuton / Allocaton cases All cases (*) Post-2015 cases only concern cases started and closed durng Based on these fgures, t follows that on average t took Swtzerland months to resolve MAP cases. As t took Swtzerland months to resolve attrbuton / allocaton cases ths may ndcate that addtonal resources specfcally dedcated to the resoluton of attrbuton / allocaton cases are needed. 87. Swtzerland provded the followng clarfcaton why t experenced some delays n the resoluton of some MAP cases: complexty and fnancal mpact of cases resolved; a certan lack of resources at the competent authorty of Swtzerland; and lengthy response tmes by other competent authortes. Swtzerland also explaned that t made addtonal effort to close old cases whch resulted n lengthenng ts average tmeframe. 88. Peers have ndcated that Swtzerland has adequate resources for the MAP functon. Face-to-face meetngs wth competent authorty counterparts occur and Swtzerland has been descrbed as showng great efforts n fndng ways to solve cases. ne peer commented on ther percepton that the number of MAP cases per employee n Swtzerland s competent authorty s hgh. Antcpated modfcatons 89. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element C3.

44 42 PART C - RESLUTI F MAP CASES Concluson Areas for Improvement [C.3] - Recommendatons Swtzerland should contnue to closely montor whether t has adequate resources n place to ensure that future MAP cases are resolved n a tmely, effcent and effectve manner. Furthermore, as Swtzerland resolved attrbuton/allocaton cases n months on average, t could consder devotng addtonal fundng and resources to accelerate the resoluton of these cases. [C.4] Ensure staff n charge of MAP has the authorty to resolve cases n accordance wth the applcable tax treaty Jursdctons should ensure that the staff n charge of MAP processes have the authorty to resolve MAP cases n accordance wth the terms of the applcable tax treaty, n partcular wthout beng dependent on the approval or the drecton of the tax admnstraton personnel who made the adjustments at ssue or beng nfluenced by consderatons of the polcy that the jursdctons would lke to see reflected n future amendments to the treaty. 90. Ensurng that staff n charge of MAP can and wll resolve cases, absent any approval/drecton by the audt department of the tax admnstraton personnel drectly nvolved n the adjustment at ssue or absent any polcy consderatons contrbutes to a prncpled and consstent approach to MAP cases. Functonng of staff n charge of MAP 91. Swtzerland has the followng framework n place to montor and evaluate the performance of the MAP functon. When resolvng MAP cases, staff n charge of MAP has to consder the provsons of the relevant treaty ncludng relevant case law and avalable lterature dealng wth the relevant provsons, namely the commentary of the ECD Model Tax Conventon (ECD, 2015a) and the ECD Transfer Prcng Gudelnes for Multnatonal Enterprses and Tax Admnstratons 2017 (ECD Transfer Prcng Gudelnes, ECD 2017). In transfer prcng, all cases are handled by two employees workng together. The relevant actons taken are subject to revew by a thrd person, usually the head of secton or the head of secton s deputy. Partcularly complex or out of the ordnary cases are dscussed wth the head of dvson and, f approprate, wth the head of the Swss State Secretarat. Tax admnstraton s nvolved prmarly to gather the relevant facts and to get the tax authorty s perspectve of the case. The nvolvement of the tax admnstraton s also necessary to make t aware of the MAP case n vew of possble adjustments. 92. In practce, the competent authorty n Swtzerland operates ndependently and has full authorty to resolve MAP cases. There s nether a (formal) system n place requrng the competent authorty to ask tax admnstraton personnel drectly nvolved n the adjustment at ssue for approval of any MAP agreements nor s the process for the dscusson of MAP agreements nfluenced by polcy consderatons.

45 PART C - RESLUTI F MAP CASES 43 Practcal applcaton 93. Peers have ndcated that Swtzerland s competent authorty s flexble and focused on achevng results n the competent authorty negotatons and that the offcers n charge of the MAP functon have suffcent authorty and mandate to resolve MAP cases. Antcpated modfcatons 94. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element C.4. Concluson [C.4] Areas for Improvement Recommendatons - As t has done thus far, Swtzerland should contnue to ensure that ts competent authorty has the authorty, and uses that authorty n practce, to resolve MAP cases wthout beng dependent on approval or drecton from the tax admnstraton personnel drectly nvolved n the adjustments at ssue. [C.5] Use approprate performance ndcators for the MAP functon Jursdctons should not use performance ndcators for ther competent authorty functons and staff n charge of MAP processes based on the amount of sustaned audt adjustments or mantanng tax revenue. 95. For ensurng that each case s consdered on ts ndvdual merts and wll be resolved n a prncpled and consstent manner, t s essental that any performance ndcators for the competent authorty functon and for the staff n charge of MAP processes are approprate and not based on the amount of sustaned audt adjustments or am at mantanng a certan amount of tax revenue. Performance ndcators used by Swtzerland 96. Swtzerland has the followng system n place to evaluate the performance of staff n charge of MAP processes. MAP related performance ndcators nvolve the average tme for the resoluton of MAP cases, the number of negotatons held per year or complance wth the determned MAP procedure. Each team member has one to three specfc goals that are set every year durng blateral dscussons wth hs or her superor. Performance ndcators such as the average tme for the resoluton of MAP cases and the total number of negotatons held per year as well as the complance wth the determned MAP procedure all play a role n these evaluatons. Follow up s done once or twce a year durng a blateral dscusson and gves rse to a grade that has a very lmted nfluence on the salary of the employee. Tax amounts are never relevant as a performance ndcator. When resolvng MAP cases, staff n charge of MAP has to consder the provsons of the relevant treaty ncludng relevant case law and avalable lterature dealng wth the relevant provsons, namely the commentary of the ECD Model Tax Conventon (ECD, 2015a) and the ECD Transfer Prcng Gudelnes (ECD, 2017). Moreover the relevant actons taken by staff are subject to revew by a thrd person, usually the head of secton or the head of secton s deputy. Partcularly complex or out of

46 44 PART C - RESLUTI F MAP CASES the ordnary cases are dscussed wth the head of dvson and, f approprate, wth the head of the Swss State Secretarat. 97. The Acton 14 fnal report (ECD, 2015b) ncludes examples for performance ndcators that are consdered approprate. These ndcators are shown below and presented n the form of a checklst: ; umber of MAP cases resolved Consstency (.e. a treaty should be appled n a prncpled and consstent manner to MAP cases nvolvng the same facts and smlarly stuated taxpayer); and ; Tme taken to resolve a MAP case (recognsng that the tme taken to resolve a MAP case may vary accordng to ts complexty and that matters not under the control of a competent authorty may have a sgnfcant mpact on the tme needed to resolve a case). Practcal applcaton 98. Peers reported not beng aware of any napproprate performance ndcators used by Swtzerland s competent authorty. ne peer noted Swtzerland was flexble and focused on achevng results and another stated that t has shown great efforts n fndng ways to solve cases. Antcpated modfcatons 99. Swtzerland dd not antcpate any modfcatons n relaton to element C.5. Concluson [C.5] Areas for Improvement Recommendatons - As t has done thus far, Swtzerland should contnue to use approprate performance ndcators. [C.6] Provde transparency wth respect to the poston on MAP arbtraton Jursdctons should provde transparency wth respect to ther postons on MAP arbtraton The ncluson of an arbtraton provson n tax treates may help ensure that MAP cases are resolved wthn a certan tmeframe, whch provdes certanty to both taxpayers and competent authortes. In order to have full clarty on whether arbtraton as a fnal stage n the MAP process can and wll be avalable n jursdctons, t s mportant that jursdctons are transparent on ther poston on MAP arbtraton. Poston on MAP arbtraton 101. In Swtzerland there are no domestc law lmtatons for ncludng MAP arbtraton n ts tax treates. Swtzerland declared that t s favourable to the use of arbtraton as a means to ensure dspute resoluton. Swtzerland was furthermore a partcpant n the sub-group on arbtraton as part of the group whch negotated the Multlateral Instrument. Swtzerland s MAP gudance does not specfy ts polcy on arbtraton or the avalablty of arbtraton under tax treates.

47 PART C - RESLUTI F MAP CASES 45 Practcal applcaton 102. Up to date, Swtzerland has ncorporated an arbtraton clause n 26 tax treates as a fnal stage to the MAP. In 23 treates the arbtraton clause s based on Artcle 25(5) of the ECD Model Tax Conventon (ECD, 2015a).5 In one treaty6 ths concerns a voluntary and bndng arbtraton clause and n two treates ths concerns a mandatory and bndng arbtraton clause Furthermore, Swtzerland ncluded n 12 treates a most-favoured naton clause concernng the ncluson of an arbtraton provson. In 4 treates8 ths concerns the automatc ncluson of such provson, whereas n 8 treates9 ths concerns enterng nto negotatons for the ncluson of an arbtraton provson, should Swtzerland s treaty partner nclude an arbtraton provson n a tax treaty wth a thrd state. Antcpated modfcatons 104. Swtzerland has reported that t wll opt for part VI of the Multlateral Instrument, whch ncludes a mandatory and bndng arbtraton provson. Concluson [C.6] Areas for Improvement Recommendatons - - otes 1. Avalable at: These statstcs are up to and nclude fscal year For post-2015 cases, f the number of MAP cases n Swtzerland s nventory at the begnnng of the Reportng Perod plus the number of MAP cases started durng the Reportng Perod was more than fve, Swtzerland s reports ts MAP caseload on a jursdcton-by-jursdcton bass. Ths rule apples for each type of cases (attrbuton / allocaton cases and other cases). 3. For pre-2016 and post-2015 Swtzerland follows the MAP Statstcs Reportng Framework for determnng whether a case s consdered an attrbuton/allocaton MAP case. Annex D of the MAP Statstcs Reportng Framework provdes that an attrbuton/allocaton MAP case s a MAP case where the taxpayer s MAP request relates to () the attrbuton of profts to a permanent establshment (see e.g. Artcle 7 of the ECD Model Tax Conventon (ECD, 2015a); or () the determnaton of profts between assocated enterprses (see e.g. Artcle 9 of the ECD Model Tax Conventon (ECD, 2015a)), whch s also known as a transfer prcng MAP case (accessed on 10 September 2017). 5. Ths concerns treates wth Albana, Australa, Austra, Belgum, Canada, Denmark (ncludng Faroe Islands), Estona, France, Greece, Hong Kong (Chna), Iceland,

48 46 PART C - RESLUTI F MAP CASES Kazakhstan, Lechtensten, Luxembourg, etherlands, orway, Poland, Slovak Republc, Slovena, Span, Sweden, the Unted Kngdom and Uruguay. 6. Ths concerns the treaty wth South Afrca. 7. Ths concerns the treaty wth Germany and the Unted States. The arbtraton clause under the treaty wth the Unted States has not yet entered nto force. 8. Ths concerns treates wth Bulgara, Cyprus, Malta and Romana. Footnote by Turkey: The nformaton n ths document wth reference to "Cyprus" relates to the southern part of the Island. There s no sngle authorty representng both Turksh and Greek Cyprot people on the Island. Turkey recognses the Turksh Republc of orthern Cyprus (TRC). Untl a lastng and equtable soluton s found wthn the context of Unted atons, Turkey shall preserve ts poston concernng the "Cyprus" ssue. Footnote by all the European Unon Member States of the ECD and the European Unon: The Republc of Cyprus s recognsed by all members of the Unted atons wth the excepton of Turkey. The nformaton n ths document relates to the area under the effectve control of the Government of the Republc of Cyprus. 9. Ths concerns treates wth the Czech Republc, Hungary, Ireland, Korea, Mexco, Peru, Portugal and Russa. Bblography ECD (2017), ECD Transfer Prcng Gudelnes for Multnatonal Enterprses and Tax Admnstratons 2017, ECD Publshng, Pars. DI: ECD (2016), BEPS Acton 14 on More Effectve Dspute Resoluton Mechansms, Peer Revew Documents, (accessed on 22 August 2017). ECD (2015a), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars. DI: ECD (2015b), Makng Dspute Resoluton Mechansms More Effectve, Acton Fnal Report, ECD Publshng, Pars. DI:

49 PART D - IMPLEMETATI F MAP AGREEMETS 47 Part D Implementaton of MAP Agreements [D.1] Implement all MAP agreements Jursdctons should mplement any agreement reached n MAP dscussons, ncludng by makng approprate adjustments to the tax assessed n transfer prcng cases In order to provde full certanty to taxpayers and the jursdctons, t s essental that all MAP agreements are mplemented by the competent authortes concerned. Legal framework to mplement MAP agreements 106. Swtzerland nforms taxpayers of the outcome of the mutual agreement procedure and n ths respect, Swtzerland requests the taxpayer concerned to gve ts consent to the agreement reached as a prerequste for mplementaton. Ths apples for agreements reached as the result of the MAP, as well as for any agreements reached followng the decson of an arbtraton panel as a fnal stage to the MAP. Swtzerland nforms the taxpayer about the outcome of the mutual agreement procedure. Unless ths agreement s rejected wthn 30 days, t s assumed that the taxpayer has accepted t. Ths 30-day deadlne can be extended by the taxpayer va a wrtten request. nce the agreement s accepted by the taxpayer, the State Secretarat for Internatonal Fnancal Matters nforms the relevant tax authorty n Swtzerland about the outcome of the mutual agreement procedure who wll, when necessary, mplement t automatcally In Swtzerland, once a tax assessment has become fnal, t can only be amended later on the bass of certan grounds. A MAP agreement s consdered to be one of these. Accordng to Artcle 148 of the Federal Law on Drect Federal Tax, a change of assessment n favour of the taxpayer has to be requested wthn 90 days after havng knowledge of the ground for revson but no longer than 10 years after the assessment was rendered. In the vew of Swtzerland ths 10 year deadlne s deemed to be met f the MAP request s fled before the end of that deadlne. Swtzerland reported that the length of the MAP wll not negatvely affect the taxpayer and ndcated t wll mplement all agreements reached n MAP dscussons gven that the 10 year deadlne s respected on the condton that t s requested wthn ths 10 year tme lmt. Informaton on the mplementaton s not publcally avalable. Swtzerland mplements all MAP agreements reached and makes approprate adjustments to the tax assessed n transfer prcng cases, f requred.

50 48 PART D - IMPLEMETATI F MAP AGREEMETS Practcal applcaton 108. Swtzerland reported that t has mplemented all MAP agreements snce 1 January However, there s no mechansm n place that keeps track of the mplementaton of all MAP agreements o peer ndcated that t was aware of any MAP agreement not mplemented by Swtzerland s competent authorty. Antcpated modfcatons 110. Swtzerland consders requestng an explct acceptance to the MAP agreement by taxpayers wthn 30 days after communcaton to them. Concluson [D.1] Areas for Improvement Recommendatons As wll be dscussed under element D.3 not all of Swtzerland s tax treates nclude the equvalent of Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) or the alternatves provded n Artcle 9(1) and 7(2). There s a rsk that for those tax treates that do not nclude those provsons, not all MAP agreements can be mplemented due to the 10 year tme lmt n Swtzerland s domestc law. Even though Swtzerland has mplemented all MAP agreements thus far, t should ensure that n the absence of the requred provsons dscussed under element D.3 mplementaton of MAP agreements s not obstructed by tme lmts n ts domestc law. In addton, to keep a record of whether all future MAP agreements are mplemented, Swtzerland could ntroduce a trackng system. [D.2] Implement all MAP agreements on a tmely bass Agreements reached by competent authortes through the MAP process should be mplemented on a tmely bass Delay of mplementaton of MAP agreements may lead to adverse fnancal consequences for both taxpayers and competent authortes. To avod ths and to ncrease certanty for all partes nvolved, t s mportant that the mplementaton of any MAP agreement s not obstructed by procedural and/or statutory delays n the jursdctons concerned. Theoretcal tmeframe for mplementng mutual agreements 112. As dscussed, Swtzerland s competent authorty wll, after acceptance by the taxpayer, communcate the agreement to the tax admnstraton and request ts mplementaton. The Swss cantonal tax authorty wll mplement the agreement automatcally unless t lacks nformaton for such mplementaton. In such stuatons t wll contact the taxpayer drectly Swtzerland has n ts domestc legslaton and/or admnstratve framework no tmeframe for mplementaton of mutual agreements reached. Furthermore, ts MAP gudance does not nclude nformaton on the tmeframe for mplementng MAP agreements.

51 PART D - IMPLEMETATI F MAP AGREEMETS 49 Practcal applcaton 114. Peers have not ndcated any problems wth Swtzerland regardng the mplementaton of MAP agreements reached on or after 1 January 2014 n general or on a tmely bass, or that any MAP agreement reached was not mplemented by Swtzerland. ne peer noted that t s ther mpresson that MAP agreements are mplemented n a tmely and effectve matter. Taxpayers also noted that they have not experenced any problems wth respect to mplementaton of MAP agreements. Antcpated modfcatons 115. Swtzerland dd not ndcate that t antcpates any modfcatons n relaton to element D.2. Concluson [D.2] Areas for Improvement Recommendatons - As t has done thus far, Swtzerland should contnue to mplement all MAP agreements on a tmely bass f the condtons for such mplementaton are fulflled. [D.3] Include Artcle 25(2), second sentence, of the ECD Model Tax Conventon n tax treates or alternatve provsons n Artcle 9(1) and Artcle 7(2) Jursdctons should ether () provde n ther tax treates that any mutual agreement reached through MAP shall be mplemented notwthstandng any tme lmts n ther domestc law, or () be wllng to accept alternatve treaty provsons that lmt the tme durng whch a Contractng Party may make an adjustment pursuant to Artcle 9(1) or Artcle 7(2), n order to avod late adjustments wth respect to whch MAP relef wll not be avalable In order to provde full certanty to taxpayers, t s essental that mplementaton of MAP agreements s not obstructed by any tme lmts n the domestc law of the jursdctons concerned. Such certanty can be provded by ether ncludng the equvalent of Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) n tax treates, or alternatvely, settng a tme lmt n Artcle 9(1) and Artcle 7(2) for makng adjustments to avod that late adjustments obstruct grantng of MAP relef. Legal framework and current stuaton of Swtzerland s tax treates 117. Pursuant to ts domestc legslaton, Swtzerland s not allowed to mplement MAP agreements f domestc tme lmts have passed and where they are not overwrtten by a tax treaty. Furthermore, t reserved n the Commentary to Artcle 25 of the ECD Model Tax Conventon (ECD, 2015) the rght not to ncorporate the second sentence of Artcle 25(2) n ts tax treates ut of Swtzerland s 90 tax treates, 4 contan a provson equvalent to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) that any mutual agreement reached through MAP shall be mplemented notwthstandng any tme lmts n ther domestc law. In addton, 3 tax treates contan the alternatves provded for n Artcle 9(1) and Artcle 7(2), settng a tme lmt for makng prmary adjustments.

52 50 PART D - IMPLEMETATI F MAP AGREEMETS Furthermore, 28 treates nclude the alternatve provded for n Artcle 9(1) settng a tme lmt for makng prmary adjustments, but not the alternatve provded for n Artcle 7(2). Antcpated modfcatons 119. For those treates that do not contan a provson equvalent to Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015), Swtzerland ndcated that t s wllng to mplement element D.3 va the ncluson of the alternatves provded for n Artcle 9(1) and 7(2) n all these tax treates. ne treaty that does not nclude the requred provson s the 1954 treaty wth the Unted Kngdom, whch contnues to be appled to 14 jursdctons (except for the Unted Kngdom, as Swtzerland entered nto a separate treaty wth ths state n 1977) and whch cannot be amended by Swtzerland. For the other treates, Swtzerland ndcated that t wll make a reservaton to Artcle 16 of the Multlateral Instrument to not nclude Artcle 25(2), second sentence of the ECD Model Tax Conventon (ECD, 2015), but nstead s wllng to ncorporate the alternatves provded for n Artcle 9(1) and 7(2) va blateral negotatons Several peers reported that ther tax treaty wth Swtzerland does not meet the relevant elements of the Acton 14 Mnmum Standard on all ponts and that they envsage mplementng these elements by sgnng the Multlateral Instrument. ne peer ndcated that ts tax treaty wth Swtzerland s currently under negotaton and both partes are seekng to meet the Acton 14 Mnmum Standard. Concluson Areas for Improvement Recommendatons 83 out of 90 treates contan nether a provson that s equvalent to Artcle 25(2), second sentence of the ECD Model Tax Conventon (ECD, 2015), nor the alternatve provsons n both Artcle 9(1) and Artcle 7(2). Swtzerland should ensure that all ts tax treates nclude the equvalent of Artcle 25(2) second sentence, of the ECD Model Tax Conventon (ECD, 2015) or be wllng to accept the ncluson of both alternatve provsons. f those 83 treates: o 55 out of 90 tax treates do not contan a provson to mplement any mutual agreement reached through MAP notwthstandng any tme lmts n the domestc law nor nclude the alternatve provsons provded for n Artcle 9(1) and Artcle 7(2). o 28 out of 90 tax treates do not contan a provson to mplement any mutual agreement reached through MAP notwthstandng any tme lmts n the domestc law and only nclude the alternatve provson provded for n Artcle 9(1). [D.3] Specfcally wth respect to the 1954 treaty wth the Unted Kngdom that s beng appled to 14 jursdctons (not ncludng the Unted Kngdom), Swtzerland should ensure that, once t enters nto negotatons wth the jursdctons for whch t apples that treaty, t ncludes the requred provson or be wllng to accept the ncluson of both alternatve provsons. In addton, Swtzerland should nclude the requred provson, or be wllng to accept the ncluson of both alternatve provsons, n all future treates.

53 PART D - IMPLEMETATI F MAP AGREEMETS 51 otes 1. Paragraph 98 of the ECD Model Tax Conventon Commentary on Artcle 25 reads: Chle, Greece, Italy, Mexco, Poland, Portugal, and Swtzerland reserve ther postons on the second sentence of paragraph 2. These countres consder that the mplementaton of relefs and refunds followng a mutual agreement ought to reman lnked to tme lmts prescrbed by ther domestc laws. (ECD, 2015) Bblography ECD (2015), Model Tax Conventon on Income and on Captal 2014 (Full Verson), ECD Publshng, Pars. DI:

54

55 SUMMAR - 53 Summary Areas for Improvement Recommendatons Part A: Preventng dsputes Two out of 90 tax treates do not contan a provson that s equvalent to Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015). Where treates do not nclude the equvalent of Artcle 25(3), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) and wll not be modfed by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, Swtzerland should request the nclusons of the requred provson va blateral negotatons. Specfcally wth respect to the 1954 treaty wth the Unted Kngdom that s beng appled to 14 jursdctons (not ncludng the Unted Kngdom), and the treaty wth the former Serba and Montenegro that contnues to be appled to both Montenegro and Serba, Swtzerland should ensure that, once t enters nto negotatons wth the jursdctons for whch t apples that treaty, t ncludes the requred provson. [A.1] In addton, Swtzerland should mantan ts stated ntenton to nclude the requred provson n all future treates. Swtzerland should contnue to provde for roll-back of blateral APAs n approprate cases as t has done thus far. - [A.2] To keep a record of the number of APAs where a roll-back was and was not granted, Swtzerland could ntroduce a trackng system. Part B: Avalablty and access to MAP o Two out of 90 tax treates do not contan a provson that s the equvalent of Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015), ether as t read pror to the adopton of the fnal report on Acton 14 or as amended by that fnal report; o Four out of the 90 tax treates do not contan a provson based on Artcle 25(1), second sentence of the ECD Model Tax Conventon (ECD, 2015), allowng taxpayers to submt a MAP request wthn a perod of no less than three years as from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provson of the tax treaty. Under these treates the flng perod for a MAP request s two years; and [B.1] o ne out of the 90 tax treates does not contan a provson based on Artcle 25(1), frst and second sentence of the ECD Model Tax Conventon (ECD, 2015). Where treates do not nclude the equvalent of Artcle 25(1) of the ECD Model Tax Conventon (ECD, 2015) and wll not be modfed by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, Swtzerland should request the ncluson of the requred provson va blateral negotatons. Ths concerns both: o A provson that s equvalent to Artcle 25(1), frst sentence, of the ECD Model Tax Conventon (ECD, 2015) ether: a) As amended n the fnal report of Acton 14; or b) As t read pror to the adopton of fnal report of Acton 14; and; o a provson that allows taxpayers to submt a MAP request wthn a perod of no less than three years from the frst notfcaton of the acton resultng n taxaton not n accordance wth the provson of the tax treaty. In addton, Swtzerland should mantan ts stated ntenton to nclude the requred provson n all future treates

56 54 SUMMAR Areas for Improvement [B.2] Recommendatons Swtzerland has n place a process to notfy the other competent authorty n cases access to MAP s dened or where ts competent authorty consdered the objecton rased n a MAP request as not justfed. Because for the perod under revew no such cases have occurred, t was not possble to assess whether the notfcaton process s appled n practce. - As Swtzerland has thus far granted access to the MAP n elgble transfer prcng cases t should contnue grantng access for these cases. [B.4] - As Swtzerland has thus far granted access to the MAP n all elgble cases concernng whether the condtons for the applcaton of a treaty ant-abuse provson has been met or whether the applcaton of a domestc law ant-abuse provson s n conflct wth the provsons of a treaty, t should contnue grantng access for these cases. [B.5] As Swtzerland has thus far granted access to the MAP n elgble cases when taxpayers have compled wth Swtzerland s nformaton and documentaton requrements for MAP requests, t should contnue ths practce. [B.3] [B.6] Fve out of 90 tax treates do not contan a provson that s equvalent to Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015). [B.7] Where treates do not nclude the equvalent of Artcle 25(3), second sentence, of the ECD Model Tax Conventon (ECD, 2015) and wll not be modfed by the Multlateral Instrument followng ts entry nto force to nclude such equvalent, Swtzerland should request the ncluson of the requred provson va blateral negotatons. Specfcally wth respect to the 1954 treaty wth the Unted Kngdom that s beng appled to 14 jursdctons (not ncludng the Unted Kngdom), Swtzerland should, once t enters nto negotatons wth the jursdctons for whch t apples that treaty, request the ncluson of the requred provson. In addton, Swtzerland should mantan ts stated ntenton to nclude the requred provson n all future treates. MAP gudance s avalable but further clarty could be provded. Swtzerland should mprove the level of clarty of ts MAP gudance. Addtonally, although not part of the Acton 14 Mnmum Standard, n order to further mprove the level of clarty, Swtzerland could consder ncludng n ts MAP gudance nformaton on: o Whether MAP s avalable n cases of () transfer prcng cases; () the applcaton of ant-abuse provsons; () bona fde taxpayer-ntated adjustments; and (v) multlateral dsputes; o The condtons for suspenson of tax collecton durng the course of a MAP; o The consderaton of nterest and penaltes; and o The steps of the process and the tmng of such steps for the mplementaton of MAP agreements. [B.8]

57 SUMMAR - 55 Areas for Improvement [B.9] [B.10] Recommendatons Swtzerland should ensure that future updates of ts MAP gudance are made publcally avalable and easly accessble. Its MAP profle, publshed on the shared publc platform, should be updated f needed Part C: Resoluton of MAP cases ne out of 90 tax treates does not contan a provson equvalent to Artcle 25(2), frst sentence of the ECD Model Tax Conventon (ECD, 2015). [C.1] Swtzerland should ensure that all ts tax treates nclude the equvalent of Artcle 25(2), frst sentence, of the ECD Model Tax Conventon (ECD, 2015). As the one treaty that does not nclude such provson s the 1954 treaty wth the Unted Kngdom that s beng appled to 14 jursdctons (not ncludng the Unted Kngdom), Swtzerland should ensure that, once t enters nto negotatons wth the jursdctons for whch t apples that treaty, t ncludes the requred provson. In addton, Swtzerland should mantan ts stated ntenton to nclude the requred provson n all future treates. [C.2] Swtzerland submtted tmely comprehensve MAP statstcs and ndcated they have been matched wth all of ts MAP partners. The year 2016 was the frst year for whch MAP statstcs were reported under the new MAP Statstcs Reportng Framework. These statstcs were only recently submtted by most jursdctons that commtted themselves to the mplementaton of the Acton 14 Mnmum Standard and some stll need to be submtted or confrmed. Gven ths state of play, t was not yet possble to assess whether Swtzerland s MAP statstcs match those of ts treaty partners as reported by the latter. Wthn the context of the state of play outlned above and n relaton to the MAP statstcs provded by Swtzerland, t resolved durng the Reportng Perod resolved 9.86% (14 out of 142 cases) of ts post-2015 cases n 2.04 months on average. In that regard, Swtzerland s recommended to seek to resolve the remanng 90.14% (128 cases) of the post-2015 cases pendng on 31 December 2016 wthn a tmeframe that results n an average tmeframe of 24 months for all post-2015 cases. Swtzerland should contnue to closely montor whether t has adequate resources n place to ensure that future MAP cases are resolved n a tmely, effcent and effectve manner. [C.3] - Furthermore, as Swtzerland resolved attrbuton/allocaton cases n months on average, t could consder devotng addtonal fundng and resources to accelerate the resoluton of these cases. [C.4] - As t has done thus far, Swtzerland should contnue to ensure that ts competent authorty has the authorty, and uses that authorty n practce, to resolve MAP cases wthout beng dependent on approval or drecton from the tax admnstraton personnel drectly nvolved n the adjustments at ssue. [C.5] - As t has done thus far, Swtzerland should contnue to use approprate performance ndcators. [C.6] - -

58 56 SUMMAR Part D: Implementaton of MAP agreements [D.1] As wll be dscussed under element D.3 not all of Swtzerland s tax treates nclude the equvalent of Artcle 25(2), second sentence, of the ECD Model Tax Conventon (ECD, 2015) or the alternatves provded n Artcle 9(1) and 7(2). There s a rsk that for those tax treates that do not nclude those provsons, not all MAP agreements can be mplemented due to the 10 year tme lmt n Swtzerland s domestc law. Even though Swtzerland has mplemented all MAP agreements thus far, t should ensure that n the absence of the requred provsons dscussed under element D.3 mplementaton of MAP agreements s not obstructed by tme lmts n ts domestc law. In addton, to keep a record of whether all future MAP agreements are mplemented, Swtzerland could ntroduce a trackng system. [D.2] - As t has done thus far, Swtzerland should contnue to mplement all MAP agreements on a tmely bass f the condtons for such mplementaton are fulflled. [D.3] 83 out of 90 treates contan nether a provson that s equvalent to Artcle 25(2), second sentence of the ECD Model Tax Conventon (ECD, 2015), nor the alternatve provsons n both Artcle 9(1) and Artcle 7(2). Swtzerland should ensure that all ts tax treates nclude the equvalent of Artcle 25(2) second sentence, of the ECD Model Tax Conventon (ECD, 2015) or be wllng to accept the ncluson of both alternatve provsons. f those 83 treates: Specfcally wth respect to the 1954 treaty wth the Unted Kngdom that s beng appled to 14 jursdctons (not ncludng the Unted Kngdom), Swtzerland should ensure that, once t enters nto negotatons wth the jursdctons for whch t apples that treaty, t ncludes the requred provson or be wllng to accept the ncluson of both alternatve provsons. o 55 out of 90 tax treates do not contan a provson to mplement any mutual agreement reached through MAP notwthstandng any tme lmts n the domestc law nor nclude the alternatve provsons provded for n Artcle 9(1) and Artcle 7(2). o 28 out of 90 tax treates do not contan a provson to mplement any mutual agreement reached through MAP notwthstandng any tme lmts n the domestc law and only nclude the alternatve provson provded for n Artcle 9(1). In addton, Swtzerland should nclude the requred provson or be wllng to accept the ncluson of both alternatve provsons, n all future treates.

59 57 AEX A - TAX TREAT ETWRK F SWITZERLAD Annex A Tax treaty network of Swtzerland Column 1 Column 2 DTC n force? Treaty partner = yes Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? = yes = yes Column 3 Is Art. 25(1), frst sentence ncluded? If yes, submsson to ether competent authorty E = yes, ether CAs = yes, only one CA = sgned pendng ratfcaton Albana Column 4 Is Art. 25(1), second sentence ncluded? = no, no such provson = no, dfferent perod = no, startng pont for computng the 3 year perod s dfferent v = no, others reasons = o Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? If no, alternatve provson n Art. 7 & 9 ECD MTC? = yes = yes = yes = no, but access wll be gven to TP cases = no and such cases wll be accepted for MAP If no, please state reasons = yes Artcle 25(2) of the ECD MTC = no and access wll not be gven to TP cases = no but such cases wll not be accepted for MAP Artcle 25(3) of the ECD MTC Arbtraton = yes = no, but have Art 7 equvalent = yes -Art. 25(5) mandatory other = no, but have Art 9 equvalent = no, but have both Art 7 & 9 equvalent = no = no and no equvalent of Art 7 and 9 = no = no = no - voluntary Algera Angulla f yes:

60 AEX A - TAX TREAT ETWRK F SWITZERLAD - 58 Column 1 Treaty partner Column 2 DTC n force? Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Column 4 Is Art. 25(1), frst sentence ncluded? Is Art. 25(1), second sentence ncluded? If yes, submsson to ether competent authorty If no, please state reasons Is Art. 25(2) frst sentence ncluded? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Antgua and Berbuda Argentna Armena Artcle 25(2) of the ECD MTC Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MTC? Australa Austra Azerbajan Bangladesh Barbados Belarus Belgum Belze Brtsh Vrgn Islands Bulgara v Canada

61 59 AEX A - TAX TREAT ETWRK F SWITZERLAD Column 1 Treaty partner Column 2 DTC n force? Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Column 4 Is Art. 25(1), second sentence ncluded? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton Chle If yes, submsson to ether competent authorty Chna Colomba Côte d'ivore Cyprus* v If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? If no, please state reasons If no, alternatve provson n Art. 7 & 9 ECD MTC? Czech Republc v Denmark Domnca Ecuador Egypt Estona Faroe Islands Fnland France Gamba Georga

62 AEX A - TAX TREAT ETWRK F SWITZERLAD - 60 Column 1 Treaty partner Column 2 DTC n force? Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Column 4 Is Art. 25(1), frst sentence ncluded? Is Art. 25(1), second sentence ncluded? If yes, submsson to ether competent authorty If no, please state reasons Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MTC? Germany Ghana Greece Grenada Hong Kong, Chna Hungary v Iceland Inda Indonesa (2 years) Iran Ireland Israel Italy Jamaca Japan v

63 61 AEX A - TAX TREAT ETWRK F SWITZERLAD Column 1 Treaty partner Column 2 DTC n force? Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Column 4 Is Art. 25(1), second sentence ncluded? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton Kazakhstan If yes, submsson to ether competent authorty Korea v Kuwat Kyrgyzstan Latva If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? If no, please state reasons If no, alternatve provson n Art. 7 & 9 ECD MTC? Lechtensten Lthuana Luxembourg Macedona Malaw Malaysa Malta v Mexco (2 years) v Moldova Mongola Montenegro

64 AEX A - TAX TREAT ETWRK F SWITZERLAD - 62 Column 1 Treaty partner Column 2 DTC n force? Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Montserrat If yes, submsson to ether competent authorty Morocco Column 4 Is Art. 25(1), second sentence ncluded? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? If no, please state reasons Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MTC? etherlands ew Zealand orway man Pakstan Peru Phlppnes (2 years) Poland Portugal (2 years) v v Qatar Romana v Russa Sant Ktts and evs v

65 63 AEX A - TAX TREAT ETWRK F SWITZERLAD Column 1 Treaty partner Sant Luca Sant Vcent and Grenadnes Serba Column 2 DTC n force? Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? If yes, submsson to ether competent authorty Column 4 Is Art. 25(1), second sentence ncluded? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? If no, please state reasons Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton If no, alternatve provson n Art. 7 & 9 ECD MTC? Sngapore Slovak Republc Slovena South Afrca Span Sr Lanka Sweden Tawan Tajkstan Thaland Trndad and Tobago

66 AEX A - TAX TREAT ETWRK F SWITZERLAD - 64 Column 1 Treaty partner Column 2 DTC n force? Acton 25(1) of the ECD Model Tax Conventon ( MTC ) Artcle 9(2) of the ECD MTC Ant-abuse B.1 B.3 B.4 C.1 D.3 A.1 B.7 C.6 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Is Art. 9(2) ncluded? Exstence of a provson that MAP Artcle wll not be avalable n cases where your jursdcton s of the assessment that there s an abuse of the DTC or of the domestc tax law? Is Art. 25(3) frst sentence ncluded? Is Art. 25(3) second sentence ncluded? Incluson arbtraton provson? Column 3 Is Art. 25(1), frst sentence ncluded? Column 4 Is Art. 25(1), second sentence ncluded? Artcle 25(2) of the ECD MTC Is Art. 25(2) frst sentence ncluded? Is Art. 25(2) second sentence ncluded? Artcle 25(3) of the ECD MTC Arbtraton Tunsa If yes, submsson to ether competent authorty Turkey Ukrane Unted Arab Emrates Unted Kngdom Unted States Uruguay Uzbekstan Venezuela (2 years) Vet am Zamba If no, wll your CA accept a taxpayer s request for MAP n relaton to such cases? If no, please state reasons If no, alternatve provson n Art. 7 & 9 ECD MTC? * Footnote by Turkey: The nformaton n ths document wth reference to "Cyprus" relates to the southern part of the Island. There s no sngle authorty representng both Turksh and Greek Cyprot people on the Island. Turkey recognzes the Turksh Republc of orthern Cyprus (TRC). Untl a lastng and equtable soluton s found wthn the context of Unted atons, Turkey shall preserve ts poston concernng the "Cyprus" ssue. Footnote by all the European Unon Member States of the ECD and the European Unon: The Republc of Cyprus s recognzed by all members of the Unted atons wth the excepton of Turkey. The nformaton n ths document relates to the area under the effectve control of the Government of the Republc of Cyprus.

67 AEX B - MAP STATISTICS PRE-2016 CASES 65 Annex B MAP Statstcs pre-2016 cases umber of pre-2016 cases closed durng the reportng perod by outcome: Category of cases o. f pre-2016 cases n MAP nventory on 1 January 2016 Column 1 Agreement partally elmnatng double taxaton / partally resolvng taxaton not n accordance wth tax treaty Agreement that there s no taxaton not n accordance wth tax treaty o agreement ncludng agreement to dsagree Any other outcome o. f pre2016 cases remanng n on MAP nventory on 31 December 2016 Average tme taken (n months) for closng pre2016 cases durng the reportng perod Wthdrawn by taxpayer Unlateral relef granted Resolved va domestc remedy Agreement fully elmnatng double taxaton / fully resolvng taxaton not n accordance wth tax treaty Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column Dened MAP access bjecton s not justfed Column 2 Column 3 Attrbuton/ Allocaton 141 thers Total

68 AEX C - MAP STATISTICS PST-2015 CASES - 66 Annex C MAP Statstcs post-2015 cases umber of post-2015 cases closed durng the reportng perod by outcome: Dened MAP access bjecton s not justfed Wthdrawn by taxpayer Unlateral relef granted Resolved va domestc remedy Agreement fully elmnatng double taxaton / fully resolvng taxaton not n accordance wth tax treaty Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column 14 Column Category of cases o. f post-2015 cases n MAP nventory on 1 January 2016 o. f post-2015 cases started durng the reportng perod Column 1 Column 2 Attrbuton/ Allocaton 0 thers Total Agreement partally elmnatng double taxaton / partally resolvng taxaton not n accordance wth tax treaty Agreement that there s no taxaton not n accordance wth tax treaty o agreement ncludng agreement to dsagree Any other outcome o. f post-2015 cases remanng n on MAP nventory on 31 December 2016 Average tme taken (n months) for closng post-2015 cases durng the reportng perod

69 GLSSAR 67 Glossary Acton 14 Mnmum Standard The mnmum standard as agreed upon n the fnal report on Acton 14: Makng Dspute Resoluton Mechansms More Effectve Look-back perod Perod startng from 1 January 2014 for whch Swtzerland wshed to provde nformaton and request peer nput MAP gudance Federal Department of Fnance State Secretarat for Internatonal Fnancal Matters Tax Dvson s Fact Sheet on the Mutual Agreement Procedure, June 2016 MAP Statstcs Reportng Framework Rules for reportng of MAP statstcs as agreed by the FTA MAP Forum Multlateral Instrument Multlateral Conventon to Implement Tax Treaty Related Measures to Prevent Base Eroson and Proft Shftng ECD Model Tax Conventon ECD Model Tax Conventon on Income and on Captal as t read on 15 July 2014 Pre-2016 cases MAP cases n a competent authorty s nventory that are pendng resoluton on 31 December 2015 Post-2015 cases MAP cases that are receved by a competent authorty from the taxpayer on or after 1 January 2016 Reportng Perod Perod for reportng MAP statstcs that started on 1 January 2016 and that ended on 31 December 2016 Terms of Reference Terms of reference to montor and revew the mplementng of the BEPS Acton 14 Mnmum Standard to make dspute resoluton mechansms more effectve

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71 RGAISATI FR ECMIC C-PERATI AD DEVELPMET The ECD s a unque forum where governments work together to address the economc, socal and envronmental challenges of globalsaton. The ECD s also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the nformaton economy and the challenges of an ageng populaton. The rgansaton provdes a settng where governments can compare polcy experences, seek answers to common problems, dentfy good practce and work to co-ordnate domestc and nternatonal polces. The ECD member countres are: Australa, Austra, Belgum, Canada, Chle, the Czech Republc, Denmark, Estona, Fnland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latva, Luxembourg, Mexco, the etherlands, ew Zealand, orway, Poland, Portugal, the Slovak Republc, Slovena, Span, Sweden, Swtzerland, Turkey, the Unted Kngdom and the Unted States. The European Unon takes part n the work of the ECD. ECD Publshng dssemnates wdely the results of the rgansaton s statstcs gatherng and research on economc, socal and envronmental ssues, as well as the conventons, gudelnes and standards agreed by ts members. ECD PUBLISHIG, 2, rue André-Pascal, PARIS CEDEX 16 ( P) ISB

72 ECD/G20 Base Eroson and Proft Shftng Project Makng Dspute Resoluton More Effectve MAP Peer Revew Report, Swtzerland (Stage 1) Inclusve Framework on BEPS: Acton 14 Addressng base eroson and proft shftng s a key prorty of governments around the globe. In 2013, ECD and G20 countres, workng together on an equal footng, adopted a 15-pont Acton Plan to address BEPS. Beyond securng revenues by realgnng taxaton wth economc actvtes and value creaton, the ECD/G20 BEPS Project ams to create a sngle set of consensus-based nternatonal tax rules to address BEPS, and hence to protect tax bases whle offerng ncreased certanty and predctablty to taxpayers. In 2015, the ECD and G20 establshed an Inclusve Framework on BEPS to allow nterested countres and jursdctons to work wth ECD and G20 members to develop standards on BEPS related ssues and revewng and montorng the mplementaton of the whole BEPS Package. Under Acton 14, countres have commtted to mplement a mnmum standard to strengthen the effectveness and effcency of the mutual agreement procedure (MAP). The MAP s ncluded n Artcle 25 of the ECD Model Tax Conventon and commts countres to endeavour to resolve dsputes related to the nterpretaton and applcaton of tax treates. The Acton 14 Mnmum Standard has been translated nto specfc terms of reference and a methodology for the peer revew and montorng process. The mnmum standard s complemented by a set of best practces. The peer revew process s conducted n two stages. Stage 1 assesses countres aganst the terms of reference of the mnmum standard accordng to an agreed schedule of revew. Stage 2 focuses on montorng the follow-up of any recommendatons resultng from jursdctons stage 1 peer revew report. Ths report reflects the outcome of the stage 1 peer revew of the mplementaton of the Acton 14 Mnmum Standard by Swtzerland, whch s accompaned by a document addressng the mplementaton of best practces whch can be accessed on the ECD webste: Consult ths publcaton on lne at Ths work s publshed on the ECD Lbrary, whch gathers all ECD books, perodcals and statstcal databases. Vst for more nformaton. sbn P 9HSTCQE*ccged+