Michaela Merz

New interpretation guidance of the Principal Company Taxation adopted by the Swiss Federal Tax Authorities (SFTA)

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686232_web_R_K_B_by_Rainer Sturm_pixelio.deThe SFTA have recently reviewed and revised the interpretation guidance which is used by the cantonal tax authorities to apply the taxation of principal companies, the rules of which are stipulated in Circular Letter number 8 published by the SFTA in 2011.

We have set out below the key points of the revised interpretation guidance:

  • substance test: principal companies must satisfy specific substance requirements especially where core principal functions are outsources.
  • exclusivity test: limited-risk-distributors and commissionaires that perform distribution activities for a Swiss principal company must derive at least 90% of their net profits from their distribution activities performed for the Swiss princiapl company or other group companies.
  • margin test: the principal tax allocation must be adjusted if gross margin/compensation of the limited-risk-distributors/commissionaires exceeds 3%.

The above modifications become applicable as from 2016 for existing principal companies and with immediate effect for new principal companies.

For a deeper understanding of how these issues might affect your business, please contact:

Urs Landolf

Birchstrasse 160
Postfach, 8050 Zürich


Bildquelle: pixelio.de/Rainer Sturm

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