There is an expectation that for cross-border IP transfers, a detailed analysis of DEMPE functions carried out within the organization for the IP under assessment is documented and presented by the taxpayer, and that reference is made to the drivers overseen by the Swiss entity with respect to the overall value chain of the multinational. With respect to IP entering Switzerland, the SFTA has confirmed that the OECD’s DEMPE (Development, Enhancement, Maintenance, Protection, Exploitation) concept as first introduced with the OECD’s action plan against base erosion and profit shifting (“BEPS”) is important in practice. As the associated risk of challenge by the tax authorities for multinationals are therefore high, it is recommended by the SFTA to proactively approach them and obtain a ruling in advance, to get clarity and avoid costly procedures at a later point in time. The cross-border transfer of IP is one of the most common cases that the SFTA handles, due to their complexity and the often sizeable values involved. In the following blog series, the key take-aways from the discussion are presented. KPMG has identified various hot topics that are currently in focus within Swiss audits and ruling requests, and has discussed those in detail with the SFTA specialists. KPMG has recently organized a joint webcast with the transfer pricing specialists from the SFTA.
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