Country-by-Country Reporting (CbCR) is a critical component of international tax compliance for multinational enterprises (MNEs). In Switzerland, the Federal Tax Administration (FTA) has implemented specific guidelines aligned with the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13. This article provides Chief Financial Officers (CFOs) and financial executives with a comprehensive understanding of the CbCR requirements in Switzerland, including applicability, filing procedures, and penalties for non-compliance.

Applicability of CbCR in Switzerland

Criteria for Reporting:

• MNE groups with consolidated group revenue of CHF 900 million or more (approximately €750 million) in the preceding fiscal year are required to submit a CbC report.
• The reporting entity is typically the ultimate parent entity of the MNE group that is a tax resident in Switzerland. In certain cases, surrogate parent entities or constituent entities may also be required to file.

Relevant Legislation:

• The primary legislative framework for CbCR in Switzerland is outlined in Article 13(2) of the Federal Act on International Administrative Assistance in Tax Matters (AIAA).
• Detailed regulations are provided in the Ordinance on Country-by-Country Reporting (CbCR Ordinance).

Reporting Requirements

Information to be Reported:

• The CbC report must include aggregate information relating to the global allocation of income, taxes paid, taxes accrued, stated capital, accumulated earnings, number of employees, and tangible assets other than cash or cash equivalents.
• It must also include details of all the constituent entities for which financial information is reported, indicating the jurisdiction of tax residence of each entity and the main business activities.

Form and Submission:

• MNEs must complete and submit the CbC report using the specific XML schema provided by the Swiss FTA.
• The report should be filed electronically via the Swiss FTA’s e-filing portal (ESTV).
  • More information on e-filing can be found on the Swiss FTA CbCR page.

Filing Deadlines

• The CbC report must be submitted within 12 months from the end of the reporting fiscal year. For example, if the fiscal year ends on 31 December 2023, the report must be submitted by 31 December 2024.

Penalties for Non-Compliance

Penalties:

• Failure to file the CbC report by the deadline can result in administrative penalties determined by the Swiss tax authorities.
• Additional penalties may apply for inaccurate information, non-compliance, or failure to keep adequate records.

Defences:

• Entities may avoid penalties if they can demonstrate that there was a reasonable cause for the failure to comply.

Confidentiality and Use of Information

Data Protection:

• The information in the CbC report is treated as confidential and will only be exchanged with tax authorities in jurisdictions with which Switzerland has a competent authority agreement.
• The data is used to assess high-level transfer pricing and other BEPS-related risks.