International Tax

Transfer Pricing: Rules and Practice in Selected Countries (Q-S) (Portfolio 6970)

  • This Portfolio presents the rules and practice related to transfer pricing in Singapore, Spain, Sweden, and Switzerland.


Chapter 145, “Transfer Pricing Rules and Practice in Singapore,” provides an overview of the rules and practice of transfer pricing in Singapore with regard to determining arm’s-length pricing. The term “arm’s length” is not defined in the Singapore Income Tax Act (Chapter 134 of Singapore) (ITA), but there are specific provisions in the ITA that require transactions between related parties to be conducted on similar bases as unrelated parties would conduct those transactions. Transfer pricing guidelines have been issued by the Inland Revenue Authority of Singapore (IRAS). The material in the chapter is current as of September 2013.

Chapter 150, “Transfer Pricing Rules and Practice in Spain,” begins with an overview of the main characteristics of Spain’s economy and of the Spanish tax system, and then provides a detailed discussion of the Spanish transfer pricing rules and regulations. The chapter includes an analysis of the specific rules and regulations that are provided under Spanish law for services, cost-sharing arrangements, and loans and thin capitalization. The chapter also discusses transfer pricing audit procedures in Spain as well as the consequences of a transfer pricing adjustment, both from a domestic perspective and from an international dispute resolution point of view. Finally, the chapter discusses the Advance Pricing Agreement alternative that is available to Spanish taxpayers as well as the relevant transfer pricing case law.

Chapter 155, “Transfer Pricing Rules and Practice in Sweden,” provides an overview of the Swedish tax system, particularly the provisions applicable to operating a controlled group of companies, including the rules for tax consolidation, restrictions on interest deductibility, payment of group dividends, and taxation of controlled foreign corporations. The chapter then analyzes in depth the relevant provisions in Swedish tax law governing transfer pricing adjustments, including the definition of an arm’s length price in the controlled group context, the examination process, taxpayer documentation requirements, settlement of transfer pricing disputes through arbitration or the competent authority process, and the advance pricing agreement regime. The chapter also examines significant transfer pricing cases, potential defenses, and tax treaty provisions relevant to transfer pricing issues involving Sweden and the United States.

Chapter 160, “Transfer Pricing Rules and Practice in Switzerland,” analyzes the Swiss federal and cantonal rules and procedures for making transfer pricing adjustments. In many countries there are specific rules for setting or evaluating prices for related-party services, licenses, or sales of goods or intangibles. Switzerland, however, has even today only rudimentary rules dealing with transfer pricing and Swiss tax administrators often simply lack the capacity to audit complex transfer pricing arrangements. The reason for this is that historically multinational enterprises generally used Switzerland’s beneficial tax environment to shelter profits, and thus transfer pricing was seldom used to reduce profits in Switzerland. Nowadays, in today’s worldwide transfer pricing environment, Swiss multinational enterprises and multinationals with Swiss-affiliated companies are more often confronted with foreign transfer pricing adjustments which may affect the taxable base of a Swiss company and thus present the possibility of double taxation. In such a situation, a knowledge of Swiss transfer pricing rules and practice is necessary in order to persuade the Swiss tax authorities that a corresponding adjustment is appropriate, either unilaterally or as part of a mutual agreement procedure.

Table of Contents

Portfolio 6970-1st: Transfer Pricing: Rules and Practice in Selected Countries (Q-S)





145:I. Introduction

145:II. The Transfer Pricing Landscape in Singapore

145:III. Application of the Arm’s-Length Principle

145:IV. Corresponding Adjustments

145:V. Other Matters Relevant to the Transfer Pricing Circular

145:VI. Singapore Avenues of Appeal

145:VII. Conclusions


150:I. Introduction

150:II. Overview of Spain’s Tax System

150:III. Overview of Spain’s Income Tax System

150:IV. History of Spain’s Transfer Pricing Rules

150:V. The Spanish Transfer Pricing Rules

150:VI. The Spanish Transfer Pricing Rules and the OECD Transfer Pricing Guidelines

150:VII. Documentation and Reporting Requirements

150:VIII. Penalties

150:IX. Tax and Transfer Pricing Audits in Spain

150:X. Administrative Appeals and Litigation of Transfer Pricing Adjustments

150:XI. Resolving Conflicts with Other Countries

150:XII. Adjustments to Be Made in the Wake of a Transfer Pricing Adjustment

150:XIII. Advance Pricing Agreements

150:XIV. Transfer Pricing Case Law


155:I. Introduction

155:II. Background

155:III. Application of General Principles to Transfer Pricing

155:IV. Application of Chapter 14 of the Income Tax Act

155:V. Defenses To Transfer Pricing Adjustments

155:VI. Swedish Tax Treaty Provisions Relevant to Transfer Pricing

155:VII. Conflict of General Principles, Chapter 14 and Treaty Law

155:VIII. Corresponding and Secondary Adjustments

155:IX. Competent Authority Proceedings (Mutual Agreement)

155:X. Arbitration

155:XI. Transfer Pricing Reporting and Documentation Requirements

155:XII. Penalties and Interest on Additional Income Taxes due to Transfer Pricing Income Adjustments

155:XIII. Dealing with the Swedish Tax Authorities on Transfer Pricing Matters

155:XIV. Coordination of Transfer Prices with Swedish Value Added Taxes and Customs

CHAPTER 160: TRANSFER PRICING RULES AND PRACTICE IN SWITZERLAND  by Richard J. Wuermli and Katharina B. Padrutt TAX EXPERT International AG, Zurich

160:I. Introduction

160:II. Overview of Corporate Income and Capital Tax System in Switzerland

160:III. Legal Basis for Transfer Pricing Adjustments in Switzerland

160:IV. Specific Transactions between Associated Companies

160:V. OECD Model Tax Convention on Income and on Capital — Relevant Articles

160:VI. The Swiss Treaty Practice

160:VII. OECD Transfer Pricing Guidelines

160:VIII. Consequences of Transfer Pricing Adjustments in Switzerland

160:IX. Compliance and Litigation

Edmund Leow
Judicial Commissioner
Supreme Court Of The Republic Of Si
Allen Tan
Baker & McKenzie.Wong & Leow
Peter Tan
Senior Consultant
Baker & McKenzie.Wong & Leow
Christopher Newman
Managing Director
Duff & Phelps
Wei Kee Ho
Wei Kee Ho
UBS Trustees (Singapore) Ltd
Michael Walter
Landwell - PricewaterhouseCoopers
Ramón Mullerat
PwC España
Lars Samuelson
Associate Professor In Fiscal Law
Uppsala University
Richard Wuermli
Managing Partner
Tax Expert International Ltd.
Katharina Padrutt
Katharina Padrutt
Certified Tax Expert, Partner
TAX EXPERT International AG