The English language version is created automatically. The text may therefore contain linguistic and terminological errors.

Stefan Oesterhelt

Pascal Shield

Workshop by Stefan Oesterhelt and Pascal Schild at the ISIS) seminar on August 30, 2022, entitled "Intragroup Financing, Price Adjustments, Restructuring and Other Current Survey Issues."

Workshop by Stefan Oesterhelt and Pascal Schild at the ISIS) seminar on August 30, 2022, entitled "Intragroup Financing, Price Adjustments, Restructuring and Other Current Survey Issues."

The complete seminar folder can be ordered for
The corresponding case solutions can be purchased for CHF
(introductory price)
can be purchased in the shop.
The workshops are also available individually in the "Documents" section.
The case solutions and other documents can be obtained free of charge in the shop.

Case 1: Price adjustment / margin correction


FantasyPharma Group (FPG) is a multinational specialty pharmaceutical and medical device company. FPG develops, manufactures and markets a wide range of branded, generic and generic branded pharmaceuticals, OTC products and medical devices.

FantasyPharma Schweiz AG (FPS AG) is the Swiss group company of FPG. It operates as a distribution company: FPS AG purchases products under a buy-sell arrangement from its intra-group suppliers for distribution to wholesalers in the sales territory (Western and Eastern Europe).

FPS AG is entitled to an arm's length compensation for its sales activities. In line with its function and risk profile, the intercompany agreements provide for an arm's length operating margin for FPS AG, which is to be based on a corresponding benchmark study (TNMM - ROS).

For the financial years 2016 -2018, FPS AG reports the following results:

According to the FPG, the operating margin of FPS AG should not be strongly influenced by fluctuations of the peer companies. FPS AG therefore applies the interquartile range according to the three-year average.

The result of the corresponding study (prepared in 2020) presents itself as follows:

Due to the rather low overall profits of the FPG Group, FPS AG is expected to achieve an operating margin for the years 2016-2018 that is at the lower end of the customary range. Specifically, 1.33%.

The 2016 and 2017 annual financial statements have already been closed. In order to achieve the desired margin of 1.33% over the comparison period, the margin will consequently be adjusted accordingly via a subsequent correction of the purchase prices in 2018 (year-end adjustments). This is the reason for the reported negative margin in 2018.


  • Can multi-year data generally be used in a comparability analysis? What is the situation in the present case?
  • In the present case, is an overall analysis of the 2016-2018 results (analogous to the comparative analysis with multi-year data) possible?
  • Are there (further) arguments against such fluctuating earnings or losses at FPS AG?
  • What are the withholding tax consequences for FPS AG?

Case 2: Year-end adjustments


SelfService Group (SSG) is a multinational company specializing in the sale, manufacture, installation and service of self-service transaction systems (such as ATMs) and related services.

SelfService Schweiz AG (SSS AG) is the Swiss group company of SSG. It operates as a sales company: SSS AG purchases hardware (vending machines) as well as standardized and customized software solutions from its intragroup suppliers or software developers for distribution in Switzerland.

SSS AG is entitled to an arm's length compensation for its sales activities based on its function and risk profile (routine sales company). The key data of the intercompany contracts provide for an operating margin (ROS) for the hardware business of 2% and an operating margin (ROS) for the software business of 4%. The notice period for these intercompany agreements is 6 months. The arm's length nature of the margins is to be reviewed by means of benchmark studies, which are to be conducted or updated every two years. Following studies in 2012 and 2014, the 2016 study also confirmed that the margins are in line with the market.

The SSG - Group did not achieve the expected earnings targets in the past years. As of the end of 2017, SSG announced to SSS AG that it would investigate and standardize the compensation of its various sales companies in the coming year.

As a result of these clarifications, a new benchmark study was prepared as of June 30, 2018 The distinction (two studies) between hardware and software sales was abandoned. This was done in order to achieve the simplification of remuneration sought by the Group. The new study was prepared for consequently the activity "Distribution". It shows an operating margin between 1.3% (lower quartile) - 3.5% (upper quartile) from comparative values 2015-2017.

On December 20, 2018, the intercompany distribution agreements were adjusted to the beginning of the year (Jan. 1, 2018) based on the new (combined) study. The new operating margin (ROS) was thus 1.5% for the hardware business and 2.5% for the software business. The software business generated approx. 68% of sales in 2018 (32% hardware).

On the occasion of the year-end closing work, SSS AG reviewed the margins of the two divisions and made year-end adjustments (credits to suppliers/developers) in the amount of mCHF 3 to achieve the newly defined margins.


  • What principles must be followed for year-end adjustments to be acceptable for tax purposes?
  • Are the intercompany agreements binding or can they be deviated from economically?
  • Are the margin correction and the resulting year-end adjustments accepted for withholding tax purposes? Are there any withholding tax consequences?

Case 3: Intra-group financing - loan on-lending according to circular letter


Core Pharma Group (CPG) is a multinational medical technology company. The Group enters the market with a comprehensive product portfolio that meets the needs of cardiac surgeons and patients worldwide.

Core Schweiz AG (CS AG) is a Swiss group company of CPG. It operates primarily as a holding company.

CS AG receives various EUR loans from its Dutch sister company Core Finance (CF) which it passes on to (1) an operating sister company and (2) its operating subsidiary.

Both loans are to bear interest in accordance with the FTA circular "Fiscally Recognized Interest Rates 202x for Advances or Loans in Foreign Currencies". In the case of external financing, this requires interest to be charged at the borrowing rates including any fees (cost price) plus a surcharge of 0.5 %.

Specifically, the interest rate to CF should be 6% (without further justification). The relevant interest rates for the on-lending of loans 1+2 should be 6.5% each in order to achieve the required margin of 0.5% at CS AG.


  • Is this interest rate accepted from a withholding tax perspective?

Case 4: Intragroup financing based on external loans

Basic facts

BeerSpirits Group (BSG) is a global manufacturer, marketer and distributor of alcoholic beverages.

BeerSpiritsHolding AG (BSH AG) is a Swiss holding company of BSG. BSH AG controls various operating subsidiaries of the BSG Group in Western Europe....

As part of the strategic growth of the Group through targeted acquisitions, BSH AG will acquire the Swiss company MountainBeer AG (MB AG) in 2020 from independent third parties for mEUR 100. mEUR 30 will be financed from BSH AG's own funds.The remaining mEUR 70 will be provided internally by means of a loan (term 10 years) from the Luxembourg-based BeerSpiritsFinance Ltd. (BSF Ltd.).

The rating of the loan to BSH AG was set at Baa2/BBB (Moody's/S&P) after taking into account the implicit Group reserve.

By means of a transfer pricing study, 9 comparable loans (rating Baa1 - Baa3/BBB+ - BBB-) could be identified. After appropriate TP adjustments (maturity, rank, etc.), the study shows an arm's length interest rate (interquartile range) of 2.9%-3.6% with a median of 3.3%.

In accordance with the intercompany agreements, the loan from BSF Ltd. to BSH AG bears interest of 3.6%.

BSF Ltd. refinances the mEUR 70 with a syndicate of banks.

Facts Variant 1

BSH AG grants the banks a full credit security guarantee. In this context, the shares of MB AG and other assets of BSH AG are pledged as collateral.

BSF Ltd. has to pay an annual interest of 3.1% to the bank consortium for this loan.

BSF Ltd. has only one domicile address in Luxembourg. It does not employ any staff of its own and has no assets other than the loan to BSH AG.

Facts Variant 2

BSH AG grants the banks a full credit security guarantee. In this context, the shares of MB AG and other assets of BSH AG are pledged as collateral.

BSF Ltd. has to pay an annual interest of 3.0% to the banking syndicate for this loan.

BSF Ltd. has premises in Luxembourg. It employs staff who set up the financing and perform the day-to-day administration. BSF Ltd. has equity capital of mEUR 5.

Facts Variant 3

The shares of MB AG and other assets of BSH AG are pledged as collateral in favor of BSF Ltd. BSH AG does not grant any direct guarantees to third parties.

BSF Ltd. refinances only a part of the loan (mEUR 30) through a syndicate of banks. The interest rate for this amounts to 2.5%. The remaining financial requirements are financed from own funds, other internal and external loans as well as financing instruments with different conditions and maturities.

Questions variants 1 - 3

  • Is the derivation of the third standard interest rate (comparative study loan) accepted?
  • Which alternative is appropriate?
  • Are there any withholding tax consequences?

Case 5: Incurrence of the tax receivable in the case of non-cash benefit


A. GmbH, whose shares are held by Mr. X., a resident of Switzerland, provides brokerage services in the real estate sector. In June 2022, the FTA discovers that in the years 2014-2020, brokerage commission, which would actually be due to A. GmbH, was received in an account of Mr. X. which was not declared to the FTA and was not booked at A. GmbH.

Approval of the annual financial statements by the General Meeting did not take place in these years.


  • For which years can the FTA claim withholding tax?
  • From when is the default interest owed?

Facts Variant 1

In June 2022, the FTA determines that X. GmbH received a shareholder loan from its shareholder in 2013, which bore interest at 8% p.a. as of May 31. The FTA takes the position that a benefit in kind within the meaning of Art. 4 para. 1 lit. b VStG exists to the extent of 5%.


  • For which interest due dates can the FTA make its claim?
  • When does the default interest start to run in each case?

Facts Variant 2

Mr. X. granted a shareholder loan to A. GmbH in 2013, which bears interest at 3% as of April 30. In June 2022, the FTA determines that hidden equity existed in each of the years 2014 to 2020 and that part of the interest payments must therefore be reclassified as a benefit in kind.


  • For which interest due dates can the FTA make its claim?
  • When does the default interest start to run in each case?

Facts Variant 3

In the years 2014 - 2020, A. GmbH has paid various benefits in kind to Mr. X. in that A. GmbH has taken over private expenses from Mr. X. (hotel accommodation, travel expenses, etc.). This will be discovered by the FTA in June 2022.


  • For which interest due dates can the FTA make its claim?
  • When does the default interest start to run in each case?

Case 6: Group transfer according to the new KS 5a of 1.2.2022 concerning reorganizations


A. AG, which is domiciled in Switzerland, holds through its domestic subsidiary B. AG holds the foreign subsidiary X. Inc.

Now the X. Inc. (fair value: CHF 100 million) is transferred to C. BV (a subsidiary of A. AG) based in the Netherlands at a book value of CHF 20 million.


  • How should this process be assessed from a withholding tax perspective?

Case 7: Practice withholding tax on secondary adjustments


A company domiciled abroad experiences a tax correction according to the tax regulations of the country of domicile (primary adjustment) for an intra-group transaction with a subsidiary domiciled in Switzerland. In order to eliminate double taxation on the basis of Art. 9 (2) of the OECD Model Tax Convention, Switzerland must (exclusively) make an adjustment in the tax balance sheet by reopening the already legally valid assessment of the subsidiary and reducing the taxation by the amount of the adjustment made abroad (counter-adjustment).

In order to reconcile the commercial and tax balance sheets, some countries require that the subsidiary subsequently repay the amount corresponding to the tax adjustment to the parent company abroad. This is referred to as a secondary adjustment.


  • Was such a payment subject to withholding tax prior to the entry into force of the Federal Act on the Implementation of International Agreements in the Tax Field (StADG) as of 01.01.2022?
  • What additional correction option has been available since the StADG went into effect?
  • When are such payments subject to withholding tax even after the StADG comes into force?

Please change your browser!

Microsoft Internet Explorer uses outdated web standards and is no longer supported by our platform. For an optimal display of the zsis) we recommend that you use one of the following browsers.
For more information about the outdated technology of Internet Explorer and the resulting risks, please visit the blog of Chris Jackson (Principal Program Manager at Microsoft).