Tag: Cash box

In order to align the remuneration for transfer pricing purposes with value creation, a cash box entity should not be entitled to any premium returns. Therefore, the profits that the cash box is entitled to retain would be equivalent to no more than a risk-free financial return.

Switzerland vs. Finanz AG, Oct. 2012, Federal Supreme Court, Case No 2C_708/2011

Switzerland vs. Finanz AG, Oct. 2012, Federal Supreme Court, Case No 2C_708/2011

A company of a Swiss based group maintained a permanent establishment in the Cayman Islands for financing the domestic group companies. Whereas the group companies were able to deduct the interest payments from the taxable profit to their full extent, the interest income, for Swiss tax purposes, was allocated to the permanent establishment in the Cayman Islands, and therefore led to non-taxation of this interest income. By interpreting the legal term “foreign permanent establishment” the Federal Supreme Court concluded that the finance company in the Cayman Islands had only four employees and that such a lean structures was in contrast to the figures in the annual accounts. Therefore, it denied the allocation of interest income to the Cayman Islands for Swiss tax purposes. Click here for English translation Federal Tax Administration against X. Finanz AG ... Continue to full case