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Fundamental changes to Swiss withholding tax on interest payments
Walder Wyss
  • Switzerland
  • 09 August 2019

The Federal Council recently announced its intentions to resume the temporarily suspended Swiss withholding tax reform and set out the general framework to introduce a paying agent tax system with regard to interest payments. However, as the Federal Council's communication did not contain any details, it remains to be seen how the reform will be set out in the draft bill expected in Autumn 2019 and how it will affect paying agents and investors.

Switzerland adopts new corporate tax reform
Walder Wyss
  • Switzerland
  • 24 May 2019

Swiss voters recently approved a new corporate tax reform, which will set the basis for new rules on Swiss corporate taxation and secure and enhance Switzerland's overall attractiveness as a business location. The reform includes a patent box, an R&D super deduction and a notional interest deduction for high-tax cantons. There are also substantial non-tax (revenue-raising) measures and new provisions on social security contributions.

Welcome relaxation of Swiss withholding tax rules on foreign bonds guaranteed by Swiss parent company
Walder Wyss
  • Switzerland
  • 22 February 2019

The Swiss Federal Tax Administration recently relaxed its practice under which bonds that are issued by foreign resident issuers, but guaranteed by their Swiss resident parent company, are requalified as domestic issuances which trigger Swiss withholding tax on interest payments. The revised rules significantly increase the permissible use of proceeds in Switzerland.

Intra-group debt financing: updated safe haven rates and thin capitalisation rules
Walder Wyss
  • Switzerland
  • 15 February 2019

The Swiss Federal Tax Administration recently published the 2019 safe haven interest rates to be used on intra-group loans. Against this backdrop, this article provides an overview of the relevant Swiss tax rules associated with determining whether intra-group financing constitutes equity or debt for tax purposes and the consequences of each characterisation.

End to rulings on Swiss principal companies and finance branches
Walder Wyss
  • Switzerland
  • 30 November 2018

In the context of the bill on the Federal Act on Tax Reform and AHV Financing, the Swiss Federal Tax Administration recently announced that, as of 1 January 2019, it will abstain from granting rulings which safeguard the tax privileges of new principal companies and finance branches. Existing rulings for these regimes will no longer be valid after 1 January 2020 as part of the overall Swiss tax reform.

Swiss Parliament approves corporate tax reform
Walder Wyss
  • Switzerland
  • 28 September 2018

The Swiss Parliament has approved the revised version of Tax Proposal 17, a proposal for corporate tax reform. The new proposal aims to set the basis for new rules on Swiss corporate tax (the last proposal having been rejected in a nationwide referendum) and secure and enhance Switzerland's overall attractiveness as a business location.

Swiss Upper House issues revised Tax Proposal 17
Walder Wyss
  • Switzerland
  • 22 June 2018

The Council of States recently issued a revised version of Tax Proposal 17, a proposal for corporate tax reform. The new proposal is based on the government's March 2017 proposal and aims to set the basis for new rules on Swiss corporate tax (the last proposal having been rejected in a nationwide referendum in February 2017) and secure and enhance Switzerland's overall attractiveness as a business location. Under the proposal, Switzerland will repeal the existing special corporate tax regimes.

Switzerland and Brazil sign double taxation agreement
Walder Wyss
  • Switzerland
  • 18 May 2018

Switzerland and Brazil recently signed a double taxation agreement, which is a major achievement for both countries and has been a long-standing demand of the private sector. The new agreement will significantly increase Switzerland's attractiveness for Latin American investments and provide investors with legal certainty in tax matters.

Government adopts Tax Proposal 17 and submits dispatch to Parliament
Walder Wyss
  • Switzerland
  • 13 April 2018

The government has adopted Tax Proposal 17, a new proposal for corporate tax reform. The purpose of this new proposal is to set the basis for new rules on Swiss corporate taxation and to secure and enhance Switzerland's overall attractiveness as a business location. Under Tax Proposal 17, Switzerland will repeal the existing special corporate tax regimes. As opposed to the proposal that was rejected in February 2017, the current proposal appears to have attracted wider political support.

Initial coin offerings – more clarity on tax implications
Walder Wyss
  • Switzerland
  • 02 February 2018

Switzerland has become a major hub for initial coin offerings (ICOs). Yet to date, there has been little clarity about the resulting tax implications. Recent discussions and tax ruling negotiations with representatives of several tax authorities in Switzerland have provided more clarity on the tax implications of ICOs, at least regarding tokens issued by Swiss companies raising funds under the promise of a participation in future revenues.

Government publishes detailed draft for corporate tax reform
Walder Wyss
  • Switzerland
  • 22 September 2017

The government recently published a new detailed draft for a corporate tax reform. The purpose of this new draft is to set the basis for new rules on corporate tax (the last proposal having been rejected in a nationwide referendum) and to secure Switzerland's overall attractiveness as a business location. The draft includes several measures that have been discussed in the past, but it also addresses the criticism that contributed to the rejection in the February referendum.

Parliament Passes Bill to Overhaul VAT System
Walder Wyss
  • Switzerland
  • 04 September 2009

Parliament has passed the Value Added Tax Act Reform Bill. Barring a referendum, this new legislation will completely replace the existing legislation and will introduce significant changes in key areas; businesses will have only a few months to prepare for the transition.

Commission Cites Trade Agreement in Tax Dispute
Walder Wyss
  • Switzerland
  • 07 September 2007

Rates of corporate income tax in Switzerland are low compared to those of some other European countries, making the jurisdiction an attractive location for multinational companies. The European Commission has recently formally challenged the cantonal corporate tax regimes, holding that they are in violation of Article 23 of the 1972 Free Trade Agreement between the European Economic Community and Switzerland.

Purchase of a Participation and Indirect Partial Liquidation
Walder Wyss
  • Switzerland
  • 01 September 2006

In June 2006 a new federal law was passed governing the taxation, at both federal and cantonal level, of an indirect partial liquidation involving the sale of participations equal to 20% or more of the nominal share capital of the relevant company, and limiting the restricted period to a maximum of five years. The new law significantly improves the tax position of the seller and the purchaser.

Civil Code Revised to Reflect Importance of Charities and Foundations
Walder Wyss
  • Switzerland
  • 10 March 2006

The section on foundations of the Swiss Civil Code has been revised to take into account the importance of charities and not-for-profit institutions in Switzerland, as well as the corporate governance issues associated with their increasing importance and the value of the assets they manage. Some of these amendments also have an impact on the tax situation of the founders and donors.

Stamp Duty Act Enters into Effect
Walder Wyss
  • Switzerland
  • 10 March 2006

Revisions to the Federal Stamp Duty Act entered into force on January 1 2006. Among other things, foreign resident corporations with shares listed on a recognized stock exchange and their foreign resident affiliates are exempt from the Swiss transfer stamp duty triggered on sales or purchases of taxable securities from a Swiss securities dealer or intermediated by a Swiss securities dealer.

Employee Stock and Stock Option Plan Legislation Still Pending
Walder Wyss
  • Switzerland
  • 03 March 2006

Rising stock markets have seen a return of employee stock and stock option plans as a common part of compensation and incentive packages for executives and other highly compensated employees. A draft bill including revised rules on the taxation of benefits granted under employee incentive plans is pending in the second chamber of the Federal Parliament.

Swiss-EU Savings Agreement Takes Effect
Walder Wyss
  • Switzerland
  • 03 March 2006

The Swiss-EU Savings Agreement provides for measures equivalent to those laid down in the EU Directive on the Taxation of Interest Payments and the EU Parent-Subsidiary Directive. The relief from withholding tax on dividends under the agreement will strengthen Switzerland's position as a location for holding companies and promote investment activity in the jurisdiction.

Corporate Tax Reforms to be Debated by Parliament
Walder Wyss
  • Switzerland
  • 24 February 2006

Through the proposed law known as the Corporate Tax Reform II, the Federal Council aims to make Switzerland more attractive to entrepreneurs and investors. However, provisions relating to the recharacterization, under certain circumstances, of tax-free capital gains as taxable distributions are controversial and are likely to be debated by the first chamber of the Federal Parliament in spring 2006.

New Guidelines on Lump-Sum Expense Deductions
Walder Wyss
  • Switzerland
  • 24 February 2006

In 2005 the Federal Tax Administration issued a circular letter on lump-sum deductions with respect to foreign-to-foreign business transactions. Swiss resident corporations and foreign resident corporations with a Swiss permanent establishment are no longer allowed to apply lump-sum deductions on foreign-to-foreign business transactions, but must keep records of their expenses.

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