Trust Bloomberg Tax's Premier International Tax offering for the news and guidance to navigate the complex tax treaty networks and business regulations.
The Swiss government plans to bolster group financing activities by amending its withholding tax ordinance to exempt interest payments for certain intra-group loans.
The goal of the amendment is to encourage Swiss-based multinational companies to pursue targeted financing activities in Switzerland rather than abroad, according to a March 10 news release.
Switzerland’s Federal Council approved the amendments March 10, and the changes are scheduled to enter into force April 1.
For years, Swiss-based multinational companies have pursued targeted funding opportunities abroad to avoid paying a 35 percent withholding tax on interest payments for certain intra-group loan agreements.
The amendment seeks to exempt any withholding tax from bonds that are guaranteed by a Swiss group company and issued to a foreign group company that belongs to the same group, according to the Swiss Federal Department of Finance.
“Forwarding of funds from the foreign issuer to a group company established in Switzerland will be possible up to the maximum amount of the equity capital of the issuer without the interest on it being subject to withholding tax,” the agency said.
The amendment to Switzerland’s withholding tax ordinance will “significantly improve the ability to operate and manage group financing activities from within Switzerland,”Deloitte said. “Both global financing activities and group wide cash pools may benefit.”
“This change will make Switzerland significantly more attractive for all kinds of group financing activities,”said Deloitte in a blog post.
The Swiss Federal Finance Department said the amendment would both “strengthen” the incentive for companies to locate their headquarters in Switzerland and encourage additional tax receipts stemming from direct and indirect profit taxes.
The government said the shift would likely result in “negligible”short-term reductions to withholding tax receipts, according to its news release.
Though Swiss lawmakers previously sought to modernize the alpine nation’s tax withholding legislation in 2014, the reform effort was suspended and awaits the result of a 2018 referendum vote.
In Switzerland, any legislative changes may be subject to a referendum vote if at least 50,000 signatures are collected.
To contact the reporter on this story: Bryce Baschuk in Geneva at firstname.lastname@example.org
To contact the editor responsible for this story: Penny Sukhraj in London at email@example.com
The Ordinance on the Withholding Tax is in German at: https://www.newsd.admin.ch/newsd/message/attachments/47510.pdf
The Report on the results: Consultation procedure for the amendment of the regulation on the withholding tax (consolidated financing), is in German at: https://www.newsd.admin.ch/newsd/message/attachments/47513.pdf
The Explanation: Amendment to the regulation on the deduction of tax (consolidated financing) is in German at: https://www.newsd.admin.ch/newsd/message/attachments/47516.pdf
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)